Renewable energy sources are set to take almost three quarters of the $10.2 trillion the world will invest in new power generating technology over the years to 2040, Bloomberg New Energy Finance (BNEF) revealed in its latest long-term energy forecast.
BNEF’s New Energy Outlook (NEO) 2017 shows earlier progress than forecasted before towards decarbonization of the world’s power system, with global emissions projected to peak in 2026 and to be 4% lower in 2040 than they were in 2016.
The largest share of new renewable energy investments will go to solar, predicted to take $2.8 trillion with a 14-fold jump in capacity, while wind is expected to draws $3.3 trillion with fourfold increase in capacity, according to BNEF.
As a result, wind and solar will make up 48% of the world’s installed capacity and 34% of electricity generation by 2040, compared with just 12% and 5% now.
Seb Henbest, lead author of NEO 2017 at BNEF, said: “This year’s report suggests that the greening of the world’s electricity system is unstoppable, thanks to rapidly falling costs for solar and wind power, and a growing role for batteries, including those in electric vehicles, in balancing supply and demand.”
European investment in renewables is projected to grow by 2.6% per year on average out to 2040, averaging $40 billion per year. Total investment in renewables across Europe is expected to reach almost $1 trillion over 2017-40, according to NEO 2017.
The report also anticipates that half of European electricity supply in 2040 will come from variable renewables, posing challenges for grid and generators.
Investment in renewables across the Americas will average at $50 billion per year to 2040, to reach almost $1.5 trillion over 2017-40, BNEF said.
Asia Pacific will see almost as much investment in generation as the rest of the world combined, with China and India alone presenting a $4 trillion opportunity for the energy sector, and accounting for 28% and 11% total regional investment respectively over 2017-40 period, BNEF predicts.
Although the world’s power sector emissions is predicted to reach a peak within a decade, the rate of decline in emissions is not nearly enough for the climate, NEO 2017 states, revealing that a further $5.3 trillion investment in 3.9TW of zero-carbon capacity will be needed place the power sector on a 2°C trajectory.