Study: Renewable energy cost-competitiveness will lead to strong growth

Annual investment in new renewable power capacity is set to rise by anywhere from two and a half times to more than four and a half times between now and 2030, according to research by analysts at Bloomberg New Energy Finance.

The likeliest scenario implies a jump of 230 percent, to $630 billion per year by 2030, driven by further improvements in the cost-competitiveness of wind and solar energy relative to fossil fuel alternatives, as well as an increase in the roll-out of non-intermittent clean energy sources like hydro, geothermal and biomass.

Bloomberg New Energy Finance’s predictions form three scenarios: “New Normal,” “Barrier Busting” and “Traditional Territory.”

The New Normal scenario is considered the most likely. It shows the investment requirement for new clean energy assets in the year 2030 at $630 billion (in nominal terms), more than three times the investment in the renewable energy capacity that was built in 2012.

This 2030 investment figure is 35 percent higher than that produced in Bloomberg New Energy Finance’s last global forecast a year ago, and the projection for total installed renewable energy capacity by that date is 25 percent higher than in that previous forecast, at 3,500 GW.

In the power sector, the research company’s latest forecasts project that 70 percent of new power generation capacity added between 2012 and 2030 will be from renewable technologies (including large hydro). Only 25 percent will be in the form of coal, gas or oil, the remaining being nuclear.

The scenarios are based on Bloomberg New Energy Finance’s latest projections for coal and gas prices. For gas, these assume prices stabilize in real terms at $6, $9 and $11/MMBtu in the U.S., Europe and the Asia respectively.

For comparison, the International Energy Agency’s New Policies scenario forecasts that 57 percent of power capacity added during this period will be from renewable resources (including large hydro).

The study predicts that wind and solar will take up the largest shares of new power capacity added in terms of GW by 2030, accounting for 30 percent and 24 percent respectively. By 2030 renewable technologies will account for 50 percent of new power generation capacity installed around the world, up from 28 percent in 2012. In terms of power produced, the share of renewables will increase from 22 percent in 2012 to 37 percent in 2030.

The New Normal scenario’s outlook for global biofuel production in 2030 is that it will increase by around 200 percent from 120 billion litres in 2012, to 370 billion litres in 2030.

The future under the other two scenarios look somewhat different, although in both cases, there will be further growth in renewable energy demand. Capital requirements for renewable energy could reach $880 billion by 2030, under the Barrier Busting assumptions ($9.3 trillion cumulative from 2013). This would require an additional $2 trillion (22 percent increase) invested in supporting infrastructure such as long distance transmission systems, smart grids, storage and demand response.

Under a more pessimistic view of the world, in the Traditional Territory scenario, renewable energy investment requirements are projected to be $470 billion by 2030 ($6.1 trillion cumulative).

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