New Energy Outlook 2019, the renewables boom

Last May the editor of "The Guardian" newspaper Katherine Viner invited the paper’s journalists to change the vocabulary they used to discuss the climate. This involved replacing the phrase “climate change” with “climate crisis” or “climate emergency”, while instead of “global warming” the newspaper is to use “global heating”. The objective is to communicate to readers the urgency of a dramatic problem that has yet to be solved. “Climate crisis” are the same words of alarm sounded last year by UN Secretary-General António Guterres and borrowed by members of the movement gathered around the young Swedish activist Greta Thunberg.

For some years now the issue of the changing climate has also been at the centre of the most important analyses of the future energy scenario, and while the consequences of the effects of fossil fuels are now a shared certainty, the current pace of development of renewables is regarded as a necessary but not always sufficient condition for safeguarding our planet’s future.

“It’s not enough” was also a theme of the New Energy Outlook 2019 by Bloomberg NEF (New Energy Finance), one of the most authoritative surveys of the global energy market from now to 2050, presented at the Enel Auditorium on 10 July. This year’s study also included a special report on the e-mobility boom.

As our Group’s CEO Francesco Starace explained in his opening address, the report confirms the ever-increasing competitiveness of renewable sources and the gradual replacement of thermoelectric energy. But that’s not enough if we want to bring rising global temperatures under control by 2050. Politicians, regulators and industry leaders must decide which direction to take, as there is still much ground to cover.

The long road to decarbonisation

There is no shortage of positive signs regarding decarbonisation, as confirmed by the slides shown by Elena Giannakopoulou, Head of Energy Economics at BNEF, and Andreas Gandolfo, Senior Associate, who focussed on the European scenario.

By 2050 solar and wind power will supply almost half the grid’s electricity (“50 by 50” in the words of BNEF). Thermal generation will collapse and in mid-century it will supply only 21% of electricity. Installed capacity will move from today’s 57% from fossil fuels to two-thirds from renewables.

Naturally, Europe will lead the energy transition – by 2050 renewables will supply 92% of the continent’s electricity needs, 43% in the US, 62% in China and 63% in India. A 95% reduction of CO₂ emissions will be achieved in Europe, where coal will become obsolete in around 2043. In China, peak emissions will occur in 2027 and then fall, while the US will see a 54% reduction in emissions by 2050.

However, the BNEF warns that after 2030 this trend may not be enough to limit temperature rise to under 2°C, the threshold above which climate change could have devastating consequences. The reason is that the growing world population and rising GDP in non-OECD countries will cause electricity demand to almost double, with a growth rate of 93% between 2018 and 2050. This demand cannot be met by clean energy at its current rate of development, and according to an alternative scenario put forward by Bloomberg, it would require the development of further zero-emission technologies. Alternative political decisions would also be needed, but here the analysts don’t go into detail. “We can’t predict policy choices,” said Giannakopoulou in her closing remarks.

Renewables and batteries, falling costs

BNEF’s slogan is “Disruption is an opportunity”, and the technology surrounding renewables confirms this. New wind and solar generating plants already cost less than traditional power plants, and in more than two-thirds of the world they also cost less than new coal and gas installations. The cost of wind power has fallen by 49% since 2010, and photovoltaic is now 85% cheaper. The report predicts costs will continue to fall by a further 63% (solar) and 50% (wind) by mid-century.  

Lithium ion batteries too are becoming cheaper: prices have fallen by 85% since 2010 and are expected to fall by another 65% by 2030. The report also highlights the active role played by consumers, now described as “the new part of the energy system”. In 2050 domestic photovoltaic power will make up 12% of total installed generation capacity, while behind-the-meter batteries will be responsible for 40% of overall market development. The flexibility provided by storage and demand response technology will help to integrate renewables into the grid.

Electrification of heating and transport will make a decisive contribution to lowering CO₂ emissions. “But the challenge is the scale,” warns the Bloomberg report, which says that development in these two sectors could double demand for electricity within the next 10 years and require an installed generation capacity three times greater than that available in 2018.

E-mobility is even more competitive

This year the BNEF report included a special study on e-mobility around the world. According to the Electric Vehicle Outlook 2019 there are now over 5 million e-vehicles on our roads and market shares are rising. The report predicts that by mid-century the figure could exceed 500 million. China is driving market growth – by the mid-2020s seven out of every 35 million cars sold in China will be e-cars. In 2025 or thereabouts the price of fully electric cars will come into line with the price of traditional vehicles, and in 2040, 57% of new vehicles purchased will be e-cars. Public charging infrastructure are even more extensive. The number of charging stations grew by 20% in 2018 with a genuine boom in China (reaching a total of 304,000 charging points) and Europe (190,000), with the USA unchanged at 61,000.

E-mobility will also develop as a result of car sharing, moving from the current figure of 5% of the total number of kilometres travelled every year in Uber or MyTaxi vehicles to 19% in 2040, a doubling in absolute terms. Demand for lithium ion batteries will take off, driven by the fall in price from 1,160 dollars per kWh in 2010 to today’s figure of 176 dollars, and this price is set to drop even further.

In short, technology will lead the energy transition, driving costs ever lower and making mobility increasingly sustainable. Whether this is enough for the climate remains to be seen.