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Renewable energies will be the future of the energy sector

23 June 2018 to 13: 22
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Renewable energy
Renewable energy

Coal will be increasingly excluded from the power generation market over the next three decades as renewable energy costs fall and technology improves the flexibility of grids around the world.

This is the conclusion of a report by Bloomberg New Energy Finance, which estimated that around US$ 11,5 trillion in investments will be destined to electricity generation in 2050. Of this total, 85%, or US$ 9,8 trillion, will be earmarked for wind and solar power and other zero-emissions technologies such as hydropower and nuclear, the London-based research firm said.

Better batteries, which allow grid managers to store energy for times when there is no wind or sun, will allow utilities to take advantage of falling costs for solar panels and wind turbines. As natural gas plants have the ability to start operating in a few minutes, most distributors that want guaranteed generation capacity will opt for this fuel.

“Coal is likely to be the biggest long-term loser,” said Elena Giannakopoulou, head of energy economics at BNEF. “It is surpassed in cost by wind and solar energy in generating large amounts of electricity and in flexibility by batteries and gas, which is why the electrical system of the future will be reorganized around renewable and cheap sources.”

BNEF's projections contrast with the most optimistic scenario of the International Energy Agency for electricity generation, predicting that clean energy and fossil fuels will reach parity, with 50% of the market for each, in 2025. The institution's central projection Paris-based puts the two sides on an equal footing in 2040 and points out that fossil fuels will account for about two-thirds of generation by then if governments don't take additional steps to tighten regulation, says the IEA.

BNEF's outlook shows that renewables will likely end up dominating power generation by 2050, taking up roughly the same share of the sector as natural gas and coal by then.

BNEF's scenario, established in a 150-page annual report drawn from the expertise of 65 analysts from around the world, is based on country-by-country modeling for the evolution of the electricity market and cost projections of different generation technologies power.

Gas  

Gas will retain much of its market share, BNEF says. The nature of the plants that will be built in the future will lean towards high-end units, which can be turned on and off quickly by energy distributors, and away from the base plants, which tend to operate 24 hours a day. BNEF projects that power utilities will burn much less coal over time.

Global warming 

Coal's decline won't be enough to drastically change the landscape of gradual rise in global temperatures above the 2 degree Celsius threshold since pre-industrial times, which has become the climate target of the United Nations.

“Even if we shut down all the world's coal plants by 2035, the energy sector would still be moving above the climate-safe trajectory, burning a lot of gas without controlling emissions,” said Matthias Kimmel, energy economist at BNEF.

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