By 2050, artificial intelligence is expected to have progressed in leaps and bounds, roads could be filled with autonomous cars, and Australia’s population may be as high as 40 million people.1 How will we power this world? The answer will include wind and solar, which could provide nearly half of the world’s total electricity by 2050.2
According to the 2019 New Energy Outlook from Bloomberg New Energy Finance (BNEF), this ’50 by 50’ ratio is expected to put the power sector on a path that is compatible with limiting temperature increases to 2 degrees, as per the recommendation of the Intergovernmental Panel on Climate Change (IPCC).
BNEF anticipates that global solar capacity is likely to increase from 532 gigawatts (GW) at the end of 2018 to 7.6 terawatts (TW) by 2050 – of which, some 27% is expected to be small-scale or rooftop PV and 73% utility-scale PV, defined as having a capacity greater than 1 megawatt (MW). But what are the drivers behind this growth to 2050?
To meet the projected 62% increase in electricity demand by 2050, the world’s generating capacity is required to almost triple, meaning new investment in energy of some $13.3 trillion – $4.2 trillion of which is projected to be in solar alone.3
Renewables are now the cheapest energy sources for more than two-thirds of the world, and by 2030 are expected to undercut existing coal and gas in almost every part of the world.4 Technological innovation, economies of scale and manufacturing experience have all contributed to the falling costs of renewables. The price of solar PV has fallen 85% since 2010, with the cost of an average PV plant anticipated to drop a further 63% by 2050 on a dollar-per-megawatt-hour basis.5
Given the current cost-competitiveness of solar and wind plants, together with their reducing cost trajectories, BNEF does not anticipate that coal and gas will be competitive options in 2050 as a source of bulk new energy.6
“Renewables are now the cheapest energy sources for more than two-thirds of the world…”
Aside from cost competitiveness, renewable technologies like solar are the product of competitive, large-scale manufacturing processes that have achieved innovations in production efficiency, materials and energy use.7
These innovations have contributed to the rapid fall in the price of crystalline silicon modules since the mid-1970s (from $80 per watt to just $0.27 per watt),8 representing an estimated learning rate of 28.5%. Prices are set to fall further in 2019 to an average of roughly $0.25 cents as more efficient monocrystalline silicon becomes the dominant module technology.9 With lower production costs10 monocrystalline silicon has the potential to dominate the market by 2025.11
Other developments in panel technology also promise significant boosts in efficiency, such as the introduction of bi-facial modules. These panels use the back-side of the module to capture energy reflected off the ground, and can improve performance by as much as 10%, depending on the ground cover.12
In addition, solar tracking systems – which are currently widely used across the United States and can boost production by between 10% and 20% – have grown in popularity and, thanks to investments in new algorithms and machine learning, could soon deliver even greater production benefits to solar PV.13
In contrast, coal plants are not expected to become more efficient. With the global slowdown in coal additions, driven by government policy and investors’ unwillingness to finance new projects, accumulating the requisite experience to develop and design new and better coal assets will be difficult.14
Looking ahead, BNEF analysis suggests that cheap renewables and batteries could very well lead the way to electricity decarbonisation, which is currently the largest source of CO2 emissions – accounting for 41% of the world’s total.15 However, to keep the climate within or below two degrees of warming as outlined by the IPCC, all energy sectors around the world will need to move towards decarbonisation within the next three decades.16
While there may still be a way to go in the transition towards renewables, New Energy Solar is diligently managing its portfolio of utility-scale solar power plants, all of which are expected to be operational by year’s end, to contribute 772MWDC of renewable power to the transition.