News ID: 153133
Published: 1038 GMT June 13, 2016

World nears peak fossil fuels for electricity

World nears peak fossil fuels for electricity

The way we get electricity is about to change dramatically, as the era of ever-expanding demand for fossil fuels comes to an end — in less than a decade. That's according to a new forecast by Bloomberg New Energy Finance that plots out global power markets for the next 25 years.

Call it peak fossil fuels, a turnabout that's happening not because we're running out of coal and gas, but because we're finding cheaper alternatives. Demand is peaking ahead of schedule because electric cars and affordable battery storage for renewable power are arriving faster than expected, as are changes in China's energy mix.

Here are some massive shifts coming soon to power markets.

 

1. There will be no golden age of gas

Since 2008, the single most important force in US power markets has been the abundance of cheap natural gas brought about by fracking. Cheap gas has ravaged the US coal industry and inspired talk of a ‘bridge fuel’ that moves the world from coal to renewable energy. It doesn't look like that's going to happen.

The cost of wind and solar power are falling too quickly for gas ever to dominate on a global scale, according to BNEF. The analysts reduced their long-term forecasts for coal and natural gas prices by a third for this year's report, but even rock-bottom prices won't be enough to derail a rapid global transition toward renewable energy.

"You can't fight the future," said Seb Henbest, the report's lead author. "The economics are increasingly locked in." The peak year for coal, gas, and oil: 2025.

 

2. Renewables attract $7.8 trillion

Humanity's demand for electricity is still rising, and investments in fossil fuels will add up to $2.1 trillion through 2040. But that will be dwarfed by $7.8 trillion invested in renewables, including $3.4 trillion for solar, $3.1 trillion for wind, and $911 billion for hydro power.

Already in many regions the lifetime cost of wind and solar is less than the cost of building new fossil fuel plants, and that trend will continue. But by 2027, something remarkable happens. At that point, building new wind farms and solar fields will often be cheaper than running the existing coal and gas generators. "This is a tipping point that results in rapid and widespread renewables development," according to BNEF.

Flexible capacity, such as technology, primarily large batteries for the home and grid, smooths out the peaks and valleys inherent to wind and solar power. By 2028, batteries will be as ubiquitous as rooftop solar is today.

 

3. Electric cars rescue power markets

In this discussion of peak fossil fuels, the focus is on electricity generation, not transportation fuels. For cars, peak oil demand will take a bit more time. But the sudden rise of electric cars is on the verge of disrupting oil markets as well, and that has profound implications for electricity markets as more cars plug in.

In fact, electric cars couldn't come at a better time for developed economies. Take Germany, for example, where increases in efficiency mean that without electric cars, demand for electricity would be headed toward a prolonged and destabilizing decline. Electric vehicles (EVs) will reverse that trend, according to BNEF.

The demand for battery capacity for cars will soar and EVs will make a difference to power demand worldwide. The adoption of electric cars will vary by country and continent, but overall they'll add eight percent to humanity's total electricity use by 2040, BNEF found.

   
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