These Three Trends Are Redefining the Cost of Energy Everywhere

(Bloomberg) — Michael Liebreich, the founder of Bloomberg
New Energy Finance, set out the trends upending the global
energy markets and ushering in what he termed an “age of
plenty.” He said:

1. Cheap fossil fuels are here to stay because production
costs are tumbling.

2. Intermittent renewables will dominate electricity supply
by 2040, with huge challenges for grid managers.

3. Electricity demand is flattening out, losing its link
with economic growth.

The implication is that energy will be plentiful for years
to come, Liebreich said in a presentation Tuesday at the
research group’s conference in London. Oil will linger closer to
$50 a barrel than to $90, and renewables will gain market share,
he said.

“There has been an enormous amount of innovation in the
unconventional gas industry,” Liebreich said. “The cost
reductions have been similar to what’s happening in solar.”

Here’s what he identified:

The cost of shale gas is plunging rapidly …

… and each well is producing more.

Renewables costs are falling to the level of fossil fuels:

The chart above shows forecasts for the cost of building
and operating a new power plant in each technology. Rising costs
for running a coal plant and falling solar panel prices mean
photovoltaics may rival fossil fuels on price within 10 years,
according to Bloomberg New Energy Finance. 

Renewables will grab market share everywhere:

Electricity demand is flat, falling short of forecasts:

All those LED light bulbs are starting to have an impact.
Energy-efficient technologies of all kinds are squeezing
electricity demand. The chart above shows Australia’s
experience. Actual power consumption is shown by the green line.
The gray lines show demand forecasts made each year since 2010
by regulators, and the blue line represents their most recent
forecast.

Together, the trends may hit coal hardest, as curbs on
pollution drive up the cost of burning the dirtiest fossil fuel.

“There’s plentiful supply and weak demand,” Liebreich said.
“The price of coal is on a gentle glide path toward the shutting
of large amounts of capacity.”

To contact the reporter on this story:
Reed Landberg in London at
landberg@bloomberg.net

To contact the editors responsible for this story:
Reed Landberg at
landberg@bloomberg.net
Alex Morales, Will Wade

About Bloomberg New Energy Finance

Bloomberg New Energy Finance (BNEF) is an industry research firm focused on helping energy professionals generate opportunities. With a team of 200 experts spread across six continents, BNEF provides independent analysis and insight, enabling decision-makers to navigate change in an evolving energy economy.
 
Sign up for our weekly newsletter →

Want to learn how we help our clients put it all together? Contact us