New Energy Outlook 2018

NEO is our annual long-term economic analysis of the world’s power sector out to 2050.

NEO is our annual long-term economic analysis of the world’s power sector out to 2050.

Overview

Focused on the electricity system, our New Energy Outlook (NEO) combines the expertise of over 65 market and technology specialists in 12 countries to provide a unique view of how the market will evolve.

What’s new in the 2018 NEO? 

What sets NEO apart is that we focus on technology that is driving change in markets and business models across the sector, such as solar PV, onshore and offshore wind and battery technology. In addition, we put special focus on changing electricity demand, electric vehicles, air-conditioning, and the growing role of consumers. NEO includes our price forecasts for coal, oil and gas around the world, and assesses the impact of the energy transition on fossil fuel demand and materials.

Each year we aim to make a number of changes to NEO to continuously improve the completeness and complexity of our analysis. In 2018, we have included the following in the client report:

  • Extended our outlook from 2040 to 2050.
  • Expanded our new-build algorithm to include utility-scale lithium-ion batteries – both stand-alone and paired with renewables – for energy arbitrage as well as peaking capacity.
  • Expanded our assessment of new air-conditioning load to include Brazil, Indonesia, India, Mexico, Malaysia, Philippines and Thailand.
  • Added chapters on materials demand, market design and coal phase-out scenarios.
  • Updated our PV and wind cost and lithium-ion battery cost curves with 2017 data.
  • Updated our comparative cost of energy analysis to better capture difference between technologies and the cost of bulk electricity and flexibility, and enhanced the digital experience when interacting with our data models.

In addition, we have updated a number of the proprietary models central to this forecast, including: our EV and small-scale solar PV and storage consumer uptake models, and our electricity demand fundamentals model.

While BNEF clients get access to the full NEO report including the content above, an excerpt of the findings in a free public report.

“Wind and solar are set to surge to almost “50 by 50” – 50% of world generation by 2050 – on the back of precipitous reductions in cost, and the advent of cheaper and cheaper batteries that will enable electricity to be stored and discharged to meet shifts in demand and supply.  Coal shrinks to just 11% of global electricity generation by 2050.”

Highlights

1

"50 by 50"

Cheap renewable energy and batteries fundamentally reshape the electricity system. Batteries boom means that half of the world’s electricity by 2050 will be generated from wind and solar. 

2

PV, wind and batteries trifecta.

The cost of an average PV plant falls 71% by 2050. Wind energy is getting cheaper too, and we expect it to drop 58% by 2050. PV and wind are already cheaper than building new large-scale coal and gas plants. Batteries are also dropping dramatically in cost. Cheap batteries enable wind and solar to run when the wind isn’t blowing and the sun isn’t shining.

3

Coal is the biggest loser in this outlook.

Coal will shrink to just 11% of global electricity generation by 2050, from 38% currently.

 

4

Gas consumption for power generation increases only modestly out to 2050

despite growing capacity, as more and more gas-fired facilities are either dedicated peakers or run at lower capacity factors helping to balance variable renewables, rather than run flat-out around-the-clock. Gas use declines dramatically in Europe, grows in China and picks up materially in India beyond 2040.

5

Electric vehicles add around 3,461TWh of new electricity demand globally by 2050, equal to 9% of total demand.

Time-of-use tariffs and dynamic charging further support renewables integration: they allow vehicle owners to choose to charge during high-supply, low-cost periods, and so help to shift demand to periods when cheap renewables are running.

High-level findings of NEO 2018 are available in a free public report:

Click to read New Energy Outlook 2018

BNEF clients can access the full report, its breakdown by technology and region, as well as the underlying Excel data and previous editions. Go to client page or access on the Bloomberg Terminal.

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Meet the authors

Seb Henbest

NEO Lead Author

@SebHenbest

Elena Giannakopoulou

NEO Lead Analyst

@ElenaGiannakop

Matthias Kimmel

NEO Analyst

@matthiaskimmel

Amy Grace

Americas

Jonas Rooze

Europe

@JonasRooze

Sophie Lu

Asia Pacific

@SLEnergy

Tom Harries

Wind

Jenny Chase

Solar

@solar_chase

Logan Goldie-Scot

Storage

@LoganGoldieScot

Richard Chatterton

Fossil Fuels

Andrew Turner

Modelling

 

In close collaboration with:

Ian Berryman (Modelling), Xiaoting Wang (Solar), Andreas Gandolfo (Europe) , Tifenn Brandily (Energy Economics), Leonard Quong (Australia), Roseline Polle (Modelling), Yvonne Liu (China), Atin Jain (India), Josh Danial (US), Martin Tengler (Japan), Luiza Demoro (Latin America), David Kang (South Korea), Kobad Bhavnagri (Australia), Abishek Rohatgi (South East Asia), Colin McKerracher (Electric Vehicles), Miho Kurosaki (Japan), Hugh Bromley (Solar), Salim Morsy (Electric Vehicles), Nick Steckler (US), Colleen Regan (Canada), James Ellis (Latin America), Chris Gadomski (Nuclear), John Twomey (Gas), Thomas Knight (Europe), Ashish Sethia (Asia Pacific), David Hostert (Wind), James Sprinz (Decentralized Energy), Nikolas Soulopoulos (Electric Vehicles), Jane Swarbreck (Solar), Tom Rowlands-Rees (Decentralized Energy), Katherine Poseidon (MENAT), Shantanu Jaiswal (India), Het Shah (Gas), Ethan Zindler (Americas), Albert Cheung (Energy Economics), and many other analysts from BNEF’s 16 offices around the world.

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