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Coal and Solar Energy Are Neck-and-Neck in the Developing World

In its annual energy outlook, Bloomberg New Energy Finance projects big gains in renewable energy production around the world, but coal will remain a big source of power.
June 24, 2015, 9:15pm
Photo by Abed Al Hashlamoun/EPA

Twenty-five years from now, more than half of the world's power-generating capacity will come from sources that emit no carbon dioxide, a new report from Bloomberg New Energy Finance (BNEF), an energy analysis group, projects.

The report analyzes the global energy landscape through the year 2040 and forecasts huge growth in electrical plant construction in the developing world. Along with it, they predict a boom in new coal plants as well as investments in new renewable energy, especially solar. The world will invest over $12 trillion in the energy sector, the report says, and much of that will be spent on renewable energy.

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Right now, the world gets about two-thirds of its power from fossil fuels, but by 2040 coal, oil, and natural gas will account for 44 percent of global power generation, the report says. Renewable energy, including tidal, wind, and solar power, will likely account for 46 percent, and the last ten percent will come from nuclear generation.

While the report says renewable energy sources will account for increased electrical capacity in the developed world, the real action will happen in the developing world, where coal will compete with solar energy, which is becoming cheaper. Worldwide, countries will invest $3.7 trillion in solar, the report says.

Countries in the developing world are extremely power-hungry, said Elena Giannakopoulou, co-author of the report. "They will need all the power that they can get," she told VICE News. "The good news is that the economics of renewables make sense already and they will become more and more competitive."

On the other hand, the bad news is that coal remains cheap. India, for example, has good targets for solar power, and yet adds a coal plant per week, said Giannakopoulou. "In the developing countries, we see coal and solar neck-and-neck in terms of capacity additions." That's an "impressive trend," she said.

"We see solar booming worldwide," she added. Solar costs have dropped substantially and in rich countries like the United States, the United Kingdom, and Germany more consumers are expected to install rooftop solar panels. BNEF predicts that developed nations within the Organization of Economic Cooperation and Development will need less power in 2040 than they did in 2014.

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Meanwhile, the developing world is ripe for solar-energy installations on a larger scale.

Not only will renewables, particularly solar power and on-shore wind power, eventually become less expensive to build than running an existing coal plant, Giannakopoulou said, renewables also offer a way to bring power to people in the developing world who lack it now.

Like the way cell phone networks have leapt over landlines in some corners of the globe, renewables and decentralized electrical grids can do the same in places like India. "We will see developing countries shifting to microgrids and probably this is going to be cheaper and faster [than installing traditional big power grids], and renewable energy is expected to have a significant contribution to that."

While the predicted boom in solar energy and other renewables is good news for clean-energy advocates, the report also warns that carbon will keep spewing into the atmosphere for years to come. Carbon dioxide emissions from the power industry will keep rising for the next 19 years, the report says, and in 2040, emissions from that sector will be 13 percent higher than they are now.

Alex Perera, the acting director of the global energy program at the World Resources Institute, says that they agree with the report's conclusions. There are three reasons that renewable energy is looking like a more attractive option for countries in the developing world, he said: Governments in places like India and China are increasingly committed to renewables, populations are feeling the effects of pollution from dirty fossil fuels, and the economics behind renewables are starting to make more sense.

The challenge, Perera said, is getting the utility markets aligned to make use of renewable energy.

"Markets that are not quite setup to take full advantage of the cost declines that we've seen in renewables," he told VICE News. "They're still set up to take advantage of traditional resources." That, he says, is where the opportunity lies for making use of renewable energy.

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