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ACWA Power

150MW Nooro III CSP Project

The 150 MW NOORo III CSP Project is a greenfield IPP to be developed as the third project for the Moroccan Agency for Solar Energy (MASEN) in a series of several planned developments at the Ouarzazate Solar Complex. [Read more]

 

 

NOORo III, Morocco NOV 16

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NOORo III, Morocco NOV 16 (1)

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200MW NOORo II CSP Project

The 200 MW NOORo II CSP Project is a greenfield IPP to be developed as the second project for the Moroccan Agency for Solar Energy (MASEN) in a series of several planned developments at the Ouarzazate Solar Complex. [Read more]

 

Fitting Solar Panels at NOORo 2

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Under panels, NOORo 2

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Business Breakfast: Enerwhere & Neutral Fuels

Daniel Zywietz, CEO of Enerwhere and CEBC board member, joins Dubai Eye’s Business Breakfast together with Karl Feilder from Neutral Fuels to talk about how they are looking to raise money through crowdfunding. Both are clean energy companies – Enerwhere, the distributed solar utility for commercial & industrial customers and Neutral Fuels, the biodiesel producer, and are hoping to raise a million dollars in equity funding through Eurecca.com.

 

Mena Region’s Movement Toward a Clean Energy Future

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Established in 2008, the Clean Energy Business Council (CEBC) is a non-profit organization with a mission to establish a leading forum for companies and government entities focused on the development and deployment of clean energy in the MENA region. The CEBC seeks to promote the clean energy industry and inform the wider community of the benefits of the sector in the region. In collaboration with government agencies and stakeholders, the CEBC develops policies and regulations in this quickly developing and exciting sector. Strategic alliances are a key initiative, partnering with research institutions, international associations, media and others to drive the delivery of clean energy solutions for MENA.

 

The Arabian Gulf is an ideal place to generate solar energy and with over 3,500 sunshine hours per year, Dubai’s climatic conditions are amongst the world’s best for generating photovoltaic energy. However, even when the costs of solar panels fell dramatically in 2012, the uptake in the region was slow. Some of the objections that CEBC experienced were technological (e.g. solar does not work due to dust in the desert) and some were related to both the technology and the economics (e.g. solar is only available during the day. Why does that make sense for me?). Due to a supportive policy environment in the UAE including the contracted 1000MW at Mohammed Bin Rashid Al Maktoum Solar Park, many of these reservations have been disproved and gradually the region is warming up to solar. However, you still do not see as many solar panels as you would expect driving through the UAE. This is particularly the case in commercial and industrial sectors.

 

With Dubai and Abu Dhabi’s new net-metering programmes, this is starting to change. CEBC has recognised that this often an educational issue as to the benefits of solar and have invested large amounts of time and energy to change the mindset of businesses and encourage higher adoption of rooftop solar. CEBC has one eye to the future and recognises that storage is the next great revolution and as the economics get more and more attractive, a future with only renewables and storage becomes increasingly possible.

 

Daniel Zywietz, Enerwhere CEO, is a current Board Member and past Deputy Chair of the CEBC. Dubai-based Enerwhere has been on the forefront of the solar industry since 2012 and continues to bring innovative energy solutions to non-traditional solar markets across the UAE. The company is a market leader in the UAE’s grid-connected roof-top market, offering fully-financed solar rooftop solutions under DEWA’s Shams Dubai net metering initiative. However, it is also one of the only companies focused on the off-grid market where there is no regulatory support and where the technology and finance options for solar energy to date have not been so attractive.
Enerwhere’s award-winning technology and proven business model brings the benefits of solar energy to off-grid markets such as remote labor camps, resort islands, construction sites, mines, logistics and other industrial settings traditionally powered by diesel generators. Enerwhere is the world’s first provider of MW-scale transportable solar solutions.

 

In the off-grid sector, Enerwhere sells energy as a service, leasing their cleaner energy solutions requiring zero upfront client investment. Enerwhere has developed a solar-diesel hybrid system with a proprietary hybrid management technology to provide clients with reliable, high quality energy 24 hours per day. Using high-resolution remote monitoring technology, Enerwhere measures energy loads and efficiencies on a 30 second frequency allowing them monitor production, add solar capacity as energy demand increases, manage demand and to optimize power plant efficiency. Enerwhere’s transportable system means that it is one of the only companies in the world that can deploy and re-deploy commercial-scale solar systems in a matter of days. Enerwhere has strong in-house engineering capabilities and technical teams to ensure quick response times, high quality system delivery and excellent after sales service.
In this rapidly changing technology environment, Enerwhere is constantly innovating to expand the applications for solar in the commerciaV industrial sector, lower costs, and keep ahead of its competition. Some of its ‘first in the region’ projects include: -Ballasted, transportable solar mounting structures, enabling the use of solar PV in temporary power applications without the need for heavy foundations or time-consuming permitting.

 

  • Rugged, high-resolution yet cost-effective data loggers allowing Enerwhere to create detailed energy demand profiles of customer installations when electricity bills are not available.
  • High-power battery solutions for peak shaving of industrial loads like cranes, crushers, pumps, etc., reducing and ultimately eliminating the need for diesel generation. The introduction of energy storage represents a significant opportunity to increase solar deployment in the construction & industrial sectors in the region, which are so far lagging in adoption of solar technology.
  • Ultra-high efficiency solar air-conditioning solutions to reduce the energy demand in camps & construction site offices in the hot summer months.
  • Robotic cleaning solutions to mitigate the impact of dust of PV power generation and reduce the need for manual cleaning under the Middle East’s harsh desert climate.
  • Ballasted trackers to provide steady power to large industrial and mining loads.
  • Electric boats to reduce the fuel costs & environmental foot print of island resort operations.

In the off-grid space, understanding your market and their energy consumption is key. Enerwhere’s CEO, Daniel Zywietz, has imbued the company with a strong focus on data collection and analysis. His unwavering focus has driven Enerwhere to locate, map, measure and analyze current market opportunities, identify new market segments, then to deploy resources accordingly across the region. While continually investing in new technologies and energy efficiency solutions, Enerwhere has also invested significantly in its team. With its current headcount approaching 50, Enerwhere has offices in Dubai and Abu Dhabi in the UAE, and Kano in northern Nigeria with plans to expand to additional countries in the near term. Enerwhere’s philosophy of continually developing new, scalable energy solutions, supported by a strong team and corporate leadership, will allow Enerwhere to be a significant player in the region’s movement toward a green energy future.

 

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Enerwhere Opens Opportunity for Crowdfunding through Eureeca

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Enerwhere, one of our partner members, is the first solar company in the Middle East that is enabling any member of the public to invest in and benefit from the growing renewable energy market. Through Eureeca, a crowd funding platform, Enerwhere is raising finance to deliver on its near-term project pipeline.  Enerwhere has spent 5 years perfecting the technology and business model to replace hundreds of MW of diesel generation in the Middle East construction, oil & gas and hospitality sectors with solar hybrid plants. Enerwhere is also one of the most successful developers to date in the on-grid Dubai Shams net-metering programme. The targeted $1 mln. round is the largest crowd funding round the platform to date, and has attracted over $700K in expressions of interest so far, ahead of the official launch in July. Enerwhere will use the funds to buy solar assets to support the company’s ongoing triple-digit revenue growth in 2017 and beyond.

 

For more information on Enerwhere and to register your interest in this unique opportunity, click here: investinenerwhere

40,000 طالب من الإمارات يشاركون في المسابقات المدرسية حول الاستدامة

  • مدرسة GEMS مدرستنا الثانوية، الورقاء‘ تفوز بجائزة مسابقة مجلس صناعات الطاقة النظيفة عن فلم ’حماية الكوكب‘

 دبي، الإمارات العربية المتحدة، 28 يونيو 2017: شارك أكثر من 40,000 طالب من 30 مدرسة في الإمارات العربية المتحدة في المسابقة المدرسية السنوية 2017 التي ينظمها مجلس صناعات الطاقة النظيفة، والتي اختتمت فعاليتها في 19 يونيو بحفل توزيع الجوائز الذي تخلله تكريم كل من مدرسة ’GEMS مدرستنا الثانوية، الورقاء‘ بالجائزة الكبرى التي تبلغ 5,000 درهم والمخصصة لدعم مبادرات الاستدامة في المدرسة، وطلاب المدرسة الأمريكية العالمية الذين فازوا بجائزة التصويت وفق اختيار الطلاب البالغة 3,000 درهم.

هذا وتمحّورت المسابقة في دورتها لهذا العام  على الأفلام القصيرة، حيث حظيت المدارس بفرصة تقديم حتى 3 أفلام لا تزيد مدة كل منها عن 5 دقائق بإطارٍ عام يتحدث عن ’حماية كوكب الأرض‘، وتم اختيار الفلم الفائز لنهجه الشامل في تجسيد حس المسؤولية للوصول إلى مستقبل مستدام، ولتركيزه على إمارة دبي وحديثه عن كافة الجهات ذات الصلة من مسؤولين حكوميين وعمال ووصولاً إلى عائلات الطلاب المشاركين، حيث استعرض الفلم الجهود المبذولة للتوفير في استهلاك الماء والكهرباء وإعادة التدوير لجعل العالم أكثر مراعاةً للبيئة.

يذكر أن مجلس صناعات الطاقة النظيفة يعمل على تعزيز الوعي واعتماد الطرق النظيفة لانتاج الطاقة في المنطقة لاسيما في الإمارات، التي تضع حكومتها أهدافاً طموحة للوصول إلى انتاج 44% من الطاقة من مصادر نظيفة بحلول العام 2050، وذلك من خلال الاستثمار في أشكال متعددة من مصادر الطاقة المتجددة وخلق مزيج متوازن في مصادر الطاقة الوطنية، ومثل هذه المبادرات تسهم في تثقيف الأجيال القادمة حول أهمية تبني ممارسات مستدامة ضمن كافة شرائح المجتمع.

وبهذه المناسبة، شدد ستيفان لي جنتل، الرئيس التنفيذي لمجلس صناعات الطاقة النظيفة على دور الشباب في نهضة الأمم، ونوّه إلى أن اتباع نهج مستدام للطاقة هو سبيل تحقيق الازدهار والرفاهية لمستقبل كافة دول العالم. وأضاف: “إن مثل هذه المسابقات والفعاليات التي تشجّع على اتباع نهج شامل لحماية الموارد تسهم بشكل فعال في دعم مبادرات التعليم الوطنية، ومن دواعي سرورنا أن نشهد مشاركة أكثر من 40,000 طالب يعملون يداً بيد لتسليط الضوء على ما يمكن القيام به لتطوير المجتمعات وجعل العالم أكثر استدامة.”

من جانبه، قال سانجيف جولي، مدير مدرسة ’GEMS مدرستنا الثانوية، الورقاء‘:” تعتبر المدرسة المكان الأمثل لتعزيز إدراك الطلاب بأهمية موارد الطاقة في حياتنا وضرورة الحفاظ عليها للأجيال القادمة، ونحن في مدرسة ’GEMS مدرستنا الثانوية، الورقاء‘ محظوظون بطلابٍ يقدرون ذلك ومدرسين يكرسون أنفسهم لمساعدة الطلاب من خلال إلهامهم والعمل معهم.” وأضاف: “يسرنا المضي قدماً في هذه الشراكة القوية مع مجلس صناعات الطاقة النظيفة، وهو ما يوفر مجالاً واسعاً من المبادرات التي تتيح للطلاب فرصة تعلّم أهمية التوفير باستهلاك الموارد.”

كما ضمّت فعاليات البرنامج مبادرات توعوية بدعم من مركز الشيخ محمد بن راشد للتواصل الحضاري، وورش عمل بالتعاون مع مبادرة ’الطاقة الشمسية في مدارس دبي ’ Dubai Solar Schools‘، من ’ أركيتالي غرين أنرجي د م س‘ بهدف مساعدة المدارس على خفض فواتير الكهرباء وبصمتها الكربونية، حيث التقى ديفيد بروفينزاني، المدير العام لشركة أركيتالي بالطلاب وفريق الإدارة على مدار العام وذلك لتعزيز وعيهم بالطاقة الشمسية ومناقشة المبادرات حول تركيب ألواح الطاقة الشمسية في مدارس الإمارات العربية المتحدة.

تجدر الإشارة إلى أن هذه المسابقة السنوية هي جزء من مبادرة مجلس صناعات الطاقة النظيفة ’البرنامج المدرسي للحماية البيئية‘ والتي تهدف إلى تثقيف الطلاب والمدارس بالمزيد من المعرفة حول الطاقة النظيفة وأهميتها في المنطقة.

Interschool Sustainability Competition Engages over 40,000 Students across the UAE

GEMS Our Own High School Al Warqa’a wins Clean Energy Business Council’s 2017 Interschool Competition with ‘Protect the Planet’ Film

 

Dubai – UAE, 28 June 2017: More than 40,000 students from 30 schools across the Emirates participated in the 2017 edition of the Clean Energy Business Council’s (CEBC) annual UAE Interschool Competition. GEMS Our Own High School Al Warqa’a were awarded this year’s grand prize of AED 5,000 to support sustainability initiatives at the school, which was given out during an awards ceremony at the school on 19 June. Winners of the Students’ Choice voting prize of AED 3,000 were the students of Universal American School.

 

This year’s competition centered on short films, with all participating schools given the option to submit up to three films under than five minutes, under the theme ‘Protect the Planet’. The winning film was selected for its holistic approach, and for portraying a sense of ownership for a sustainable future. Focusing on Dubai as a whole, the film involved everyone from government officials, to laborers, to the students’ own families, showcasing efforts to conserve water and electricity, recycle and make the world a more environmentally friendly place.

 

CEBC works to scale up awareness and action on clean energy in the region. The UAE has set an ambitious target of achieving 44 percent clean energy by 2050, by investing in various forms of renewable energy and balancing the national energy mix. Grassroots initiatives such as this serve to educate coming generations about the importance of adopting sustainable practices across all parts of society.

 

“Young generations hold the key to our future, a future in which a sustainable approach to energy is essential for the prosperity and well-being of countries all around the world,” said Stephane le Gentil, CEO of the Clean Energy Business Council. “This competition, and similar activities that instil a holistic approach to protecting the planet, hold an important position in supporting national education initiatives. The submissions we saw for this year’s competition were brilliant, with GEMS Our Own leading the pack. It is exciting to see over 40,000 creative young minds come together to shine a spotlight on what we can do to improve society and make the world more sustainable.”

 

Principal Sanjeev Jolly of GEMS Our Own High School Al Warqa’a, added: “Schools are in the best position to make children recognize the blessings of the Almighty upon all, by providing us a beautiful and a resourceful world, which no one should take for granted.  We need to protect it and nurture it for our posterity. We at Our Own are blessed with children who comprehend this, and teachers who assist students to execute their roles on this planet by inspiring them and by working with them. We are privileged to be working in close partnership with CEBC, which provides a variety of platforms where children learn the importance of conservation.”

 

The annual competition is part of CEBC’s ‘Schools Environmental Protection Program’, which serves to support and encourage students and schools in the UAE to learn about clean energy and its future in the region. In addition to the competition, the program also comprises workshops and knowledge sharing initiatives with the support from the Sheikh Mohammed Bin Rashid Centre for Cultural Understanding.

 

To conduct workshops in this cycle of the program, CEBC partnered with Dubai Solar Schools, an initiative created by ArchItaly Green Energy DMCC with an aim to help schools reduce both their energy bills and carbon footprint. Architaly’s managing director David Provenzani met with students and school boards over the course of the year to raise awareness of solar energy and discuss initiatives surrounding rooftop solar panel installations on schools in the UAE.

Energy to 2040 – Faster Shift to Clean, Dynamic, Distributed

PDF download PDF version of this VIP Comment

By Seb Henbest
Lead Author, New Energy Outlook
Bloomberg New Energy Finance

In the last 10 days, I have been travelling around North America presenting to senior executives from energy companies, policy-makers and investors a long-term forecast for the world’s electricity system that would have been seen as wildly fanciful just a decade ago. And that’s putting it politely.

It’s a measure of just how rapidly things are changing in energy, particularly with the steep and remorseless reduction in the cost of cleaner options, that the reaction to BNEF’s New Energy Outlook 2017 forecast, published this month, has been totally different from that. The questions that my colleague Elena Giannakopoulou, senior analyst on the project, and I have been hearing have mostly begun with “how much” or “how fast” – not with “whether”, “how on Earth” or “what the blazes?”

Events are moving rapidly, and that is evident in the way energy system forecasts from industry players such as BP, ExxonMobil and the International Energy Agency have shifted in the last few years. BNEF’s work differs from those – we like to think it is a few steps ahead – but it is mostly a matter of degree, not direction.

So what are we saying in New Energy Outlook, or NEO, 2017? Before I list this year’s 10 high-level messages, just a reminder what NEO is, and is not. It is not based on how we think policy on clean energy or climate change might evolve between now and 2040. Instead, drawing on the work of 65 analysts, NEO is based squarely on the changing economics of electricity generation. Starting with a forecast for electricity demand, peaks and profiles, we first consider projects under development and our near-term industry forecasts, before modelling the supply mix using our in-house, least-cost optimization model. NEO explicitly removes renewable energy subsidies once they have run their course, and does not assume aspirational national climate targets are met, unless a mechanism to ensure compliance has been legislated.

OK, I promised 10 key messages for energy in 2017-2040. Here they are:

- Solar and wind dominate the future of electricity

- Solar’s challenge gets more serious

- Onshore wind costs fall fast, and offshore falls faster

- China and India are a $4 trillion opportunity for the energy sector

- Batteries and new sources of flexibility bolster reach of renewables

- Homeowners’ love of solar grows

- Electric vehicles bolster electricity use and help balance the grid

- Coal-fired power collapses in Europe and the U.S., peaks globally by 2026

- Gas is a transition fuel, but not in the way most people think

- Global power sector emissions peak in just over ten years, then decline

The following paragraphs will dig into each of these points in more detail.

Around $6 trillion of new investment in wind and solar power between now and 2040 will reshape the world’s electricity markets as we move from a system where coal, gas and oil-fired power plants make up over 60% of capacity, to one where solar and wind are the two largest categories, and where fossil fuels make-up less than a third.

Electricity demand worldwide grows 58% to 2040 and this is met by a doubling of installed capacity to 13,919GW in 2040 from 6,719GW today, with wind up 349% and solar expanding a whopping 14-fold, split between 69% grid-scale and 31% small-scale installations. In addition, we expect growth in new sources of system flexibility, including batteries and demand response, such that by 2040 flexible assets make up around 7% of total installed capacity – similar to size of oil-fired power today. Just under 50% of global investment in new power capacity to 2040 will be in Asia-Pacific and the bulk of that – around $4 trillion – will flow to China and India.

What determines these high-level conclusions are the relative economics of coal, gas, wind and solar power, country by country, over the next 24 years. And the challenge thrown down by renewable energy is perhaps best exemplified by solar PV. Based on data going back to the U.S. space program, we can extract an experience curve that describes the price decline for every doubling of capacity. Last year we said that rate of decline was 26.5%. But after the BNEF solar team reanalyzed the data in January, we upped it to 28%. Solar PV is getting cheaper, faster than we thought. Modules are down 90% in price since 1990; and solar electricity has got 72% cheaper since 2009, with another 67% reduction forecast by 2040.

The same applies to wind energy. Looking at the decline in the price per MW of onshore wind turbines over time, we can extract a 9% experience rate. However, the wind turbine built today is fundamentally a very different machine to the one from 2008. Over time, wind turbines have not just got cheaper, they have also got more efficient at extracting energy from the wind field, with average capacity factors rising from around 15% at the start of this century, to almost 30% for new projects today.

As solar and wind costs continue to decline sharply, it becomes a matter of when, not if, these technologies get cheaper than other forms of power generation.

We see two tipping points ahead. The first is when a new solar or wind project can compete directly with a new coal or gas plants in the absence of subsidies. The second is when that new solar or wind project is cheaper than continuing to run coal and gas power stations that are already built.

Tipping point one is either already, or almost, upon us in all major markets. In Germany, new onshore wind and solar already appear to be cost-competitive with new coal and gas; in China today, coal is the lowest-cost, new-build electricity generation, but in 2019, onshore wind gets cheaper, then PV follows two years later; in the U.S., cheap natural gas makes it the lowest-cost source of new electricity right now, but by 2022-23 PV and wind both begin to beat it; and in India, new solar PV starts to look cheaper than new coal, across the country, from 2020.

Not only do solar and wind get cheaper than coal and gas on a new-build basis, they also start to undercut existing fossil fuel plants. We define this as tipping point two, and our analysis suggests this is going to happen much faster than most people think. In China, PV gets cheaper than running an existing coal plant by 2030; in the U.S. PV beats existing gas by 2027; and in Germany, new solar and onshore wind undercut existing coal and gas generation between 2027 and 2030.

These two tipping points paint a dramatic picture of the rapidly changing economic calculus that we think will shape the future of energy. That said, these signals will be affected by policy and the inertial politics of vested interests. It is therefore very likely that these tipping points will not suddenly result in a wholesale shift in electricity generation but, as is often then case, policy and politics will lag technology. But when they do catch up, it may all come in a rush.

One of the big surprises in the news on clean energy in the last year has been offshore wind. Cost declines have been remarkable. A combination of near-shore sites, competitive tendering and a deliberate effort to de-risk project development has allowed prices to fall as low as $50 per megawatt-hour in Denmark, the Netherlands and Germany for projects coming on-line from 2020. By 2040, we think that offshore wind will be 71% cheaper than today, at about $37 per MWh as a global average. And while we don’t think it will ever be as cheap as onshore wind or PV, the combination of scale, high capacity factors, easier politics and more stable output than other variable renewables increases its value.

As more variable wind and solar generation enter the system, new sources of flexibility are going to be increasingly important. Coal and gas plants that can be ramped up and down and dispatched when required currently provide the bulk of flexibility to electricity systems. However, as these plants reach their end-of-life or are forced out by cheaper solar and wind, new sources of flexibility – such as batteries and demand response – will need to be added. A lot of the early successes with utility-scale batteries have been in relatively small markets such as ancillary services.

However, batteries can also help manage peak demand, and in NEO 2017 we have explicitly modelled the value of lithium-ion batteries compared with other technology options – in particular open-cycle, or “peaker”, gas plants. Batteries are best at providing power very rapidly for relatively short durations, making them ideal for hitting narrow peaks. However, their application is somewhat self-limiting, as each additional battery unit lengthens the remaining peak requirement, ultimately requiring larger, higher-cost battery systems that can discharge for longer periods. So, even as batteries get cheaper, their application can get more expensive.

Overall, about 45% of our battery forecast is utility-scale, the remainder is small-scale. We anticipate that small-scale batteries will be deployed alongside rooftop PV system by households and businesses, particularly after 2025, when the cost of combined systems starts to be within reach of mainstream consumers. Small-scale PV is already at “socket parity” in countries like Australia, Germany and Chile, where there are high electricity prices, good sunshine, or both. Over time, the ongoing decline in the cost of PV means self-generation is likely to take off in all major markets – the biggest being China and Europe, and the fastest growing Latin America including Brazil. And by 2025, China, the U.S. and almost all of Europe will be at socket parity. Tariff reform, shifting more of the total cost to fixed rather than variable charges, could upend these conclusions.

Combining small-scale solar, small-scale batteries and distribution-grid-level demand response, provides a measure of the increasing decentralization in the future electricity system. Australia sets the pace, with as much as 45% of total capacity located behind-the-meter by 2040. We think that Brazil, Japan, Mexico and Germany are each likely to have a decentralization ratio of over 30%. This represents a shift in value downstream towards consumers at the expense of grid-scale assets.

The rise of electric vehicles offers to arrest the decline in net grid demand that we would otherwise expect to see as behind-the-meter solar booms. The competitiveness of EVs comes down to battery prices, and these too are falling fast. Since 2000, the market price for li-ion battery packs is down 73%, and we expect prices to fall a further 73%, to $73 per kWh by 2040. The result is a very big EV story which adds around 14% new electricity demand in the U.K., 11% in Australia and 10% in France.

However, it’s not just the total amount of new electricity demand EVs add that matters, it also matters when these vehicles charge. In NEO 2017, we have assumed that half the EVs on the road in 2040 can do smart charging – that is, they can charge throughout the day, whenever prices are low. Allowing smart charging tends to push EV demand to times when there is an excess of renewable generation and by 2040 that’s increasingly during daytime hours when PV is at maximum output. In this way EV demand can follow supply, which helps to smooth out load profiles and better integrate new renewables. It also supports PV plants, which might otherwise be struggling to find demand for their electricity.

An ageing fleet and the influx of renewables result in the collapse of coal-fired electricity generation, in Europe and the U.S., falling by 87% and 51% respectively by 2040. However, heralding the end of coal would be extremely premature as it will continue to be central for some time, particularly in Asia. China currently runs the world’s largest coal fleet by some way and we expect a further 20% growth in coal-fired generation in that country, before a peak in 2026 and fall thereafter. In India, coal generation continues to grow, but cheaper solar means we now anticipate a much slower increase, of just 50% from 2020 to 2040, compared to 130% in last year’s assessment. Overall by 2040, we think that global coal generation will be 5% down from where it is today.

Gas-fired electricity, on the other hand, does grow, up 10% by 2040. But we don’t see it playing a “transition fuel” role in the commonly understood sense, whereby carbon-intensive coal gives way to less-carbon-intensive gas, before this too yields to renewables. Wind and solar are just getting too cheap, too fast. Gas does not win more than a third of the market lost by coal. One exception is perhaps the U.S. where cheap $2-3/MMBtu gas has already started to push coal out of the mix. However, even here the age of gas may be limited once the tipping points for solar and wind are reached.

Instead, gas appears likely to be an important ingredient in the “glue” that helps bind the electricity system together, offering supply-side flexibility to help meet extremes and when renewable generation is at a minimum. We anticipate over $800 billion of new investment and a 16% increase in gas capacity to 2040, with the bulk of this running only a fraction of the time.

The combination of large amounts of close-to-zero running-cost wind and solar, and low capacity-factor gas plants in a cost-optimized system, strongly supports new market reform to ensure both are adequately remunerated for the system services they can provide. This subject was addressed at length in last month’s VIP Comment from my colleague Albert Cheung, and in a White Paper by Michael Liebreich, and will be an important research focus for BNEF over the coming year.

Finally, on emissions – we expect 10% growth in global power sector emissions over the next ten years as faster demand growth in China, and higher gas prices in the U.S. increase coal burn. China runs easily the biggest coal fleet in the world, so more than any other country, it will determine future emissions. This year we have emissions peaking in 2026, the same year as coal generation in China, and falling thereafter at one percent per annum, to four percent below 2016 levels by 2040. This is higher in the near term in line with restated expectations for Chinese demand growth, but falls more rapidly beyond 2030 as cheaper renewables weigh heavily on coal in both China and India.

This emissions trajectory puts the world broadly on-track to meet the Nationally Determined Contribution targets defined under the Paris Agreement, and our analysis suggests there is definitely scope to ratchet up ambition without incurring additional costs. However, there remains a large gap to anything resembling a 2-degree Celsius scenario. The task is slightly smaller than we projected last year, but would still require extra investment of around $5.3 trillion in zero-carbon generation between now and 2040 to bridge it. This creates significant additional climate policy risk and the possibility that the dramatic changes we are painting to 2040 in NEO 2017, may very well be accelerated.

 

This VIP Comment is an edited version of speeches made by Seb Henbest in London on Friday June 16, to launch NEO 2017, and at meetings in the U.S. the following week. 

Excerpts from the NEO 2017 report, written by Seb and a team led by Elena Giannakopoulou, head of energy economics at BNEF, are available here.

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