After watching and taking notes on Michael Liebreich’s keynote at Bloomberg New Energy Finance’s recent conference, I went digging through their website to see whether there’s more info on their scenario analysis. They apparently don’t have a big write-up on their website, but they have a “fact pack” powerpoint presentation available for download here.
As I noted in my previous post, they consider their “new normal” scenario to be the most likely one among the three scenarios they analyse. The scenario projects global fossil fuel use to peak by around 2030 since it projects 73% of total power generation investments to 2030 to be directed to renewables. 70% of new power generation capacity added between 2012 and 2030 is projected to be renewables while fossils are projected to account only for 25%, with the rest being nuclear. The result of which is renewables constituting half of global power generation capacity in 2030.
Interestingly, this scenario does not foresee a strengthening of climate policy: “Environmental concerns remain at current levels – no major breakthroughs but carbon prices from current policies rise in the EU and Australia.” The envisaged ramp-up of renewables is therefore mostly driven by the decrease of renewable energy technology costs, which has been very rapid and does not show signs of stopping. BNEF projects the levelised costs of wind power to fall by another 35% by 2030 while the levelised cost of solar PV is projected to fall by 50%.
The more ambitious “barrier busting” scenario has stronger climate policy, in particular carbon pricing in China and the US. Nevertheless, “Unit costs of generation technologies are the same as in NN scenario.”, which seems counterintuitive to me since stronger diffusion ought to result in faster technological learning.
Even in the most pessimistic “Traditional Territory” scenario, which envisages a weakening of supportive policies, renewables are projected to account for 46% of globally installed capacity in 2030.
“In all three scenarios it is assumed that no technology specific support mechanisms are in place post 2020”, which may be too conservative.
Even the most pessimistic “Traditional Territory” scenario sees EU carbon prices going back to slightly below US$30/t by 2020 already, which seems a bit optimistic right now. On the other hand, Europe is not where most of the action will be in terms of installing new capacity.