China and India will be the biggest recipients for new investment in power-generating capacity by 2040, representing a $4 trillion opportunity for the energy sector.
China will require $2.8 trillion of spending for 2,547 gigawatts of new capacity, while India needs $1.2 trillion, according to a Bloomberg New Energy Finance outlook forecasting how energy markets will evolve by 2040. China’s wind and solar capacity will increase eightfold through to 2040, retaining the nation’s role as a global powerhouse of clean energy.
India will build 10 times more solar capacity than net additions of coal to 2040 as it shifts to lower-cost renewables to meet a more than threefold rise in energy demand. Coal generation will increase by 78 percent as the country becomes the second-biggest power system in the world.
The massive deployment of renewables in the two countries will help the region reduce its output of greenhouse gases. BNEF expects emissions from the power sector to peak at 7.2 gigatonnes in 2028 in Asia Pacific.
Interestingly, India’s increasing adoption of air conditioners as it transitions to a service-oriented economy means a change in peak demand periods, aligning the nation’s energy needs more closely with output from solar systems.
The London-based research company also found: China’s coal capacity will peak in 2024 due to stricter standards for new projects and cheaper renewables. Renewables will attract 73 percent of the new investment spent over the next 23 years in China. Renewable capacity will account for 63 percent of the nation’s overall mix in 2040, compared with 33 percent last year.
China’s electricity demand will almost double by 2040, while the electricity intensity of economic growth falls by 35 percent as the nation shifts away from an industry-heavy growth model. India’s coal additions will be at a near-hiatus from 2023 to 2028. From 2029, new coal will be needed to meet rising demand. Even so, with an explosion in solar installations, coal is set to no longer play a dominant role in the growth of India’s power-generating capacity by 2040.
India’s cumulative solar PV capacity rises from 10 gigawatts in 2016 to 670 gigawatts in 2040. Coal’s share in India’s total capacity mix falls from 59 percent in 2016 to 17 percent in 2040. From 2029, India’s widespread use of renewables will decouple economic growth from emissions. Zero-carbon sources will provide more than half of India’s electricity needs in 2040. India will become the Asia-Pacific’s largest consumer of gas in 2038, reorienting liquefied natural gas trade.
The report also found that solar power, once so costly it only made economic sense in spaceships, is becoming cheap enough that it will push coal and even natural-gas plants out of business faster than previously forecast. That’s the conclusion of a Bloomberg New Energy Finance outlook for how fuel and electricity markets will evolve by 2040. The research group estimated solar already rivals the cost of new coal power plants in Germany and the US and by 2021 will do so in quick-growing markets such as China and India.
The scenario suggests green energy is taking root more quickly than most experts anticipate. It would mean that global carbon dioxide pollution from fossil fuels may decline after 2026, a contrast with the International Energy Agency’s central forecast, which sees emissions rising steadily for decades to come. “Costs of new energy technologies are falling in a way that it’s more a matter of when than if,” said Seb Henbest, a researcher at BNEF in London and lead author of the report.