Renewables will overtake natural gas as the dominant source of electricity generation in the U.S. in 2031, even without subsidies as wind and solar costs plunge, a Bloomberg New Energy Finance analysis showed.
This U.S. shift will be driven by $745 billion in investments in renewables through 2040, outstripping the projected $95 billion that will be spent on building new fossil-fuel plants, said Elena Giannakopoulou, lead economist at BNEF. Solar and wind capacity will become cheaper than gas or coal without any incentives after 2020.
“This is a huge transition of the U.S. system,” Giannakopoulou said in a June 10 telephone interview. “The crossover is not really far into the future.”
The transition to greater use of cleaner technologies in the U.S. follows a global trend albeit at a slower pace. Renewables will become the dominant source for power on the planet in 2027 as India, China and other countries go straight from coal to wind and solar, she said. The global shift will be helped by $7.8 trillion in renewable spending through 2040, almost quadruple the investments in fossil fuels over the same period, according to BNEF.
Declining costs will help spur renewable investments, primarily in onshore wind and both utility-scale and rooftop photovoltaic panels, Giannakopoulou said. Total U.S. electricity demand will decline by 9 percent over the 25-year period.
By 2040, renewables will account for 44 percent of U.S. power generation from 14 percent in 2014. Gas generation will slip from 33 percent to about 30 percent in the period. Coal’s share will drop by almost two-thirds to just 12 percent.
The forecast assumes wind and solar subsidies, such as tax credits, are used to support projects through 2020. “Post 2020 we turn off all of the support scheme subsidies and we let technologies compete on an economic basis,” Giannakopoulou said. “In our analysis, by 2030 this is going to be the case everywhere.”