Renewables to supply just as much U.S. power as gas by 2040
Lower costs put renewables on track for 51% of global power
Natural gas is the king of the U.S. power market -- but that may not last.
By 2040, renewable energy resources such as wind and solar power will supply just as much of America’s electricity demand as gas, based on a Bloomberg New Energy Finance outlook issued Thursday. And globally, the cost of renewable power is falling so rapidly that gas will never become the dominant fuel as most of the world leapfrogs over fossil fuels and moves straight into wind turbines and solar farms to meet growing electricity demand, the report shows.
Economics are driving the shift in how the world producers power. By 2040, renewables will almost double from last year to make up 51 percent of the global power mix. Growth in gas demand for power will meanwhile slow to a crawl in the U.S. and stop altogether in 2039, the BNEF report shows. It’ll mark a turnaround from the past decade when the shale boom unleashed cheap gas supplies, forcing coal plants to nuclear reactors to shut.
The move toward renewables signals that gas “is not a gravy train” that’ll continue to dominate the U.S. power market, Seb Henbest, a London-based analyst for BNEF, said in a telephone interview. “There are new technologies that are going to come and start to eat everybody’s lunch, and increasingly more so.”
Gas-fired power generation capacity globally will still increase 16 percent by 2040 from last year, representing $804 billion in investments, BNEF said. But in some regions, gas is more expensive than coal and is often seen as an alternative to oil. The U.S. has been an outlier thanks to the shale boom.
Gas futures rose Thursday after lingering near three-month lows when the government reported that inventories rose by 78 billion cubic feet last week to 2.709 trillion, less than analysts’ expectations. Futures gained 12.3 cents, the most since April 4, to $3.056 per million British thermal units on the New York Mercantile Exchange.
By the end of the forecast period, gas and renewables will each make up 39 percent of the U.S.’s supply mix while coal will drop to 14 percent, the BNEF report shows. In 2016, gas’s share was 34 percent, coal was 30 percent and renewables was 16 percent.
Meanwhile, over the next five or six years, the cost of new solar generation in the U.S. will fall to level with the cost of a new gas-fired plant, and in 2027, new solar farms will be able to compete with existing gas plants, Henbest said. As costs plunge, renewables are poised to put the squeeze on gas-fired plants the way the current buildout of gas plants is squeezing out coal, he said.