Growth in storage solutions like batteries will facilitate 50 per cent of the global electricity supply from wind and solar by 2050,' predicts Shantanu Jaiswal, Head of India Research, Bloomberg NEF and one of the authors of New Energy Outlook (NEO) 2018 report.
According to BNEF's NEO 2018 report, wind and solar are set to contribute nearly 50 per cent of the world's generation by 2050. What would be the main triggers behind this shift?
Economics is the main trigger point for the major shifts we are experiencing in the global energy sector today and these shifts are expected to continue into the future for a long time. Adoption of renewables increases rapidly as wind and solar power become cheaper than electricity produced from coal and gas power plants.
What kind of investment opportunity is likely to be created on the back of this growth and which segments are expected to benefit the most?
India's growing power needs and the transition towards a cleaner power system till 2050 present a $1.6 trillion opportunity in the power generation segment alone. Solar and wind technologies will provide the lion's share of electricity generated and thus, attract an overwhelmingly large share of the investments as well.
You anticipate that lithium-ion battery prices - already down by up to 80 per cent per megawatt hour (Mwh) since 2010 - would continue to decline with the expansion in electric mobility. But are the supply side issues of rare Earth metals taken into consideration?
Rare Earth materials are not really in use in the battery chemistries we have forecast here, but we did consider lithium and cobalt scarcity as a part of the forecast on both costs and availability. We have a supply-and-demand outlooks for both these metals as well as others such as nickel and graphite. Although we believe there could be supply bottlenecks in the near term, we do not believe it is an issue in the longer term.
The survey suggests that gas-fired power stations will increasingly be providing backup for renewables. However, gas-fired power plants have not had much success in India by far.
The gas power projects have not been performing well in India because the cost of un-subsidised fuel is prohibitively high and there are other alternatives available to meet power requirements. With the rise in the power generation technologies by up to 2050, there will be a need to have a backup power source which kicks in whenever the wind and solar generation suddenly drops due to variation in weather patterns. India's peak power demand is also expected to scale up in the future and this is best met by quick ramp-up technologies such as gas power plants.
Interestingly, the BNEF analysis also says that renewables will supply 75 per cent of electricity in India compared to 62 per cent in China by 2050. What will lead to the elephant overtaking the dragon?
The addition of new renewable energy capacity as a percentage of total installed capacity is lesser in China than in India. This leads to a lower share of renewable energy generation, including hydro, in China when compared with India.
NEO 2018 has also predicted that half of the total charging will be done on a dynamic basis during periods when electricity prices are low because of high renewables output. But again, that would require a very robust charging regime to be firmly in place.
India has a slow adoption rate of new electric passenger vehicles compared to other developed countries. The rise of electric vehicles also does not make a significant contribution to power demand as it is expected to increase total electricity requirements by just 2 per cent in 2040. Half of all electricity required for charging electric vehicles in 2040 will be on a dynamic basis with the introduction of time-of-day tariffs and deployment of smart metres. It is, however, essential to plan ahead for investments needed in enhancing the grid and the charging infrastructure to avoid mismatch in demand and supply.
- Manish Pant
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