BloombergNEF released predictions for 2019, covering clean energy generally, solar and wind, battery storage, electric vehicles, U.S. natural gas, international LNG, oil markets, digitalization, and energy in China.
# Lower costs, lower dollar investment
We should get more gigawatts of both wind and solar installed this year than last, but solar capital costs fell by some 12 percent in 2018 – as manufacturers slashed module prices in the face of a glut. Investment in offshore wind was $25.7 billion thanks to five European projects in the $1-3.5 billion range. 2019 will fall modestly short. The shaky stock market might mean public markets investment in clean energy undershoots 2018’s $10.5 billion.
Clean energy investment will be reaching $300 billion for the sixth successive year, but will not be matching last year’s $332 billion, said Angus McCrone, chief editor of BloombergNEF.
# Solar additions rise despite China
Solar installations in 2018 will end up at about 109GW. The year ahead is likely to see growth to the 125GW to 141GW range. Europe is building more PV once again, and India, the Middle East, North Africa and Turkey are continuing to expand their deployments.
China, the world’s largest PV market, is in disarray as the government tries to reconcile future solar support with a deficit in the renewable energy fund of $23.4 billion at the end of 2017.
New countries are holding auctions and tenders to buy cost-effective solar power, although governments hoping to set new records may be disappointed in 2019. Incremental improvements in cost and performance will continue, but the big price fall of last year, on the back of the sudden Chinese slowdown, will not be repeated.
Some firms may exit the market as module manufacturing becomes even more competitive. Technologies in the news will include floating solar, bifacial modules and combining utility-scale storage with solar, said Jenny Chase, head of solar.
# More consolidation in onshore wind
The wind market capacity will grow from about 53.5GW in 2018 to more than 70GW in 2019, with Northern Europe, China and the U.S. all boosting the onshore element, many of those projects already financed in 2018. The offshore additions are likely to rise from 4.8GW to 8.5GW.
In offshore wind, Europe is set to install 4.9GW in 2019, compared to 3.5GW in Asia, both record figures. This will be the last year before Asia takes over as the leading market, on our forecasts installing 25 percent more capacity than Europe during the 2020s. Offshore wind is the ‘must-have’ technology of 2019, spurred by eye-catching price drops and awe-inspiring scale.
In onshore wind, turbine prices have dropped steeply. Since December 2016, they are down 17 percent according to the 2018 BNEF Wind Turbine Price Index. There will be a temporary stabilization at just below $0.8 million per MW in 2019.
To fill order books in the last two years, industry players have made aggressive bets on the cost savings and efficiency gains they could achieve. These bets are now being called on. This is likely to lead to further cuts and consolidation, especially in China and India, said David Hostert, head of wind.
# Energy storage adds 10GWh for first time
Annual global energy storage deployments in 2019 will exceed 10GWh for the first time in the history of the market. This includes both utility-scale and behind-the-meter assets, and will be up from last year’s estimated 8GWh (or 4GW) of new installations.
Chinese battery producers will establish a global presence, despite the threat of trade wars. Automotive companies will expand relationships with Chinese suppliers as they ramp up sales in that country.
International energy storage developers and integrators will head to China in search of batteries, as the Korean domestic market keeps its champions busy. Competition and the recent easing of cobalt and lithium costs will push average prices below $150/kWh, undershooting the experience curve, while EV-only battery prices will be even lower than that. At the end of 2018, battery pack prices reached a record low at $176 per kWh, said Logan Goldie-Scot, head of energy storage.
# Electric vehicle sales up by 40 percent
There are now almost 5 million passenger electric vehicles on the road globally including buses and other commercial vehicles. Another 2.6 million will be added in 2019. This will represent around a 40 percent growth rate, down from the 70 percent growth rate in 2018. China will again lead, with some 1.5 million of those sales, representing around 57 percent of the global market.
European EV sales will be just under 500,000. Growth should be strong in the Nordics and Germany. Sales in Italy have been slow but should start picking up in 2019, while sales in the U.K. will likely be flat or declining after the government eliminated support for popular plug-in hybrid models.
North America EV sales should come in around 425,000, up modestly from 405,000. The Tesla Model 3 surge boosted 2H 2018 sales but the momentum will be difficult to maintain unless a lower-cost model can be introduced quickly. Sales in Japan and South Korea combined should be around 100,000, said Colin McKerracher, head of advanced transport.
# New infrastructure to boost U.S. gas exports
BNEF expects the U.S. natural gas Henry Hub price benchmark to average between $2.50 and $3.50 per million British Thermal Units (MMBtu) in 2019, depending on how weather compares to normal. Once again, rising demand in the South is expected to be met by stronger production in the Northeast, said Laurent Key, head of North America gas.
# LNG to grow strongly for third year
Global LNG demand rose 10 percent in 2018 to reach 313 million metric tons per annum – despite higher LNG prices (averaged at $10/MMBtu) than 2017 (averaged at $7/MMBtu).
Global LNG trade will expand by 8 percent to reach 340MMtpa in 2019, said Maggie Kuang, head of global LNG.
# Steps forward on China’s long energy transition
Though China will remain the world’s largest deployer of new renewable energy capacity, the 40GW of solar and 20GW of wind will not shatter any previous records.
The goal is to push renewable energy toward wholesale grid parity (which in China is defined as parity with each province’s mostly coal power projects) so that it no longer relies on subsidies, said Nannan Kou, head of China.