London — Global power generation is forecast to increase by some 60% between 2017 and 2040 to cover a quarter of primary energy demand, the IEA said in its World Energy Outlook 2018.
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"Electricity markets are undergoing a unique transformation with higher demand brought by the digital economy, electric vehicles and other technological change," the IEA said.
Fossil fuels remain the major source for power generation in two of the IEA's three scenarios, with only its sustainable development scenario modeling a sharp decline for coal and gas by 2040.
Coal would remain the world's biggest source of electricity under both the new and current policies scenarios, but its overall share is set to decline from around 40% now to a quarter by 2040.
Renewables' share in the electricity mix is set to grow from 25% today to around 40% under the new policies scenario, while the share of natural gas remains steady at around 20%.
GLOBAL ELECTRICITY GENERATION BY SCENARIO (TWh)
|Actual||New Policies||Current Policies||Sustainable Development|
Source: IEA WEO 2018
Solar power costs are projected to fall by more than 40% to 2040, underpinning a ninefold growth in solar photovoltaic generation, mainly in China, India and the United States.
Wind will play the key role for the European Union, with the IEA's new policies scenario projecting wind power output to more than triple to 1,100 TWh/year by 2040.
Hydro, bioenergy and solar are forecast to supply another 1,000 TWh by then in the EU.
Coal-fired power output in the EU is set to plunge below 200 TWh in the early 2030s with both gas and nuclear output seen steady at around 600 TWh/year, it said.
INVESTMENT IN ELECTRIFICATION
Global energy investment registered a slight decline in 2017 for a third year in a row, falling to $1.8 trillion, the IEA said.
Nonetheless, the largest share of global investment went to the electricity sector reflecting the growing importance of electricity in the energy system.
Looking ahead, energy investment amounts to $2.2 trillion each year between 2018 and 2025 on average and $2.8 trillion each year thereafter under its new policies scenario.
A pick-up in oil and gas investment to balance the near-term market, together with a slight rise in costs, means that spending on fossil fuels regains a larger share of total supply investments than electricity, the IEA said.
Renewables represent over half of the investment made in power plants since 2010, and continue to take the largest share of investment in the new policies scenario, with an average annual spend of $350 billion. Continued declines in costs mean that a constant investment, in dollar terms, buys a steadily increasing amount of capacity.
Policies will determine which way investment flows with the future pathway of energy open, the IEA said.
Overall, 70% of the forecast $42 trillion investment in energy supply between 2018 and 2040 will be determined by governments and policies, rather than markets, the report said.
GLOBAL ANNUAL ENERGY INVESTMENT ($2,017 billion)
|2010-2017||New Policies||Current Policies||Sustainable Development|
|2018-2040 total||$60,042 billion||$59,168 billion||$67,713 billion|
Source: IEA WEO 2018
--Andreas Franke, firstname.lastname@example.org
--Edited by Norazlina Jumaat, email@example.com