Falling prices for lithium-ion batteries will enable half the world's electricity to come from renewable solar and wind by 2050. That still won't be enough to meet global climate targets, however.

Those are the conclusions of a new report by Bloomberg New Energy Finance (BNEF), released today.

Building on BNEF's Electrc Vehicle Outlook report last month, which anticipated that 50 percent of new cars sold worldwide by 2050 would be electric, today's 2018 New Energy Outlook report translates that increased production of lithium batteries into lower cost for industrial-scale battery storage.

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Installing battery storage capacity at wind and solar farms will allow those renewable sources to provide grid-scale electrical power even when the sun doesn't shine and the wind doesn't blow.

“The arrival of cheap battery storage will mean that it becomes increasingly possible to finesse the delivery of electricity from wind and solar, so that these technologies can help meet demand even when the wind isn’t blowing and the sun isn’t shining," said Seb Henbest, lead author of the report. "The result will be renewables eating up more and more of the existing market for coal, gas, and nuclear.”

Wind farm outside Fort MacLeod, Alberta, Canada [photographer: Joel Bennett]

Wind farm outside Fort MacLeod, Alberta, Canada [photographer: Joel Bennett]

The report predicts that falling battery prices will reduce the levelized cost per kilowatt-hour of solar electricity by 71 percent by 2050, and the cost of wind power by 58 percent. Those prices have already dropped 77 percent for solar and 41 percent for wind since 2009, the report notes.

Most of the new battery capacity is expected to be installed on the power grid, to support industrial-scale wind and solar farms. One-third is expected to be installed in homes and businesses to support individual solar installations. The trend could even allow as much as 40 percent of electricity in some countries, such as Australia, to come from individual installations at homes and businesses.

The U.S. is expected to lag behind other large industrialized regions, with 55 percent of electricity coming from renewable sources, compared with 87 percent in Europe, 62 percent in China, and 75 percent in India.

Electric power plant outside Ithaca, New York

Electric power plant outside Ithaca, New York

Increased battery installations and falling prices will dramatically reshape electricity production, according to the report. The increased use of renewables will squeeze coal to just 11 percent of the market.

“Coal emerges as the biggest loser in the long run, beaten on cost by wind and [photovoltaics] for bulk electricity generation and batteries and gas for flexibility. The future electricity system will reorganize around cheap renewables," said Elena Giannakopoulou, head of energy economics at BNEF.

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While electricity production from natural gas is forecast to increase, it will make up a smaller market share, mainly consisting of peaker plants to fill in short term spikes in power demand, rather than supplying base loads as many natural gas plants do now.

Even such a large transformation in electricity generation won't keep CO2 emissions to targeted levels to limit global warming to 2 degrees centigrade, according to the report. CO2 emissions are forecast to rise 2 percent in the next decade before beginning to fall by 38 percent from those levels by 2050.

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