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Global Power Demand Surge Strengthens Renewable Energy Outlook, BNEF Says

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Solar power will become the world's largest electricity source by 2032 as rising energy demand accelerates electrification and renewable investment, according to a BloombergNEF analysis on Tuesday.

BloombergNEF said in its annual New Energy Outlook report that growing electricity use from data centers, electric vehicles, rising incomes and population growth will continue lifting global power demand over the coming years.

The analysis said recent energy shocks, including the Covid-19 pandemic, the Ukraine war and tensions in the Persian Gulf, are encouraging countries to reduce fossil fuel dependence.

The analysis used two outlooks, including an Economic Transition Scenario based on market trends and a Net-Zero Scenario built around climate pledges.

Under the Economic Transition Scenario, solar power will outpace coal in 2032, while wind energy will become the second-largest electricity source by 2034.

BloombergNEF increased its global battery storage outlook to 2,000 gigawatts by 2035 from 220 GW projected for 2025 as renewable energy capacity expands.

China will continue leading battery deployment over the next few decades, while India and Europe will sharply increase storage demand beginning in the 2030s, the analysis said.

The world remains off track to meet the Paris Agreement target of limiting global warming to 1.5 degrees Celsius as emissions continue rising across India, Southeast Asia and Latin America.

Under the Economic Transition Scenario, global temperatures will rise 2.4 degrees Celsius by 2050, the analysis said.

The outlook expects China's emissions to decline after peaking in 2025, although global temperatures could still rise above 1.8 degrees Celsius even under a net-zero pathway by 2050.

BloombergNEF expects annual energy transition spending under its Economic Transition Scenario to climb 34% from $2.3 trillion in 2025 to $3.1 trillion later this decade.

The Net-Zero Scenario would require yearly investment to increase further to $4.8 trillion to support global climate targets, according to the analysis.

BloombergNEF said electric vehicle adoption will help oil demand peak around 2029, while natural gas consumption will continue growing through 2050 and overtake oil in the 2040s.

The analysis said nearly $500 billion has flowed into carbon removal, advanced batteries and geothermal technologies, although none have reached commercial scale.

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Oil & Energy

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Oil & Energy

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