Natural gas is the king of the U.S. power market – but that may not last.
By 2040, renewable energy resources such as wind and solar power will supply just as much of America’s electricity demand as gas, based on a Bloomberg New Energy Finance outlook issued Thursday. And globally, the cost of renewable power is falling so rapidly that gas will never become the dominant fuel as most of the world leapfrogs over fossil fuels and moves straight into wind turbines and solar farms to meet growing electricity demand, the report shows.
Economics are driving the shift in how the world producers power. By 2040, renewables will almost double from last year to make up 51 percent of the global power mix. Growth in gas demand for power will meanwhile slow to a crawl in the U.S. and stop altogether in 2039, the BNEF report shows. It’ll mark a turnaround from the past decade when the shale boom unleashed cheap gas supplies, forcing coal plants to nuclear reactors to shut.
Meanwhile, over the next five or six years, the cost of new solar generation in the U.S. will fall to level with the cost of a new gas-fired plant, and in 2027, new solar farms will be able to compete with existing gas plants, Henbest said. As costs plunge, renewables are poised to put the squeeze on gas-fired plants the way the current buildout of gas plants is squeezing out coal, he said.