
Each year, NEO compares the costs of competing energy technologies through a levelised cost of energy analysis. This year, the report finds that, in approximately two-thirds of the world, wind or solar now represent the least expensive option for adding new power-generating capacity.
Electricity demand is set to increase 62%, resulting in global generating capacity almost tripling between 2018 and 2050. This will attract $13.3 trillion in new investment, of which wind will take $5.3 trillion and solar $4.2 trillion. In addition to the spending on new generating plants, $840 billion will go to batteries and $11.4 trillion to grid expansion.
NEO starts by analysing technology trends and fuel prices to build a least cost view of the changing electricity sector. The results show coal's role in the global power mix falling from 37% today to 12% by 2050 while oil as a power-generating source is virtually eliminated. Wind and solar grow from 7% of generation today to 48% by 2050. The contributions of hydro, natural gas, and nuclear remain roughly level on a percentage basis.
Europe will decarbonise its grid the fastest with 92% of its electricity supplied by renewables in 2050. The USA, with its abundance of low-priced natural gas, and China, with its modern fleet of coal-fired plants, follow at a slower pace.