global: future investments in the power sector
The overall global level of investment required in new power plants up to 2030 will be in the region of $ 11.5 trillion in the Reference case and $ 20.1 trillion in the Energy [R]evolution. A major driving force for investment in new generation capacity will be the replacement of the ageing fleet of power plants in OECD countries and the build up of new power plants in developing countries. Utilities and new players such as project developers and independent power producers base their technology choices on current and future equipment costs and national energy policies, in particular market liberalisation, renewable energy and CO2 reduction targets. Within Europe, the EU emissions trading scheme could have a major impact on whether the majority of investment goes into fossil fueled power plants or renewable energy and co-generation. In developing countries, international financial institutions will play a major role in future technology choices, as well as whether the investment costs for renewable energy become competitive with conventional power plants.
In regions with a good wind regime, for example, wind farms can already produce electricity at the same cost levels as coal or gas power plants. While solar photovoltaics already reach ‘grid parity’ in many industrialized countries. It would require about $ 50,400 billion in investment in the power sector for the Energy [R]evolution scenario to become reality (including investments for replacement after the economic lifetime of the plants) - approximately $ 714 billion annual more than in the Reference scenario.
Under the Reference version, the levels of investment in conventional power plants add up to almost 49% while approximately 51% would be invested in renewable energy and cogeneration (CHP) until 2050. Under the Energy [R]evolution scenario the global investment would shift by 95% towards renewables and cogeneration. Until 2030, the fossil fuel share of power sector investment would be focused mainly on CHP plants. The average annual investment in the power sector under the Energy [R]evolution scenario between today and 2050 would be $ 1,260 billion.
Because renewable energy except biomasss has no fuel costs, however, the fuel cost savings in the Energy [R]evolution scenario reach a total of about $ 52,800 billion up to 2050, or $ 1,320 billion per year. The total fuel cost savings therefore would cover two times the total additional investments compared to the Reference scenario. These renewable energy sources would then go on to produce electricity without any further fuel costs beyond 2050, while the costs for coal and gas will continue to be a burden on national economies.