Renewables must ramp up to 126 GW by 2030 to reach net zero by 2050, says BNEF

New modelling from Bloomberg New Energy Finance (BNEF) warns Australia must rapidly decarbonise its power sector to reach its net-zero commitment by 2050, with an investment of $3.56 trillion (USD 2.4 trillion) required by 2030 and renewable energy capacity needing to grow by 135%, to more than 126 GW.

The latest edition of BNEF’s New Energy Outlook report shows that to stay on track Australia’s energy mix will need to transform over the next decade, with all unabated coal and almost all unabated gas generation exiting the power system by 2035. Australia will rely instead on a mix of renewables paired with flexible technologies like batteries and pumped hydro.

Leonard Quong, head of BNEF in Australia, said there is no time to waste with the rollout of renewables in this decade critical to achieving the decarbonisation targets.

“Australia’s window to stay on a well below two-degree pathway is closing fast,” he said.

“Rapidly moving to a clean power system based on wind, solar and storage will be essential to cost-effectively reduce carbon emissions in line with our existing decarbonisation targets, but the heavy lifting must be done this decade.”

“A low-carbon power sector will also serve as a bedrock for future emissions reduction efforts in other areas of the economy in the years to come.”

In its latest report, BNEF has modelled a net zero scenario (NZS), which is consistent with a 1.75 C global warming by 2050 outcome, and a base-case economy transition scenario (ETS), consistent with a 2.6 C warming outcome.

In the favoured NZS scenario, Australia will heavily electrify its power, transport and building sectors by 2050, pushing overall electricity demand up by 2.5 times with solar and wind installations reaching a combined 290 GW by mid-century. Storage, in the form of batteries and pumped hydro, increases from about 3 GW today to more than 59 GW.

This scenario is expected to require a massive $3.56 trillion investment, but BNEF said this is estimated to cost only an additional 12% more when compared to the baseline ETS but would deliver far better outcomes in net-zero terms.

BNEF also highlights that Australia would still face massive investment requirements to renew and maintain its energy sector even without a decarbonisation imperative.

“Australia will always need to invest in its energy system, irrespective of whether it reduces its carbon emissions” said Caroline Chua, BNEF Energy Transition Specialist and lead author of the report.

“The challenge of getting to net zero is going to be making sure capital flows into the right type of technologies, at the right time.”

In addition to ramping up solar, wind, and energy storage, the report also highlights the need to scale up other key technologies like electric vehicles and hydrogen in order to get on track for net zero.

“Emerging technologies like hydrogen, biofuels and carbon capture systems will be essential for Australia to reach net zero,” BNEF Australia Senior Associate Sahaj Sood said.

“While questions still remain about their reliability, acceptability, and scalability, if they aren’t able to be used, emission reductions will have to come from somewhere else in the economy, and likely from more expensive solutions.”

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