China and India are expected to be the biggest receivers of new investments in power-generating capacity by 2040, representing a US$4 trillion opportunity for the energy sector.
China will require US$2.8 trillion of spending for 2,547 gigawatts (GW) of new capacity, while India needs US$1.2 trillion, according to a Bloomberg New Energy Finance (BNEF) outlook forecasting how energy markets will evolve by 2040.
China’s wind and solar capacity will increase eightfold through to 2040, retaining the nation’s role as a global powerhouse of clean energy. India will build 10 times more solar capacity than net additions of coal to 2040 as it shifts to lower-cost renewables to meet a more than threefold rise in energy demand. Coal generation will increase by 78% as the country becomes the second-biggest power system in the world.
The massive deployment of renewables in the two countries will help the region reduce its output of greenhouse gases. BNEF expects emissions from the power sector to peak at 7.2 gigatons in 2028 in Asia Pacific. Interestingly, India’s increasing adoption of air conditioners as it transitions to a service-oriented economy means a change in peak demand periods, aligning the nation’s energy needs more closely with output from solar power systems.
The London-based research company also found that China’s coal capacity will peak in 2024 due to stricter standards for new projects and cheaper renewables.
Renewables will attract 73% of the new investment spent over the next 23 years in China. Renewable capacity will account for 63% of the nation’s overall mix in 2040, compared with 33% last year. China’s electricity demand will almost double by 2040, while the electricity intensity of economic growth falls by 35% as the nation shifts away from an industry-heavy growth model.
India’s coal additions will be at a near-hiatus from 2023 to 2028. From 2029, new coal will be needed to meet rising demand. Even so, with an explosion in solar installations, coal is set to no longer play a dominant role in the growth of India’s power-generating capacity by 2040. India’s cumulative solar PV capacity will rise from 10 GW in 2016 to 670 GW in 2040.
Coal’s share in India’s total capacity mix falls from 59% in 2016 to 17% in 2040. From 2029, India’s widespread use of renewables will decouple economic growth from emissions. Zero-carbon sources will provide more than half of India’s electricity needs in 2040. India will become the Asia-Pacific’s largest consumer of gas in 2038, reorienting liquefied natural gas (LNG) trade.