Solar will be largest power generator in “much changed” world by 2032, but battery storage is the big mover

Solar is on track to become the world’s largest generator of electricity by 2032, a major new forecast reveals, riding the wave of falling prices and manufacturing oversupply, and bolstered by a booming battery storage market and the third global energy shock in a decade.

The BloombergNEF (BNEF) New Energy Outlook for 2026, published on Tuesday, finds the global market “much changed” since last year’s edition, as the transition to renewable energy, battery storage and electrification has a rocket put under it by the latest Middle East conflict.

“Whether the global economic order is fracturing or merely shuddering remains to be seen. That said, the fragility of today’s fossil energy-delivery system is not in doubt,” the report says.

“In March 2026, countries heavily reliant on Persian Gulf fuels saw energy costs surge and the risk of physical shortages rise, setting off energy security alarm bells in capitals across the globe.”

The immediate and longer-term effects of this are reflected in BNEF’s updated Economic Transition Scenario (ETS), which maps out how the global energy system is most likely to evolve over the next decade and through 2050.

NEO 2026 also includes BNEF’s first update in two years to its Net Zero Scenario (NZS), which explores how energy supply and demand would evolve if nations collectively adjusted policies to align with a “well below 2°C climate scenario” of net-zero by 2050.

BNEF says the updated ETS “signals the start of an electricity-led era,” in which electricity grows to supply two-thirds of new energy demand over the next 24 years, while natural gas supplies another 25 per cent.

According to NEO 2026, electricity accounted for 21 per cent of final energy – energy delivered to end users for consumption – in 2025, second only to oil products at 38 per cent.

BNEF says it its base case, electricity becomes the dominant source of final energy by 2047 – or a decade earlier in 2037 under the NZS. Notably, China hit that electrification milestone back in 2023, according to the report.

BNEF’s electrification forecast assumes that – as the report’s executive summary puts it – “many, many things get electrified,” lead by the shift to electric vehicles and bolstered by new loads like data centers.

The report says data centres consumed 500 terawatt-hours (TWh) of electricity in 2025, or 1.9% of global total demand. And BNEF expects demand from these energy guzzlers to more than double to 1,114TWh (3.6% of total demand) by 2050, representing a 10th of electricity consumed worldwide.

And if electrification is the main vehicle of future supply and demand, solar is the main fuel. BNEF says the surge in PV deployment over the past decade has been “nothing short of remarkable,” with annual capacity installations rising nearly nine-fold from 75 gigawatts in 2016 to 655 gigawatts in 2025.

“Solar is now neck-and-neck with nuclear and wind as the world’s second biggest source of zero-carbon power generation,” the report says.

“It is also being deployed in ever widening applications, from micro-systems providing citizens in least-developed countries with their first energy access, to large-scale plants that power the world’s most advanced AI data centers.

Under its ETS scenario, BNEF forecasts that at the current build rate, solar will become the largest zero-carbon source by the end of the decade and by 2032 it emerges as the single largest source of power generation of any kind.

Batteries, meanwhile, are having their own moment, with BNEF conceding that falling costs have prompted a substantial increase in the outlook for battery deployment over the next 10 and 25 years.

“Battery products are increasingly commoditised, and this is driving down prices faster than BNEF previously expected,” the NEO says. According to the BNEF’s modelling, storage jumps 17-fold to 3.8 terawatts by 2050 from 223 gigawatts in 2025.

“As EVs, data centers, population growth and industrial activity spur electricity demand, the world is in a race to meet rising energy demand with the most efficient, least-cost technologies,” says BNEF head of energy economics, Matthias Kimmel.

“NEO shows that solar becomes the world’s largest generator overall by 2032, while storage jumps 17-fold to 3.8 terawatts by 2050, underscoring how clean technologies are increasingly critical to energy security, system flexibility and meeting the world’s growing power needs.”

But the report notes that battery adoption rates vary substantially by country and region – the report points to California, where it says more than 260,000 residential battery systems have been installed since 2020 to improve resilience.

In the charts below, Australia sits somewhere in the middle in the battery stakes. But given the installation of more than 400,000 home batteries – and counting – since July 2025, it seems likely that BNEF might have to revise up its outlook again.

On fossil fuels, the report notes that while the energy crisis might have spurred a minor renaissance for coal in some nations, the BNEF’s ETS shows it cannot compete on cost over the long term, slipping to half of current levels of power generation use by 2050.

Oil and gas, meanwhile – demand for which have historically moved in tandem – have “arrived at a crossroads,” according to the NEO 2026, and part ways in the coming decade under the ETS as global oil demand plateaus into the mid-2030s, driven largely by electrification in road transport.

“By 2050, oil demand falls from its peak around 2029 to levels last seen in the early 2000s,” the report says. By contrast, BNEF is forecasting a “dash to gas” under the ETS, to meet demand including “rapidly rising data center load, as well as industry and transport.”

Under the NZS, however, the outlook for gas weakens significantly as the world rises to the global climate challenge. On this score, at least, the outlook remains the same.

“The best prospects for clean energy technology deployment continue to come from electric vehicles, wind, solar and batteries,” BNEF says. “Despite the current political headwinds, we broadly hold our outlook from the previous iteration.

“Under the NZS, annual low-carbon investment averages $US4.8 trillion 2026-2030 – more than double 2025 levels – and rises to $US7.7 trillion between
2031 and 2035,” the report says.

“Global energy transition investment reached a record $2.3 trillion in 2025. Yet investment required to achieve the NZS is $235 trillion by 2050,” says BNEF chief economist, David Hostert.

“This means investing 24% more than under the ETS scenario delivers a fundamentally different and cleaner energy system where 84% is directed toward low-carbon technologies. 

“We’re living in another moment of crisis, but unlike in past decades, today there are real options for countries to react,” Hostert says.

“We now have viable technologies that can be deployed at scale and fast, at an overall lower cost to the system than the fossil fuel technologies that used to be the primary choice. Through clean power and electrification we can strengthen energy security and reduce harmful emissions along the way.”

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