Solar power, batteries and electric vehicles will be the big stories of 2018, as clean energy technology continues to grow rapidly.
Bloomberg New Energy Finance (BNEF) analysts have outlined the ten factors that will be leading the sustainable energy transition.
The Bloomberg team predict Australia will play a major role in the world's energy transition.
Solar and wind power generation will continue to grow, with renewables playing a greater role in the world's energy generation mix, while battery developments will boost renewable energy reliability and aid the spread of electric vehicles.
Below are the five factors shaping clean and renewable energy in 2018.
Hundreds of billions invested in clean energy
The BNEF are forecasting clean energy investment to hit at least $US330 billion ($414 billion) globally, similar to 2017 ($US333.5 billion).
In Australia, about $US9 billion was invested in large wind and solar projects in 2017, up 150 per cent year-on-year.
The huge cost reductions the world is seeing in clean energy also mean the US$330 billion investment can go further.
A new cost analysis report, Renewable Power Generation Costs in 2017, by the International Renewable Energy Agency (IRENA), forecast the global costs for onshore wind and solar power to fall significantly, having already dropped 25 per cent since 2010.
The expected cost reduction reaped for every doubling of installed renewable generation capacity over the decade to 2020 is forecast to be 14 per cent for offshore wind, 21 per cent for onshore wind, and 35 per cent for solar.
The report found the global levelised cost of electricity (LCOE) for onshore wind now sits at US 6 cents (AUD 7.6 cents) a kilowatt-hour, and solar energy at US 10 cents per kilowatt-hour, whereas fossil fuel energy costs typically range between US 5 and 17 cents per kilowatt-hour.
IRENA believes that as early as next year, the more efficient wind and solar projects could even achieve US 3 cents per kilowatt-hour.
Major oil and gas companies are also expanding their footprint into the clean energy space.
Earlier this week, Shell announced it was acquiring utility-scale solar company Silicon Ranch for more than US$200 million, marking Shell's largest investment into solar energy to date.
Solar to boom
Global solar installations are forecast to hit at least 107 gigawatts of new installed capacity.
Solar investment globally reached US$160.8 billion in 2017, up 18 per cent year on year. Most of this will come from China, which installed 53 gigawatts alone in 2017.
In Australia, rooftop solar installations increased by an additional 1.078 gigawatts in 2017, beating the previous record set in 2012 by 14 per cent, and a 50 per cent increase compared to 2016.
In 2018, the growth of microgrids - small-scale grids built with solar installations and batteries - will also provide a strong foundation for an increase in Australian solar generation.
South Australia is leading the pack when it comes to solar thermal technology and has approved the construction of the world's largest solar thermal plant, a $650 million, 150-megawatt facility in the state.
Wind to power ahead
New global wind installations are forecast to hit nearly 60 gigawatts in 2018, with an additional 67 gigawatts added in 2019.
Australia has the potential to be a world leader in this space, a report by the University of Technology, Sydney's Institute for Sustainable Futures stating Australia's potential onshore wind resources could power the nation 12 times over, although it only accounts for six per cent of current energy generation.
Australia is leading the world in terms of wind power efficiency, with the total turbines capacity factor - or its ability to run at full power- at 33 per cent for the year, compared to the global average of 23 per cent.
However, Australia lags well behind the rest of the world in terms of installed capacity, coming 17th globally.
It has the equivalent of a single two-megawatt turbine for every 11,000 Australians, compared to one turbine per 7800 people in the US or 3000 people in Germany.
Australia is also moving towards its first offshore wind farm, the $8 billion, two gigawatt Star of the South project.
Located 10 to 25 kilometres off the coast of Victoria's Gippsland region, in the Bass Strait, the wind farm could provide one and a half times the energy of the now-closed Victorian Hazelwood coal-fired power station.
Batteries to become more affordable
Lithium-ion battery prices are forecast to fall in 2018 by 10 to 15 per cent, as economies of scale make an impact.
Battery capability is also slated to improve, as capacity improves by five to seven per cent, allowing for more power in a smaller package.
Australia is investing heavily in this space, and late last year built the world's largest single battery installation - with Tesla and Neoen - in South Australia.
Following the success of the 100 megawatt South Australian Tesla installation, a smaller 20-megawatt battery deal with Tesla has been signed in Victoria, while Queensland is examining an installation larger than 100 megawatts, and the Northern Territory is laying the groundwork for its own battery packs to support the Territory's power grid.
Electric cars become more common
Global electric vehicle sales are expected to hit 1.5 million in 2018, with China alone accounting for half of this growth.
This will be a 40 per cent increase in sales from 2017.
Much of this will be driven by the rapidly falling cost of electric vehicles - thanks in part to the aforementioned falling cost of batteries.
Bloomberg Energy Finance also estimates that electric vehicles and conventional vehicles will hit price parity by 2025.
Australia's Environment and Energy Minister Josh Frydenberg believes electric vehicles will have a major impact on the country, growing from the very small base of only 4000 electrical vehicles currently on Australian roads.
"A global revolution in electric vehicles is underway and with the right preparation, planning and policies, Australian consumers are set to be the big beneficiaries," he said.
"Capitalising on a declining cost curve, new investments in recharging infrastructure and significant improvements in battery capacity, the industry has now real momentum in Europe, Asia and North America, which will inevitably be replicated here."
