The energy watchdog’s latest market update shows the amount of renewable electricity capacity added rose by 45% in 2020 to 280 gigawatts - an increase it expects to become the "new normal"
Renewable sources of electricity such as wind and solar grew at their fastest rate in two decades in 2020 and are set to expand in the coming years at a much faster pace than prior to the pandemic, says a report by the International Energy Agency (IEA).
The energy watchdog’s latest market update shows the amount of renewable electricity capacity added rose by 45% in 2020 to 280 gigawatts (GW), the largest year-on-year increase since 1999. That extra power is equal to the total installed capacity of ASEAN, a grouping of 10 dynamic South-East Asian economies.
The analysis notes that the 2020 increase is set to become the “new normal”, with about 270 GW of renewable capacity on course to be added in 2021 and almost 280 GW in 2022, despite a slowdown in China after an exceptional level of additions last year.
Those forecasts have been revised upwards by more than 25% from the IEA’s previous estimates in November as governments around the world have auctioned record levels of renewable capacity and companies have signed record-level power purchase agreements, even as the pandemic spread macroeconomic uncertainties and suppressed demand.
“Wind and solar power are giving us more reasons to be optimistic about our climate goals as they break record after record,” said IEA executive director Dr Fatih Birol. “Last year the increase in renewable capacity accounted for 90% of the entire global power sector’s expansion.”
IEA calls for governments to build on “promising momentum” of renewable electricity in 2020
The IEA’s report highlights that shifting power generation to renewable sources is a “key pillar” of global efforts to reach carbon neutrality, but notes that CO2 emissions are set to rise this year because of a parallel rise in coal use, underscoring the “major policy changes and investments in clean energy needed to meet climate goals”.
Dr Birol has, therefore, called upon governments to build on renewables’ “promising momentum” through policies that encourage greater investment in solar and wind, in the additional grid infrastructure they will require, and in other key renewable technologies such as hydropower, bioenergy and geothermal.
“A massive expansion of clean electricity is essential to giving the world a chance of achieving its net-zero goals,” he added.
Global wind capacity additions almost doubled last year to 114 GW, according to the report. Although it highlights that the growth will “slow down” in 2021 and 2022, the increases will still be 50% larger than the average expansion during the 2017-19 period.
Solar PV installations will continue to break new records, with annual additions forecast to reach more than 160 GW by 2022. That would be almost 50% higher than the level achieved in 2019 prior to the pandemic, affirming solar’s position as the “new king” of global electricity markets.
China’s strong renewables growth to stabilise over next two years
The IEA said China is at the centre of global renewable demand and supply, accounting for about 40% of global renewable capacity growth for several years.
In 2020, the nation’s share rose to 50% for the first time due to a rush to complete projects before government subsidies were phased out. In 2021-22 renewables growth in China is set to stabilise at levels that are below the 2020 record but still more than 50% above where it was during the 2017-19 period.
The report highlights that any slowdown in China in the coming years will be compensated for by strong growth in Europe, the US, India and Latin America where government support and falling prices for solar PV and wind continue to drive installations.
China is the largest manufacturer of solar panels and wind turbines, as well as the biggest supplier of key raw materials such as silicon, glass, steel, copper and rare earth materials needed to build renewable energy technologies.
But the analysis notes that supply chain constraints, including due to a fire in a Chinese silicon factory last year, have recently pushed up prices of PV modules, highlighting the sector’s “potential vulnerabilities in the longer term”.
India’s renewable energy capacity additions declined by more than 50% in 2020
In the US, where President Joe Biden is seeking to ramp up the nation’s renewable capacity, the IEA expects clean energy growth this year and in 2021 to be “mainly spurred by the extension of federal tax credits”.
The forecast does not take into account the Biden administration’s new emissions reduction targets or its infrastructure bill. If enacted, the energy watchdog expects the bill to drive a “much stronger acceleration” in the deployment of renewables after 2022.
Elsewhere, India’s capacity additions declined by more than 50% last year compared with 2019 – but growth is set to rebound and renewable expansion is expected to set a new record by 2022, driven by the commissioning of delayed projects.
However, the IEA said the current surge in Covid-19 cases in India has created short-term uncertainty for this year.
As for transport biofuel, production declined by 8% globally in 2020 as the pandemic limited travel. The report notes that production is expected to recover this year to 2019 volumes and expand by a further 7% in 2022 as biodiesel and hydrotreated vegetable oil (HVO) output increases globally and ethanol expands in India.
But it added that the ongoing effects of the Covid-19 crisis on demand, as well as price competition for sugar cane from sweetener manufacturers in Brazil, continue to keep ethanol production in both the US and Brazil below 2019 levels.
At the same time, global HVO production capacity is expected to nearly double in the next two years, significantly expanding the capability of producing biofuels from waste and residue feedstocks.