The world’s capacity to generate power from renewable sources such as wind, solar, and hydro will hit a new record in 2021, according to IEA’s annual market analysis.
This remarkable expansion has occurred despite growing commodity and transportation costs, which have increased the cost of manufacturing solar panels and wind turbines.
Worldwide renewable electricity capacity is expected to increase by more than 60 percent from 2020 levels by 2026, equating to the current total global power capacity of fossil fuels and nuclear combined.
Renewables are expected to account for about 95 percent of worldwide power capacity growth through 2026, with solar PV accounting for more than half of it.
Over the next five years, China is likely to continue to dominate the world in terms of renewable capacity additions, with India expected to develop at the highest rate.
The United States and the European Union are likely to accelerate deployments, with these four markets accounting for 80 percent of global capacity growth.
IEA introduced online Renewables Data Explorer, as well as the Residential Heat Economics Calculator, which explores and compares the economics of different residential heating systems.
Additions of renewable power capacity are on track to set yet another annual record in 2021, driven by solar PV. Almost 290 gigawatts (GW) of new renewable power will be commissioned this year, which is 3 percent higher than 2020’s already exceptional growth. Solar PV alone accounts for more than half of all renewable power expansion in 2021, followed by wind and hydropower.
The growth of renewable capacity is forecast to accelerate in the next five years, accounting for almost 95 percent of the increase in global power capacity through 2026.
IEA has revised up forecast from a year earlier, as stronger policy support and ambitious climate targets announced for COP26 outweigh the current record commodity prices that have increased the costs of building new wind and solar PV installations.
Globally, renewable electricity capacity is forecast to increase by over 60 percent between 2020 and 2026, reaching more than 4 800 GW. This is equivalent to the current global power capacity of fossil fuels and nuclear combined.
Overall, China remains the leader over the next five years, accounting for 43 percent of global renewable capacity growth, followed by Europe, the United States and India. These four markets alone account for 80 percent of renewable capacity expansion worldwide.
China and the European Union are set to overshoot their current targets, setting the stage for a more ambitious growth trajectory. China’s commitment to reach carbon neutrality before 2060 has led to new nearer-term targets, such as 1 200 GW of total wind and solar PV capacity by 2030. China will reach this target four years early thanks to the availability of long-term contracts, improved grid integration, and the cost competitiveness of onshore wind and solar PV compared with coal generation in many provinces.
The trajectory of renewable capacity growth over the 2021-26 period indicates that renewable power growth in the European Union as a whole is set to outpace what the current National Energy and Climate Plans (NECPs) envision for 2030.
This trend supports the ambition of reaching the stronger targets being finalised under the “Fit for 55” programme. Rapid deployment is being driven by member countries implementing larger auction volumes, corporations contracting for more renewable electricity, and consumers continuing to install large amounts of solar panels.
Relative to existing capacity, renewable power is growing faster in India than any other key market in the world, with new installations set to double over our forecast period compared with 2015-20. Solar PV is expected to lead the way, driven by competitive auctions aimed at achieving the government’s ambitious renewable power target of 500 GW by 2030.
Over the 2021-26 period, the expansion of renewable capacity in the United States is 65 percent greater than in the previous five years. This is the combined result of the economic attractiveness of wind and solar PV, increased ambition at the federal level, the extension of federal tax credits in December 2020, a growing market for corporate power purchase agreements, and growing support for offshore wind.
Even with surging commodity prices increasing manufacturing costs for solar PV, its capacity additions are forecast to grow by 17 percent in 2021. This will set a new annual record of almost 160 GW. Solar PV alone accounts for 60 percent of all renewable capacity additions, with almost 1 100 GW becoming operational over the forecast period in our main case, double the rate over the previous five years.
In a significant majority of countries worldwide, utility-scale solar PV is the least costly option for adding new electricity capacity, especially amid rising natural gas and coal prices. Utility-scale solar projects continue to provide over 60 percent of all solar PV additions worldwide. Policy initiatives in China, the European Union and India are boosting the deployment of commercial and residential PV projects.
Onshore wind additions through 2026 are set to be almost 25 percent higher on average than in the 2015-2020 period. Global onshore wind additions doubled in 2020, reaching an exceptional level of almost 110 GW. This was driven by an acceleration in China as developers rushed to complete projects before subsidies expired. While annual additions in the coming years are not expected to match 2020’s record, we forecast that they will average 75 GW per year over the 2021-2026 period.
Total offshore wind capacity is forecast to more than triple by 2026. By then, offshore wind additions are expected to account for one-fifth of the global wind market, a major milestone. Global capacity additions of offshore wind are set to reach 21 GW by 2026, thanks to rapid expansion in new markets beyond Europe and China. This includes large-scale projects that are expected to be commissioned in the United States, Chinese Taipei, Korea, Viet Nam, and Japan.
Following a historic decline last year amid global transport disruption, total biofuel demand is on course to surpass 2019 levels in 2021. Annual global demand for biofuels is set to grow by 28 percent by 2026, reaching 186 billion litres.
The United States leads in volume increases, but much of this growth is a rebound from the drop caused by the pandemic.
Asia accounts for almost 30 percent of new production over the forecast period, overtaking European biofuel production by 2026. This is thanks to strong domestic policies, growing liquid fuel demand and export-driven production. Recent Indian ethanol policies and blending targets for biodiesel in Indonesia and Malaysia are responsible for most of the growth in Asia. India is set to become the third largest market for ethanol demand worldwide by 2026.