Renewables will account for almost 90 percent of the increase in total power capacity in 2020 and will accelerate in 2021 to their fastest growth in the last six years, IEA report said.
The new additions of renewable power capacity worldwide, driven by China and the United States, will increase to a record level of almost 200 gigawatts this year.
IEA’s Renewables 2020 report forecasts said this rise – representing almost 90 percent of the total expansion in overall power capacity globally – is led by wind, hydropower and solar PV. Wind and solar additions are set to jump by 30 percent in both the United States and China as developers rush to take advantage of expiring incentives.
India and the European Union will be the driving forces behind a record expansion of global renewable capacity additions of nearly 10 percent next year – the fastest growth since 2015 – according to the report. This is the result of the commissioning of delayed projects where construction and supply chains were disrupted by the pandemic, and growth in markets where the pre-Covid project pipeline was robust.
India is expected to be the largest contributor to the renewables upswing in 2021, with the country’s annual additions doubling from 2020.
“The resilience and positive prospects of the sector are clearly reflected by continued strong appetite from investors – and the future looks even brighter with new capacity additions on course to set fresh records this year and next,” said Fatih Birol, executive director of IEA.
Over the first 10 months of 2020, China, India and the European Union have driven auctioned renewable power capacity worldwide 15 percent higher than in the same period last year – a new record that shows expectations of strong demand for renewables over the medium and long term.
Shares of publicly listed renewable equipment manufacturers and project developers have been outperforming most major stock market indices and the overall energy sector.
By October, shares of solar companies worldwide had more than doubled in value from December 2019.
The expiry of incentives in key markets and the resulting uncertainties lead to a small dip in renewables capacity additions in 2022. If countries address these policy uncertainties in time, global solar PV and wind additions could each increase by a further 25 percent in 2022.
Factors influencing the pace of deployment will be policy decisions in markets like China, and effective support for rooftop solar PV, which has been impacted by the crisis as households and businesses reprioritised investments. Under favourable policy conditions, solar PV annual additions could reach a record level of 150 gigawatts (GW) by 2022 – an increase of almost 40 percent in three years.
The electricity generated by renewable technologies will increase by 7 percent in 2020, underpinned by the record new capacity additions, the report estimates. This growth comes despite a 5 percent annual drop in global energy demand, the largest since the Second World War.
Biofuels used in transport are set to experience their first annual decline in two decades, driven by the wider plunge in transport fuel demand this year as well as lower fossil fuel prices reducing the economic attractiveness of biofuels.
Demand for bioenergy in industry is also falling as a result of the wider drop in economic activity. The net result of these declines and the growth of renewable power is an expected overall increase of 1 percent in global renewable energy demand in 2020.
Renewable fuels for transport and industry are an area in particular need of potential policy support, as the sector has been severely hit by the demand shock caused by the crisis. More can and should be done, to support deployment and innovation in bioenergy to supply sustainable fuels for those sectors.
The report’s outlook for the next five years sees cost reductions and sustained policy support continuing to drive strong growth in renewable power technologies. Total wind and solar PV capacity is on course to surpass natural gas in 2023 and coal in 2024.
Driven by rapid cost declines, annual offshore wind additions are set to surge, accounting for one-fifth of the total wind market in 2025. The growing capacity will take the amount of renewable electricity produced globally to new heights.
In 2025, renewables are set to become the largest source of electricity generation worldwide, ending coal’s five decades as the top power provider. By that time, renewables are expected to supply one-third of the world’s electricity – and their total capacity will be twice the size of the entire power capacity of China today.