Renewables capacity additions will grow 7% this year. Image: Getty.
Renewables will be responsible for nearly 90% of new power capacity this year as the sector shrugs off COVID-19, with an even greater 2021 on the horizon.
New analysis released today by the International Energy Agency (IEA) shows that the renewables sector is to shrug off any impact from the COVID-19 pandemic and report growth of around 7% this year, supported by long-term procurement contracts, priority dispatch on national grids and ongoing installations.
As a result, total renewable capacity additions will reach nearly 200GW this year, a feat achieved despite a worldwide contraction in energy demand triggered by the pandemic and associated national lockdowns.
Wind and hydropower additions are forecast to experience the most growth this year, with solar PV relatively stable year-on-year, the IEA said, standing at around 107GW in comparison to last year’s 108GW. This has been attributed to continued growth in utility-scale solar additions being somewhat stymied by a stagnant rooftop solar market throughout 2020.
The share of total solar additions from the rooftop sector has fallen since 2018, when it reached a high of 43% and the segment looks set to continue to lose ground into next year, when it is projected to fall to around 31%.
Solar is expected to rebound strongly next year however, with the IEA expecting around 117GW of new solar to be installed in its main case. This will rise again to 119GW in 2022, however depending on the shape of new policy frameworks, this could rise by a further 11GW based on an accelerated deployment case in China, with a further 19GW possible depending on accelerated cases elsewhere.
As a result, the IEA is forecasting for anywhere between 119GW and 148GW to be installed in 2022 – equivalent to a 40% increase in just three years.
By 2023, the IEA expects that total installed wind and solar capacity will exceed that of natural gas and topple coal by the following year. Solar, which the IEA crowned as the new “king of electricity markets” last month, will account for the majority – 60% - of new renewable capacity additions by 2025, effectively double that of wind.
A considerable amount of growth witnessed in renewables this year will occur in China, which expects to see installations soar by around 30% year-on-year as developers rush to qualify projects for incentives before the national policy framework changes next year.
But while such a contraction of policy support in the world’s largest renewables market may have triggered a fall in deployment in years previous, the IEA expects an even stronger 2021 for renewables, with Europe and India coming to the fore. Global renewables capacity additions are expected to increase by 10% in 2021, a new record growth factor and the largest increase since 2015, as projects delayed by the COVID-19 pandemic start to complete and markets with strong renewables pipelines roar back into life.
Of critical importance to this growth is that investor appetite has remained strong in spite of the pandemic. The IEA notes that between January and October this year, auctioned renewable energy capacity was up 15% year-on-year, a factor which will also contribute to capacity additions next year as contracted projects start to come onstream.
However, the IEA has warned of darker clouds on the horizon. While solar deployment could continue to climb in 2022, wider renewables capacity additions are expected to fall somewhat in that year as a result of a looming policy gap. The inference is that while renewables has remained resilient under COVID-19, it is not immune to policy uncertainty.
“Governments can tackle these issues to help bring about a sustainable recovery and accelerate clean energy transitions. In the United States, for instance, if the proposed clean electricity policies of the next US administration are implemented, they could lead to a much more rapid deployment of solar PV and wind, contributing to a faster decarbonisation of the power sector,” Fatih Birol, chief executive at the IEA, said.
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