With stronger policies linked to climate change, renewables are now being deployed at record levels, with the world’s capacity to generate electricity from renewable sources, such as solar panels and wind turbines, set to accelerate over the coming years, the IEA said in a report.
The report, titled Renewables 2021, found that the number of renewable electricity installations is set to hit a new all-time record in 2021, driven heavily by solar power. This year, almost 290 gigawatts (GW) of renewable power will be commissioned, a three percent increase over 2020’s growth. Of this, solar power accounted for over half of all renewable power expansion in 2021, followed by wind and hydropower.
Over the next five years, renewable capacity is expected to accelerate, and account for almost 95 percent of all increases in global power capacity through to 2026. This growth will equal a more than 60 percent increase from 2020 levels to 4,00 GW, which is also equivalent to the current global power capacity for fossil fuels and nuclear energy combined.
“This year’s record renewable electricity additions of 290 gigawatts are yet another sign that a new global energy economy is emerging,” Fatih Birol, IEA executive director, said.
“The high commodity and energy prices we are seeing today pose new challenges for the renewable industry, but elevated fossil fuel prices also make renewables even more competitive.”
Over the next five years, China will dominate the space for renewable capacity growth, accounting for 43 percent of global growth. Europe, the US and India round out the top four, and together these markets will account for 80 percent of all capacity growth.
Both China and the EU are predicted by the IEA to overshoot their current targets, with the agency suggesting that China will reach its goal of 1,200 GW of wind and solar capacity by 2030 four years early. Meanwhile in the EU, the IEA believes the organisation will overshoot the current National Energy and Climate Plans 2030 goals.
“China continues to demonstrate its clean energy strengths, with the expansion of renewables suggesting the country could well achieve a peak in its CO2 emissions well before 2030,” Birol said.
In the US and India, ambitious targets, improved competitiveness, and policy support will help propel renewable power to new heights. Compared to current capacity, renewable power will grow faster in India than in any other market in the world, the IEA said, with solar leading the way as part of the government’s target of 500 GW of renewable capacity by 2030. In the next five years, renewable capacity expansion in the US is expected to be 65 percent larger than in the previous five years.
“The growth of renewables in India is outstanding, supporting the government’s newly announced goal of reaching 500 GW of renewable power capacity by 2030 and highlighting India’s broader potential to accelerate its clean energy transition,” Birol commented.
Commodity price heights won’t slow solar, wind
While commodity prices have continued to rise and increase manufacturing costs for solar, capacity is still expected to grow 17 percent this year, the IEA said. Furthermore, in a “significant majority of countries worldwide,” utility-scale solar energy is the lowest cost option for adding new electricity capacity, the IEA added. This fact means that utility-scale solar projects have continued to account for over 60 percent of all solar additions worldwide.
Meanwhile, wind energy growth is expected to be no slouch over the next five years. While solar energy may be rapidly growing, onshore wind capacity growth is predicted to be nearly 25 percent higher over the next five years than the last five. In addition, the IEA predicts that offshore wind will triple over the next five years and account for 20 percent of the global wind market.
The cost increases of polysilicon, steel, aluminium, copper, and freight fees, mean that the IEA now estimates that the investment costs for utility-scale solar and onshore wind power to be 25 percent higher than in 2019. Furthermore, around 100 GW of contracted capacity growth is now at risk of being delayed due to commodity price shocks. Should commodity prices continue to remain high through 2022, the agency believes that three years of cost reductions for solar, along with five years for wind power, would be erased.
The IEA pointed to government policy as key to further accelerating the growth of renewables. Governments need to address key barriers to the industry, including grid integration challenges, insufficient remuneration, and social acceptance issues. The agency also noted that the high financing costs of renewable energy in the developing world remains a major challenge.
In one scenario which assumes some of the challenges are overcome, the IEA predicts that renewable capacity growth would be 25 percent higher in the next five years.
However, while the growth in renewables may present a positive move for climate change advocates, the IEA said that more is still needed to hit net zero emissions by 2050. The agency said that solar and wind energy, average annual growth would need to almost double its current predictions over the next five years to hit the net zero scenario.
Furthermore, biofuel demand would need to quadruple, with countries implementing existing and planned policies that will ensure biofuels will be produced sustainably and avoid negative impacts of the sector. Renewable heat demand growth would also need to triple from the agency’s current predictions.
