Overcoming the odds brought about by the COVID-19 pandemic, the renewable energy sector is poised to end the year on a high, with renewables accounting for almost 90% of the increase in total global power capacity this year. That growth is expected to continue well into next year.
According to a report by the International Energy Agency (IEA), new additions of renewable power capacity worldwide, largely driven by China and the United States, will increase to a record level of almost 200 gigawatts (GW) in 2020.
The rise – representing almost 90% of the total expansion in overall power capacity globally – is being led by wind, hydropower and solar PV.
The IEA’s Renewables 2020 report forecasts a 30% jump in wind and solar additions in China and the US this year as developers rush to take advantage of expiring incentives.
The report predicts an even stronger growth next year, with India and the European Union being the driving forces behind a record expansion of global renewable capacity additions of nearly 10% in 2021, marking the fastest growth since 2015.
The report attributes the growth to the commissioning of projects which had been delayed due to disruption in construction and supply chains caused by the pandemic, and growth in markets where the pre-COVID project pipeline is robust.
India is expected to be the largest contributor to the renewables upswing in 2021, with the country’s annual additions projected to almost double from 2020.
About 15 GW of wind and solar capacity was awarded in the first half of 2020 in India.
“Renewable power is defying the difficulties caused by the pandemic, showing robust growth while other fuels struggle,” said Dr Fatih Birol, the IEA Executive Director. “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.”
While highlighting that the expiration of renewable incentives in key markets could lead to a small decline in renewables capacity additions in 2022, the agency stressed if countries address these policy uncertainties in time, global solar PV and wind additions could increase by a further 25% in 2022.
Under favorable policy conditions, annual solar installations could reach 150 GW by 2022, up 40% in three years, it said.
“Renewables are resilient to the COVID crisis but not to policy uncertainties,” Birol said. “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 decarburization of the power sector.”
The report estimates the electricity generated by renewable technologies to increase by 7% globally in 2020, despite a 5% annual drop in global energy demand, the largest since the Second World War.
Furthermore, 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 photovoltaic capacity is on course to surpass natural gas in 2023 and coal in 2024, the agency said.
Driven by rapid cost declines, annual offshore wind additions are set to surge, accounting for one-fifth of the total wind market in 2025, it added.
“In 2025, renewables are set to become the largest source of electricity generation worldwide, ending coal’s five decades as the top power provider,” Birol said. “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.”