Global Renewable Energy Industry Grew in 2020 at its Fastest Rate Since 1999 - Nick Whittle
The International Energy Agency reported last month that renewable power generation grew in 2020 at its fastest pace in over twenty years, with the rate of expansion in renewables set to increase further in coming years. The IEA expects growth rates in Europe and the United States to overtake China, which grew its renewable generating base at a remarkable rate in 2020, and for these two regions to expand even more rapidly than previously forecast. According to the IEA report, 2020’s increase of 45% in installed renewable generating capacity to 280 gigawatts (GW) is the largest year-on-year increase since 1999. That increase equals the total installed capacity of the ASEAN bloc of 10 South-East Asian nations.
With another 270GW of renewable capacity slated for 2021, and almost 280GW to be added in 2022, the IEA expects the 2020 increase to become the new normal. The agency has revised its forecasts upwards by more than 25% from its previous estimates in November. Government auctions of renewable capacity and signatures of power purchase agreements have hit record levels around the world, despite the rise in uncertainty and decline in demand as a result of the pandemic.
Fatih Birol, the Executive Director of the IEA, welcomed the report and stated that, “Wind and solar power are giving us more reasons to be optimistic about our climate goals as they break record after record. Last year, the increase in renewable capacity accounted for 90% of the entire global power sector’s expansion. Governments need to build on this promising momentum through policies that encourage greater investment in solar and wind, in the additional grid infrastructure they will require, and in other key renewable technologies such as hydropower, bioenergy and geothermal. A massive expansion of clean electricity is essential to giving the world a chance of achieving its net-zero goals.’’
Last year’s addition of 114GW of wind power capacity was almost double the previous year, and while the IEA expects that growth to slow in 2021 and 2022, it should still be 50% higher than the average expansion between 2017 and 2019. The IEA forecasts additional solar power installations to reach over 160GW by 2022, almost 50% above the 2019 level, firmly placing solar power generation as the new dominant force in global electricity markets.
Turning to the demand side, China remains the main driver and is set to account for around 40% of global renewable capacity growth for several years to come. A rush of project completions in 2020 before the phase-out of government subsidies pushed China’s share to over 50% for the first time. While this should stabilise in 2021–22, China’s installed renewable power growth rate should still be over 50% more than in the 2017–19 period. The G7’s commitment to phase out coal-burning power generation is set to cement strong renewables growth in Europe and the United States, while India and Latin America will also benefit from government support and falling prices for solar PV and wind installations, more than compensating for any slowdown in China in the coming years.
The IEA’s forecast for renewable capacity growth in the United States this year and next does not take into account the Biden administration’s new emissions reduction targets or its infrastructure bill, and is mainly spurred by the extension of federal tax credits. Should the infrastructure bill be enacted, renewable capacity growth would greatly accelerate in 2022 and thereafter.
Although the Covid-19 situation in India has added to project delays and other uncertainties, and indeed the country’s capacity growth fell last year by almost 50% compared to 2019, the IEA forecasts that India’s renewables growth is set to rebound in 2022 and following, driven by completions of delayed projects.
The IEA report also details that the decline in travel caused by the current pandemic impacted the production of biofuel, which fell by 8% year-on-year in 2020. Nevertheless, the IEA expects production to pick up this year to 2019 volumes, and grow by another 7% in 2022, with global increases in biodiesel and hydrotreated vegetable oil (HVO) and an expansion in ethanol production in India. Ethanol production in Brazil and the United States remains depressed as a result of Covid-19 and price pressures for sugar cane in Brazil from sweetener producers, but global HVO capacity from waste and residue feedstocks is still set to double over the next two years.
Thus, the outlook for global renewable energy remains very bullish. Indeed, it is telling that the IEA is now forced to update its forecasts every six months because of the rapid rate of capacity addition across the world, particularly in solar installations. As equipment and installation costs continue to fall, it is not easy to see a way forward for any fossil fuel producers. The acceleration in acceptance of renewable energy, both by regulators and consumers, is rapidly squeezing out not just coal but all the legacy fossil fuels, and even in India and China, the two major burners of coal for power generation, the writing is now firmly on the wall.
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