IEA Says Renewable Energy is Set for ‘another record year of growth’
Despite the Covid-19 pandemic and rising costs of raw materials around the world it has been another record year for renewable energy according to the International Energy Agency (IEA).
Recently published, the IEA’s new Renewable Market Report says that the growth of the world’s capacity to generate electricity from solar panels, wind turbines and other renewable technologies is on course to accelerate in the years to come. The Paris based organisation is expecting 2021 to set a fresh record for new installations with nearly 290 gigawatts of renewable power capacity being added across the globe. Even though costs have risen for key materials to make solar panels and wind turbines, renewable energy generation capacity, mostly in the form of wind turbines and solar panels is forecast to surpass the previous all-time high set last year. Solar PV’s growth in renewable electricity is forecast to increase its capacity additions by 17% in 2021 taking it to a new record of 160 GW. Within the same time frame, onshore wind additions are set to be almost one-quarter higher on average than during the 2015-20 period. Total offshore wind capacity is forecast to more than triple by 2026. It is looking likely on current trends, that renewable energy generating capacity will exceed that of fossil fuels and nuclear energy combined by 2026.
The IEA report expects this record growth for renewables to take place regardless of today’s high commodity and transport prices. However, if commodity prices continue to remain high through the end of next year, the cost of wind investments would go back up to levels last seen in 2015 and three years of cost reductions for solar PV would be erased.
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Fatih Birol, executive director of the IEA, said:
“This year’s record renewable energy additions are yet another sign that a new global energy economy is emerging. 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.”
The IEA forecasts in its report that the planet’s renewable electricity capacity will jump to more than 4,800 GW by the year 2026, which is equivalent to the current total global power capacity of fossil fuels and nuclear combined. This is an increase of over 60% compared with 2020 levels. Capacity refers to the maximum amount of energy that installations can produce, not what they’re necessarily generating.
Growth has been driven by stronger support from many governments around the world adopting new climate and energy policies with more ambitious clean energy goals on cutting greenhouse gas emissions before and during the COP26 UN climate summit in Glasgow in November.
The report says:
“We have revised up our forecast from a year earlier as stronger policy support and ambitious climate targets announced for COP26 outweigh the current record commodity prices that have increased the costs of building new wind and solar PV installations.”
Renewables are in line to account for almost 95% of the increase in global power capacity through 2026, with solar PV alone providing more than half. The amount of renewable capacity added over the period of 2021 to 2026 is anticipated to be 50% higher than from 2015 to 2020.
This level of growth, however, is still only about half that required to meet net zero carbon emissions by 2050.
As the world has emerged from the Covid pandemic, the world has seen both raw material and energy prices rise. These price increases have cancelled out some of the cost falls of recent years in the renewable sector. If prices continue to rise next year, the cost of wind power will return to levels last seen in 2015, and two to three years of cost falls in solar power will be wiped out.
Lead author of the report, Heymi Bahar, said that commodity prices were not the main obstacles to growth, however. Wind and solar would still be cheaper than fossil fuels in most areas, he noted. Gaining permission for new wind energy projects around the world was the main obstacle to further growth and policy measures were needed to expand use of solar power for consumers and industry.
Heymi Bahar said:
“We need a gear change to meet net zero. We have already seen a very important gear change in recent years, but we need to move up another gear now. It is possible, we have the tools. Governments need to show more ambition, not just on targets but on policy measures and plans.”
According to the IEA, it looks like China will remain the main driver of renewable capacity growth in the coming years, with Europe, the U.S. and India following on behind. China is expected to reach 1200 GW of total wind and solar capacity in 2026 which is four years earlier than its current target of 2030. India is set to come top in terms of the rate of growth, doubling new installations compared with 2015-2020. Deployments in Europe and the United States are also on track to speed up significantly from the previous five years. These four markets together account for 80% of renewable capacity expansion worldwide.
China is the world’s biggest carbon emitter currently, but the Chinese government appeared unwilling to commit to the strengthening of its emissions-cutting targets which had been hoped for by many. China ‘s target is to peak in emissions by 2030 which is considered much too late by many analysts if the world is to limit global temperatures to 1.5% above pre-industrial levels. This was the Paris agreement target which was the focus of the Cop26 talks.
In Fatih Birol’s opinion, China’s rapid expansion of renewable energy could see the country reaching an emissions peak “well before 2030”.
India, the world’s third-biggest emitter, also experienced strong growth in renewable energy capacity in the past year. However, it’s target of reaching net zero by 2070, which was set out at Cop26, is also regarded as too weak by many.
Fatih Birol said:
“The growth of renewables in India is outstanding, supporting the government’s newly announced goal of reaching 500GW of renewable power capacity by 2030 and highlighting India’s broader potential to accelerate its clean energy transition.”
The demand for biofuel in 2021 is expected to surpass 2019 levels despite rising prices which are limiting growth, following a huge decline caused by the pandemic. The demand for biofuel is set to grow strongly to 2026 with Asia accounting for almost 30% of new production. It is anticipated that India will rise to become the third largest market for ethanol worldwide, behind the United States and Brazil.
Governments need to further accelerate the growth of renewables by addressing key barriers such as inconsistent policy approaches, social acceptance issues, permitting and grid integration challenges and inadequate remuneration. Another major obstacle is the high cost of financing renewables in developing countries.
Even with the faster deployment of renewable energy highlighted by the IEA’s report, progress still falls short of what is needed in a global pathway to net zero emissions by mid-century.