|Enel Green Power's Roadrunner Solar Plant outside McCamey, Texas. 2020 brought a clear divergence in market conditions between renewables and fossil fuel operators, the International Energy Agency said.
Source: Enel Green Power
Renewable energy is set to defy the drag of the coronavirus pandemic and its economic shock and to close the year with record installation figures and its highest ever share of newly built capacity, the International Energy Agency said in its annual renewables outlook Nov. 10. And more is to come.
Contrasting with sharp declines in oil, gas and coal, green power additions globally will climb to nearly 200 GW in 2020, making up almost 90% of all new power capacity, the agency, or IEA, said. Leading the way are China and the U.S., where developers are rushing to take advantage of expiring incentives.
"It is not an exaggeration [to say] that the energy system is experiencing its worst year since the Second World War," IEA Executive Director Fatih Birol said in a Nov. 10 webinar to launch the report, adding that the pain is not felt evenly across the system. "Renewable energy appears to be immune to COVID-19," he added. This is due in part to priority grid access and long-term subsidy support.
The electricity generated by renewable technologies will increase 7% globally in 2020, underpinned by the record new capacity additions, the IEA estimated. This growth will come despite a 5% annual drop in global energy demand, the largest since World War II.
Renewables growth is set to accelerate further in 2021. Powered by market activity in India and the EU, 2021 will see the global renewables fleet increase 10% as developers commission projects that experienced construction and supply chain disruption this year, the IEA said.
This will make 2021 the fastest growth year since 2015. In India, annual installations will double compared to those seen in 2020. About 15 GW of wind and solar capacity was awarded in the first half of 2020 in India, Birol said.
Biden's climate pledge more than symbolism
The trajectory of growth will depend on policy decisions in key markets such as China. Additionally, cash-strapped households have slowed the ramp-up of rooftop solar photovoltaic, a trend the IEA said could be reversed by effective subsidy support. Under favorable conditions, annual solar installations could reach 150 GW by 2022, up 40% in three years, the agency said.
"Renewables are resilient to the [COVID-19] crisis but not to policy uncertainties. Governments can tackle these issues to help bring about a sustainable recovery and accelerate clean energy transitions," Birol said.
In the U.S., for instance, clean energy pledges by President-elect Joe Biden, if implemented, could lead to a much more rapid deployment of solar and wind, contributing to a faster decarbonization of the power sector.
Part of Biden's climate plan is to rejoin the Paris Agreement on climate change, recently abandoned by the Trump administration. "The U.S. going back to the Paris Agreement means much more than symbolism. It will definitely give very strong momentum in the fight against climate change — political momentum, momentum on the business side," Birol said.
Record auction volumes, investor appetite
The IEA's outlook for the next five years sees renewable power technologies buoyed by cost reductions and sustained policy support. Total wind and solar photovoltaic capacity is on course to surpass natural gas in 2023 and coal in 2024, the agency said. Meanwhile, annual offshore wind additions will surge in the coming years, accounting for one-fifth of the total wind market in 2025.
Renewable electricity produced globally will consequently reach new heights. "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."
Countries across the world, led by China, India and Europe, also auctioned record levels of renewables capacity, the IEA said. Investor appetite for renewables has been much stronger than for other energy sources, Birol added. Solar, which the IEA dubbed the new king of the global energy system, is attracting particular attention, with shares in solar companies more than doubling this year, according to the agency.