New IEA Report Predicts Surge in Worldwide New Renewable Generation

Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Renewables were the only energy source for which demand increased in 2020 despite the pandemic, while consumption of all other fuels declined, according to a new report from the International Energy Agency (IEA) (Paris, France). The report, Renewable Energy Market Update: Outlook for 2021 and 2022, asks whether renewable energy will continue growing in 2021 and 2022, and at what rate, assuming the global economy recovers from the COVID-19 pandemic.

"Wind and solar power are giving us more reasons to be optimistic about our climate goals as they break record after record," commented IEA Executive Director Fatih Birol. "Last year, the increase in renewable capacity accounted for 90% of the entire global power sector's expansion."

Birol encouraged governments to "build on this promising momentum through policies that encourage greater investment in solar and wind, in the additional grid infrastructure they will require. ... A massive expansion of clean electricity is essential to giving the world a chance of achieving its net-zero goals.''

But a global surge in coal demand this year could upend progress toward a net-zero goal. A separate IEA report, issued last month, estimated that rising coal use this year will cause energy-related carbon dioxide emissions to rise 1.5 billion metric tons in 2021, to an estimated 33 billion metric tons. For more on that, see April 21, 2021, article - IEA Report Highlights China's Surging GDP and Energy Demand.

The new IEA renewable energy report doesn't say much about coal. Rather, it details the growth in 2020, by technology, country, and region, of wind, solar and other forms of renewable energy. It also projects renewable energy capacity additions for 2021 and 2022.

While the global demand for all other energy sources fell in 2020, the IEA report noted, renewable energy capacity additions around the world increased to nearly 280,000 megawatts (MW), a 45% increase over 2019 and the highest year-on-year increase since 1999. The energy agency expects similarly large capacity additions in 2021 and 2022. It calls surging renewables growth the "new normal" for this year and the next, when renewables are projected to account for nearly 90% of new electric generation additions around the world.

Click on the image at right to see how renewable energy capacity additions around the world have grown in recent years, and are projected to continue growing in 2021 and 2022.

By technology, the IEA report projects that worldwide solar power will surge the most among renewables over the 2020-2022 period while wind decelerates from its recent period of extraordinary growth. Around the world, solar installations grew by about 130,000 MW last year, compared to wind's growth of about 115,000 MW. But going forward, solar capacity additions are expected to rise to about 145,000 MW this year and 160,000 next year. New wind generation, by contrast, is expected to decline to slightly more than 80,000 MW this year and slightly less than 80,000 next year.

Click on the image at right to see IEA's estimate of renewable generation additions by technology for 2020, 2021 and 2022.

New hydro capacity is expected to rise this year over 2020 and hold steady in 2022.

In late 2020, an agency report included projected strong worldwide growth in new renewable generation, but the current report, released May 11, showed renewable energy growing 25% faster than the IEA had predicted six months ago. China's renewable generation estimate for 2021 and 2022 has increased 45% since last November's IEA report, while the appetite for renewable generation increased by about 20% in the U.S. and 10% in Europe since last November.

Click on the image at right to see IEA's November 2020 and May 2021 estimates of renewable energy growth for 2021-2022 for various countries and regions.

China's surge is mainly attributable to a yearend 2020 ending of renewable subsidies.

In the U.S., last December's omnibus budget bill extended the Production Tax Credit (PTC) for new wind and the Investment Tax Credit (ITC) for new solar by one year.

Last December's changes to the PTC and ITC will have the most significant impact on onshore wind power, as the extensions make new projects starting construction in 2021 eligible for a $18-per-megawatt-hour tax credit, the Renewable Energy Market Update report noted. Extending the PTC by a year led to a 25% increase in IEA's estimation of new onshore wind generation coming online in the U.S. over the 2021-2022 period. The agency added that the extension of the ITC for solar power "has little effect on our short-term forecast, as the December extension covers only projects starting construction in 2022 and 2023. Still, declining costs, a recovering distributed PV sector and growing interest in corporate PPAs offer hope for more extensive solar PV expansion."

The IEA report showed that new renewable generation soared in China soared in 2020 compared to a still-robust 2017-2019 period. While those new capacity additions are expected to taper off in 2021 and 2022, they are still expected to sharply surpass capacity additions in any other country or region over that two-year timeframe.

Click on the image at right to see renewable energy capacity additions for China, the U.S., Europe and other world regions from 2021 through 2022.

The IEA report noted that its projections for the U.S. don't include infrastructure initiatives announced in March by the Biden administration. The administration's $2.3 trillion infrastructure vision includes significant boosts to renewable energy. If that vision is enacted into law, it would boost new U.S. renewable energy construction. However, the administration is still negotiating with Congress over those measures.

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