International Energy Agency Releases Renewable Energy Forecast
Dec 7, 2020
Key findings include:
- Renewables’ resilience is driven by the electricity sector—Global energy demand is set to decline 5%—but long-term contracts, priority access to the grid and continuous installation of new plants are underpinning strong growth in renewable electricity.
- Europe and India will lead a renewables surge in 2021—India is expected to be the largest contributor to the renewables upswing in 2021, with the country’s annual additions almost doubling from 2020. A large number of auctioned wind and solar PV projects are expected to become operational following delays due not only to Covid-19 but also to contract negotiations and land acquisition challenges. In the European Union, capacity additions are forecast to jump in 2021. This is mainly the result of previously auctioned utility-scale solar PV and wind projects in France and Germany coming online. Growth is supported by member states’ policies to meet the bloc’s 2030 renewable energy target and by the EU recovery fund providing low-cost financing and grants.
- In the Middle East and North Africa region and Latin America, renewable energy additions recover in 2021, led by the commissioning of projects awarded previously in competitive auctions.
- Increasing policy certainty in key markets could significantly boost renewables deployment—The expiry of incentives in key markets and the resulting policy uncertainties lead to a small decline in renewables capacity additions in 2022 in the main forecast. If countries address policy uncertainties, global solar PV and wind additions could each increase by a further 25% in 2022.
- In China, onshore wind and solar PV subsidies expire this year, while offshore wind support ends in 2021. The policy framework for 2021-25 will be announced at the end of next year, leaving uncertainty over the pace of renewables expansion in China in 2022 and beyond.
- Renewable additions are also set to be held back in 2022 by the expiry of production tax credits for onshore wind in the United States, the ongoing financial struggles of distribution companies in India, and delayed auctions in Latin America. In particular, onshore wind additions are expected to decline by 15% globally, while offshore wind expansion continues to accelerate around the world.
- In the United States, if additional policies for clean electricity are implemented, solar PV and wind may see much more rapid deployment, contributing to a faster decarbonization of the US power sector.