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Faster-than-ever renewable electricity growth supports emergence of a new global energy economy
Stronger policies and raised climate goals leading into COP26 are driving renewables to new records, but faster deployment across all key sectors is needed to reach net zero, the International Energy Agency (IEA) says in a new report.
It adds 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 over the coming years, with this year expected to set a fresh all-time record for new installations.
Despite rising costs for key materials used to make solar panels and wind turbines, additions of new renewable power capacity are forecast to increase to 290 GW this year, surpassing the previous all-time high set last year, the IEA’s annual ‘Renewables Market Report’ shows.
By 2026, global renewable electricity capacity is forecast to rise more than 60% from 2020 levels to over 4 800 GW – equivalent to the current total global power capacity of fossil fuels and nuclear combined.
Renewables are set to account for almost 95% of the increase in global power capacity through 2026, with solar photovoltaic (PV) alone providing more than half.
The amount of renewable capacity added over the period from 2021 to 2026 is expected to be 50% higher than from 2015 to 2020 and is driven by stronger support from government policies and more ambitious clean energy goals announced before and during COP26.
“This year’s record renewable electricity additions of 290 GW are yet another sign that a new global energy economy is emerging,” says IEA executive director Fatih Birol.
He notes that high commodity and energy prices pose new challenges for the renewable energy industry, but points out that the elevated fossil fuel prices also make renewables “even more competitive”.
The growth of renewables is forecast to increase in all regions compared with the 2015 to 2020 period.
China, however, remains the global leader in the volume of capacity additions as it is expected to reach 1200 GW of total wind and solar capacity in 2026 – four years earlier than previously expected.
India, meanwhile, is set to record the highest rate of growth, doubling new installations compared with the 2015 to 2020 period, while deployments in Europe and the US 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, the IEA notes.
“The growth of renewables in India is outstanding, supporting the government’s newly announced goal of reaching 500 GW of renewable power capacity by 2030 and highlighting India’s broader potential to accelerate its clean energy transition,” says Birol.
“China continues to demonstrate its clean energy strengths, with the expansion of renewables suggesting the country could well achieve a peak in its carbon dioxide emissions well before 2030.”
Further, solar PV remains the powerhouse of growth in renewable electricity, with its capacity additions forecast to increase by 17% this year to a new record of almost 160 GW.
Onshore wind additions, meanwhile, are set to be almost one-quarter higher, on average, for the 2021 to 2026 period, compared with the 2015 to 2020 period.
Total offshore wind capacity is forecast to more than triple by 2026.
The IEA expects this record growth for renewables to take place despite current high commodity and transport prices. However, it says that, should commodity prices remain high through to the end of next year, the cost of wind investments will go back up to levels last seen in 2015, with three years of cost reductions for solar PV to be erased.
Further, despite rising prices limiting growth, global biofuel demand this year is forecast to surpass 2019 levels, rebounding from last year’s huge decline caused by the pandemic. Demand for biofuels is set to grow strongly to 2026, with Asia accounting for almost 30% of new production.
India is expected to become the third-largest market for ethanol worldwide, behind the US and Brazil.
Governments can further accelerate the growth of renewables by addressing key barriers, such as permitting and grid integration challenges, social acceptance issues, inconsistent policy approaches and insufficient remuneration.
High financing costs in the developing world are also a major obstacle, the report states, noting that in its accelerated case, which assumes some of these hurdles are overcome, average yearly renewable capacity additions are one-quarter higher in the period to 2026 than is forecast in the main case.
However, the IEA says even this faster deployment will still fall well short of what would be needed in a global pathway to net-zero emissions by mid-century.
“That would require renewable power capacity additions over the period 2021 to 2026 to average almost double the rate of the report’s main case. It would also mean growth in biofuels demand averaging four times higher than in the main case, and renewable heat demand almost three times higher,” it notes.
