Renewable capacity additions last year increased by 6% and broke a new record, reaching 295GW, despite supply chain challenges and construction delays due to the pandemic, a new report showed. The trend is expected to continue this year, likely reaching 320GW of renewable energy — equivalent to Germany’s total annual demand.
The International Energy Agency (IEA) published its latest Renewable Energy Market Update and highlighted the continuous expansion of clean energy around the world. The IEA said the strengthened focus by governments on energy security and affordability has created a new momentum towards the expansion of renewables.
“Energy market developments in recent months—especially in Europe—have proven once again the essential role of renewables in improving energy security, in addition to their well-established effectiveness at reducing emissions,” IEA Executive Director Fatih Birol said in a statement.
Renewable energy expansion
Last year’s renewable expansion was mainly driven by solar and hydropower installations, the IEA said, as the wind sector was particularly affected by construction delays and supply chain challenges. China had the largest market share of deployment, accounting for almost 50% of global renewable capacity additions, followed by the EU.
The EU surpassed for the first time the all-time record from 2011 in new renewable additions. Solar accounted for most of the EU’s expansion, especially in Spain, France, Poland, and Germany. Meanwhile, in the US, solar also continued to surge, in large part due to investment tax credits — but the addition of new onshore wind capacity declined by one-quarter.
Prices for many raw materials and freight costs have been growing since the beginning of 2021, the IEA said. The price of steel increased by 50%, while copper rose by 70% for example. While this is a reversal in renewables decreasing costs, the sector still remains competitive as fossil fuels have risen at a much faster pace.
The IEA expects renewable capacity to increase by over 8% in 2022 compared with last year. Solar PV is forecast to account for 60% of the increase with the commissioning of 190GW. Onshore wind installations are expected to slightly recover and reach 80GW. Offshore wind growth is expected to drop 40% next year due to subsidy cuts in China.
However, China still accounts for most of the upward forecast revisions for 2022 and 2023 thanks to government and market factors. Generation costs of renewables are lower than coal in most provinces. Also, the government announced the construction of “mega-hubs” of renewables in the Xinjiang and Inner Mongolia provinces which should make distributing power produced from renewable sources easier and cheaper.
The current growth in renewable energy would be even faster without the logistical and supply chain hurdles, the IEA said. Installing solar PV and wind plants in 2022 and 2023 will continue to be more expensive than before the Covid-19 pandemic because of higher commodity and transportation prices, reversing a decade of lower costs. Still, in many parts of the world, renewables are the cheapest form type of energy.
“Cutting red tape, accelerating permitting, and providing the right incentives for faster deployment of renewables are some of the most important actions governments can take to address today’s energy security and market challenges while keeping alive the possibility of reaching our international climate goals,” Birol concluded.