According to the International Energy Agency (IEA), overall new renewable energy capacity rose by 45% to almost 280 GW. China accounted for 50% of renewable energy capacity growth last year and will account for 45% this year and 58% in 2022, according to the Renewable Energy Market Update – Outlook for 2021 and 2022. Globally, around 270 GW of new capacity is forecasted by IEA to be added this year and nearly 280 GW in 2022.
Annual solar PV expansion is expected to increase 8% to reach 145 GW in 2021 and 162 GW in 2022. The share of utility-scale applications in annual PV additions is forecasted to increase from over 55% in 2020 to almost 70% in 2022, says the report.
China has accounted for 40% of global renewable capacity growth for several years, but for the first time in 2020 it was responsible for 50%– a record level resulting from the unprecedented peak in new installations in December. IEA expects China’s renewable capacity additions to decline by one-quarter in 2021 compared with last year because of the government’s decision to phase out subsidies for both wind and solar PV projects. There is also uncertainty about the structure of the new incentive schemes that will be announced towards the end of 2021.
In Europe, utility-scale projects will dominate the accelerated expansion of PV in 2021 and 2022 for the first time since 2017. With this expansion, this year the region will break the record for annual additions for the first time since 2011 and become the second-largest market after China. Germany will continue to deliver the largest renewable capacity additions in Europe, followed by France, the Netherlands and Spain. This growth results from multiple countries extending their policies to meet the EU 2030 climate target, and by Power Purchasing Agreements (PPA) markets booming in several countries.
For the United States, investment tax credit (ITC) extensions in 2020 by one more year for onshore wind and solar PV will increase renewable deployment. These changes will mostly affect the onshore wind sector in 2021 and 2022 with new projects starting construction in 2021. For solar PV, the ITC has little effect on the short-term forecast, as the December extension covers only projects starting construction in 2022 and 2023. However, with sustained cost declines and tax credits, distributed PV will continue to account for almost 30% of US PV growth in 2021 and 2022.
Although India’s renewable capacity additions in 2020 declined almost over 50% from 2019 due to Covid-19 impact, the country is expected to set new records for renewables expansion in 2021 and 2022 as delayed projects from previous competitive auctions are commissioned. PV capacity additions will more than triple in 2021 compared with 2020 as delayed large-scale utility projects become operational. The government awarded 27 GW of PV in central and state auctions in 2020, which is the primary driver of PV growth this year and next. According to the IEA forecast, distributed PV expansion remains sluggish due to administrative and regulatory challenges in multiple states.
In the ASEAN region, rapid solar PV expansion in Vietnam boosted the region’s capacity additions to a record 13 GW in 2020 – 60% higher than in 2019. However, the phasing out of feed-in-tariffs in the country and relatively sluggish renewable energy growth in Indonesia and Thailand leads to a two-thirds decline in ASEAN expansion in 2021 and 2022 relative to 2020.
Japan and Australia remain the drivers of growth in Asia outside of China and India. Australia exceeded its large-scale renewable energy target in 2020, and the resulting oversupply of certificates negatively affected the business case for utility-scale PV projects. As a result, some developers are seeking to sign corporate PPAs to ensure stable remuneration. In Japan, around 21 GW of PV projects received feed-in-tariff approval but were not operational as of September 2020. IEA expects a portion of these projects to be commissioned in 2021 and 2022.
Renewables were the only energy source for which demand increased in 2020 despite the pandemic, while consumption of all other fuels and energy sources declined.