HomeIndustry SectorsFinance and PolicyRenewable energy sector is booming despite pandemic lockdowns

Renewable energy sector is booming despite pandemic lockdowns

Renewable power capacity worldwide will increase to a record 200GW this year forecasts the International Energy Agency’s Renewables 2020 report.

The increase, representing almost 90% of the total expansion in overall power capacity globally, is led by wind, hydropower and solar PV. Wind and solar additions, in particular, will jump by 30% in both the USA and China as developers rush to take advantage of expiring incentives.

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Even strong growth is forecast, going forward. According to IEA’s report, India and the European Union will probably drive a record expansion of global renewable capacity additions of almost 10% next year, which would be the fastest growth since 2015. This will come about because of the commissioning of delayed projects disrupted by the pandemic induced lockdowns stopping construction and cutting off supply chains.

As growth returns to markets where pre-COVID-19 project pipelines were robust, India is expected to be the largest contributor. India’s annual addition to the renewables sector looks set to double from 2020 to 2021.

Effect of COVID-19 pandemic on renewables sector not quite as imagined

“Renewables appear to be immune to Covid-19,” said Fatih Birol of the International Energy Agency, as he revealed that clean energy had defied the pandemic downturn that has hit all other areas of the power sector.

Speaking at a press conference for the launch of the IEA’s latest report into renewables, executive director Birol said that the global energy sector was “experiencing its worst year since the Second World War”.

He said the impact of coronavirus on the industry was seven-times worse than that of the global financial crash earlier this century.

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Yet he stressed that renewable power was the one area bucking this trend. “Ninety per cent of global energy growth is coming from renewables,” he said, spotlighting a particular success story in India, which saw 15GW of wind and solar installed in the first half of this year – as much as was installed in all of 2019.

“Renewable power is defying the difficulties caused by the pandemic, showing robust growth while others fuels struggle,” said Birol.

“The resilience and positive prospects of the sector are clearly reflected by continued strong appetite from investors – and the future looks even brighter with new capacity additions on course to set fresh records this year and next.”

Only thing that could slow growth is policy uncertainty

But the IEA cautions that policymakers still need to take steps to support the strong momentum behind renewables.

In the report’s main forecast, the expiry of incentives in key markets and the resulting uncertainties lead to a small decline in renewables capacity additions in 2022. But if countries address these policy uncertainties in time, the report estimates that global solar PV and wind additions could each increase by a further 25% in 2022.

Critical factors influencing the pace of deployment will be policy decisions in key markets like China, and effective support for rooftop solar PV, which has been impacted by the crisis as households and businesses reprioritised investments.

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“Renewables are resilient to the COVID-19 crisis but not to policy uncertainties,” said Birol. “Governments can tackle these issues to help bring about a sustainable recovery and accelerate clean energy transitions.

“In the United States, for instance, if the proposed clean electricity policies of the next US administration are implemented, they could lead to a much more rapid deployment of solar PV and wind, contributing to a faster decarbonisation of the power sector.”

Birol urges the world not to ignore potential of biofuels

Birol also used the press conference to send what he called a “heads-up message” on biofuels, and the “missed opportunity” he witnessed in the aviation sector.

He said that of around 30 airlines given pandemic-related financial bailouts by their governments, only four received the money on the condition that they embraced energy efficiency measures to combat climate change.

The report‘s outlook, for the next five years, sees cost reductions and sustained policy support continuing to drive strong growth in renewable power technologies.

Total wind and solar PV capacity is on course to surpass natural gas in 2023 and coal in 2024. Driven by rapid cost declines, annual offshore wind additions are set to surge, accounting for one-fifth of the total wind market in 2025. The growing capacity will take the amount of renewable electricity produced globally to new heights.

“In 2025, renewables are set to become the largest source of electricity generation worldwide, ending coal’s five decades as the top power provider,” said Dr Birol. “By that time, renewables are expected to supply one-third of the world’s electricity – and their total capacity will be twice the size of the entire power capacity of China today.”

This story is written by Kelvin Ross and Theresa Smit

Theresa Smith
Theresa Smith is a Content Specialist for ESI Africa.