Renewable energy has a strong showing in 2020 despite a pandemic-hobbled economy
Energize Weekly, November 18, 2020
The novel coronavirus pandemic has taken a toll on the global economy and the energy industry, but renewable energy generation set records in 2020, according to two analyses.
The International Energy Agency (IEA) reported that new, installed renewable generation worldwide set a record, as did the amount of renewable electricity generate and auctioned renewable capacity.
Meanwhile in the U.S., new wind installations are poised to set a record 23 gigawatts (GW) of capacity for the year – surpassing the 2012 highwater mark by 75 percent, according to the federal Energy Information Administration (EIA).
“The pandemic continues to affect the global economy and daily life,” the IEA said in its annual renewable energy report. “However, renewable markets, especially electricity-generating technologies, have already shown their resilience to the crisis.”
While global energy demand is set to drop 5 percent for the year, renewable electricity generation is projected to grow by 7 percent in 2020, thanks to long-term contracts and priority access to the grid.
And despite what IEA calls “looming economic uncertainties,” investment in renewables remained strong. For the first ten months of the year auctioned renewable energy capacity was 15 percent higher than for the same period in 2019 – a record.
Driven by China and the United States, net installed renewable capacity will grow by almost 4 percent globally this year to a total of nearly 200 GW.
“Higher additions of wind and hydropower are taking global renewable capacity additions to a new record this year, accounting for almost 90 percent of the increase in total power capacity worldwide,” the IEA said.
Photovoltaic (PV) solar growth is projected to be stable with an increase in utility-scale projects and a decrease in rooftop and distributed solar as the pandemic depressed investment in the sector. Still, an estimated 17 GW of solar will be added in 2020.
Wind and solar PV additions are set to jump by 30 percent in China and the U.S. as developers hurry to finish projects before changes in policy take effect.
The forecast for 2021 is even more robust and renewable generating capacity is on track for a record expansion of nearly 10 percent over 2020 to reach a total of more than 218 GW in operation.
In 2021, India is projected to be the biggest renewables market with capacity jumping to 16 GW from 9 GW in 2020.
The European Union, with the adoption of new renewable energy policies, is also in line to see a jump in installed capacity to 32 GW for 2021 from 26 GW this year, the IEA said.
Solar PV will account for 60 percent of all renewable generation through 2025, with wind adding another 30 percent.
At the current pace, wind and solar PV generation will surpass natural gas generation in 2023 and coal-fired generation, the largest single source of electricity worldwide, in 2024, the agency said.
By 2025, there will be 2,349 GW of installed wind and solar compared to 1,999 GW of natural gas and 2,079 GW of coal-fired capacity.
“Despite the challenges emerging from the COVID crisis, the fundamentals of renewable energy expansion have not changed,” the IEA said. “Solar PV and onshore wind are already the cheapest ways of adding new electricity-generating plants in most countries today. In countries where good resources and cheap financing are available, wind and solar PV plants will challenge existing fossil fuel plants.”
Hydropower will, however, remain the mainstay of total renewable generation supplying almost half of all renewable electricity.
The U.S wind industry is playing a big role in the renewable energy surge as more than 23 GW of wind turbines are slated to come online in 2020, according to the EIA.
The bulk of this capacity – 18.5 GW – is expected to be added in the last four months of the year as developers seek to access federal Production Tax Credits before they are phased out in 2021.
EIA’s Energy Outlook shows wind’s share of total electricity generation rising to 8.8 percent in 2020 from 7.4 percent in 2019 and it forecasts wind rising to 10.3 percent in 2021.
Still, the tax credit phaseout has left fewer projects in the pipeline in 2021, the agency said.
“Lower revenues and scarcity of capital have produced fewer projects in advanced development, the longest consecutive decline since 2016, and will result in a more than 40 percent decrease in additions from 2021 to 2023,” the EIA said.
The move by five coastal states – Massachusetts, Rhode Island, Connecticut, New York, and New Jersey – to include offshore wind in their comprehensive energy plans and issue calls for bids will help bolster the market.
The five have tenders for offshore wind totaling 10 GW of projects.
“With a large amount of capacity already awarded, the United States is forecast to install more offshore wind capacity in 2024 than any other country in the world,” the EIA said.