As per the International Energy Agency’s Renewable Energy Market Outlook for 2022 and 2023, renewable capacity additions are expected to increase over 8 per cent in 2022 compared with last year, pushing through the 300 GW mark for the first time.
The global annual renewable capacity additions broke a new record in 2021, increasing 6 per cent to almost 295 GW, despite the continuation of pandemic-driven supply chain challenges, construction delays and record-level commodity prices for raw materials.
Key highlights of the report
- The current global energy crisis has added new urgency to accelerate clean energy transitions and, once again, highlighted the key role of renewable energy. For renewable electricity, pre-crisis policies lead to faster growth in our updated forecast. Notably, wind and solar PV have the potential to reduce the European Union’s power sector dependence on Russia’s natural gas by 2023.
- At the same time, it is too early to assess the potential impact on our 2022 and 2023 forecast of newly announced targets following the Russian invasion of Ukraine, in the absence of rapid policy implementation.
- Annual renewable capacity additions broke a new record in 2021, increasing 6% to almost 295 GW, despite the continuation of pandemic-driven supply chain challenges, construction delays and record-level commodity prices for raw materials.
- Solar PV and wind costs are expected to remain higher in 2022 and 2023 than pre-pandemic levels due to elevated commodity and freight prices. However, their competitiveness actually improves, due to much sharper increases in natural gas and coal prices.
- Renewable capacity is expected to further increase over 8% in 2022, reaching almost 320 GW. However, unless new policies are implemented rapidly, growth remains stable in 2023 because solar PV expansion cannot fully compensate for lower hydropower and steady year-on-year wind additions.
- Globally, forecast additions for 2022 and 2023 have been revised upwards by 8% from December last year, thanks to strong policy support in the People’s Republic of China (hereafter, “China”), the European Union and Latin America, and despite downward forecast revisions in the United States.
- Biofuel demand recovered in 2021 from Covid-19 lows, to near 2019 levels, and we expect growth to expand year-on-year by 5% in 2022 and by 3% in 2023. On the other hand, increasing feedstock prices and policy reaction from multiple countries slows growth in the short term, leading to a 20% downward revision of our previous biofuel demand growth forecast. Russia’s invasion of Ukraine is also putting upward pressure on an already high-price environment for biofuel feedstocks, in particular vegetable oils.
- While looming market uncertainties increase challenges, the new focus on energy security – especially in the European Union – is also triggering an unprecedented policy momentum towards accelerating energy efficiency and renewables. Ultimately, the forecast of renewable markets for 2023 and beyond will depend on whether new and stronger policies will be introduced and implemented in the next six months.
Source: International Energy Agency