IEA Renewable Energy Market Update reveals 2021 record-breaking capacities

On May 10th, the IEA released its Renewable Energy Market Update 2022 report. Divided into two main parts ('Renewable Electricity' and 'Biofuels'), it provides important information on Renewables' capacities around the World in 2021 (and forecasts), prices, and policy changes that might have an impact.

The outstanding year 2021 for Renewables Capacities

In 2021, Renewable net capacity additions were at a record level of 295 GW, higher than the forecast previously made by the IEA, and 6% above the 2020 level (more than 52% above the 2019 level). 

The level of 295 GW was the forecast for 2022 (see here), meaning we are one year in advance of the forecast. 

Other key takeaways are consistent with the IRENA statistics that were released just about a month ago (read our article here):

• China accounted for 46% of new capacity additions, despite a 2 percentage point decline from 2020;
• Europe increased its net capacity and surpassed its 2011 record, mostly due to Solar PV large projects in Spain, France, Poland, and Germany;
• The third biggest region in terms of capacity remains the USA, despite a minor decrease in 2021 capacity compared to 2020, due to lower production tax credit rates.

It is to be noted that the 2021 level of +295GW is below what is needed (on average) during 2021-2026, to be in the 'Net Zero Scenario' as defined by the IEA (+548 GW per year are needed).

What's to expect in 2022 and 2023?

IEA forecast models cannot be more clear: the upward trend will continue to extend with a forecasted 8% increase in capacity in 2022.

The biggest increase that will be observable is for Solar PV capacities, increasing by 25% in 2022, the IEA forecast model says. This is consistent with the trend observed during the past four years, where Solar PV has been occupying more and more space in the capacity additions and thus in the total installed capacities. 

Solar PV, in certain scenarios, is even forecasted to surpass Hydro installed capacity by 2027. 

The IEA also forecasts a remaining increase in solar PV and wind costs (about +15-25%), due to raw materials and freight costs increase in the past two years.

On the policy side, many uncertainties remain and might have an impact on future projects/capacities:

• Long-term tax incentive extensions in the USA have still to be approved by the House and Senate;
• Expansion in EU capacities relies upon rapid implementation of the plans already decided;

Sources

IEA Renewable Energy Market 2022 Report

IEA Renewable Energy Market 2021 Report

IEA Renewables 2021 Report