Renewable energy capacity set for another record year amid strong policy support
▶ New green power volume is expected to rise 8% to 320 gigawatts, the International Energy Agency says
New capacity for generating electricity from renewable sources is set for another record this year, as governments around the world seek security in clean energy and its climate benefits, the International Energy Agency has said.
Globally, new renewable power capacity increased by 6 per cent last year to record 295 gigawatts, shaking off the rising cost of raw material, pandemicdriven construction delays and global supply chain challenges, the Paris-based agency said in its latest Renewable Energy Market update.
This year, the agency expects global capacity additions to rise by another 8 per cent to 320 gigawatts – equal to an amount that would come close to meeting the entire electricity demand of Germany, or matching the EU’s total electricity generation from natural gas.
The global energy crisis has underpinned the need to increase renewable energy capacity. While it is necessary to speed up clean energy transitions globally, it has more immediate benefits for Europe, which is trying to cut dependence on Russia’s oil and gas, in the wake of Moscow’s military assault on Ukraine.
Wind and solar PV, in particular, have the potential to help reduce the EU’s power sector dependence on Russia natural gas by next year, the agency said.
“Energy market developments in recent months – especially in Europe – have proven once again the essential role of renewables in improving energy security, in addition to their well-established effectiveness at reducing emissions,” said Fatih Birol, the agency’s executive director.
“Cutting red tape, accelerating permitting and providing the right incentives for faster deployment of renewables are some of the most important actions governments can take to address today’s energy security and market challenges.”
Oil and gas prices have been volatile this year. Crude, which rose 67 per cent last year amid strong demand, has surged further this year following Russia’s military offensive in Ukraine that is threatening to disrupt global energy flows.
Brent, the benchmark for more than two thirds of the world’s oil, has already climbed to a notch under $140 a barrel this year before retreating. Emirates NBD estimates Brent will average $120 a barrel for the second and third quarters.
The EU, which relies heavily on Russia to meet its energy needs, is looking to phase out Russian imports as it tightens sanctions on Moscow for its military offensive in Ukraine.
Last year, the bloc imported 155 billion cubic metres of natural gas from Russia, which accounted for about 45 per cent of EU gas imports and close to 40 per cent of its total gas consumption, the agency said in March.
It presented a 10-point plan to reduce EU’s reliance on Russian imports, including halting new gas supply contracts with Russia, finding alternative gas sources and accelerating the use of renewable energy as well as increasing power generation from bio-energy and nuclear plants.
Annual additions in the EU jumped almost 30 per cent to 36 gigawatts last year, exceeding the bloc’s previous record of 35 gigawatts set a decade ago.
But the impact of renewables on EU’s energy needs in the immediate future will depend on the success of parallel energy efficiency measures to keep the region’s energy demand in check, the agency said yesterday.
Renewables’ growth so far this year has been much faster than initially expected, driven by strong policy support in China,
the EU and Latin America, which more than compensated for slower-than-anticipated growth in the US.
The US outlook is clouded by uncertainty over new incentives for wind and solar energy and by trade actions against solar PV imports from China and South-East Asia.
This year, Solar PV is forecast to account for nearly 60 per cent of the increase in global renewable capacity, with a 25 per cent rise in commissioning of 190 gigawatts of projects. Utility-scale schemes will account for almost two thirds of overall PV expansion in 2022, driven by China and the EU.
New global onshore wind installations are expected to reach almost 80 gigawatts, while offshore wind growth is expected to decline 40 per cent globally this year following the four-fold jump last year in China.
“Despite this decline, 2022 global offshore wind capacity additions will still double compared to 2020, thanks to the continuation of provincial incentives in China and the expansion in the EU,” the agency said. “As a result, China is expected to have the largest cumulative installed offshore wind capacity globally and surpass the EU and UK combined by the end of this year.”
The rise in prices for raw materials and freight costs that began last year, is here to continue through the year.
“We estimate that the overall investment costs of new utility-scale PV and onshore wind plants are from 15 per cent to 25 per cent higher in 2022.”
Based on today’s policy settings, renewable power’s global growth is set to lose momentum next year, the agency said.
In the absence of stronger policies, the additions to renewable power capacity is expected to plateau next year, as continued progress for solar is offset by a 40 per cent decline in hydropower expansion and little change in wind additions.
“The outlook for renewables for 2023 and beyond will, therefore, depend to a large extent on whether new and stronger policies are introduced and implemented over the next six months,” the agency said.
Recent energy market developments have proven the essential role of renewables in improving energy security FATIH BIROL
IEA’s executive director