Renewable capacity addition in 2022 is expected to grow by 8% and breach the 300 GW mark for the first time, according to a report published by the International Energy Agency.
Solar is expected to account for 60% of the increase in global renewable capacity this year with new installations of 190 GW, a 25% increase from last year. Utility-scale installations will account for nearly two-thirds of the total installations, driven by a strong policy implementation in China and the European Union.
The report points out that global onshore wind installations will recover marginally and touch the 80 GW mark in 2022. Onshore wind installations took a hit in 2021 and declined by 32% compared to 2020.
Offshore wind growth worldwide is expected to decline by 40% in 2022, following the phenomenal jump last year in China due to the national subsidy phase-out deadline.
2021: A good year for renewables
According to the report, despite several challenges, 2021 turned out to be one of the better years for renewables, with capacity additions of 295 GW, increasing by 6% compared to 2020.
Globally, there was a decline of 17% in annual wind capacity additions in 2021, which was offset by an increase in solar and hydropower installations. The expansion of bioenergy, concentrated solar power, and geothermal remained stable in 2021 compared to 2020.
India’s renewable sector witnessed growth in 2021 following a record slowdown in 2020 due to Covid-19 challenges. With the commissioning of already auctioned utility-scale projects and the acceleration of the distributed solar market, India’s renewable capacity additions in 2021 doubled in 2021 compared to 2020.
India installed a record 10 GW of new solar capacity in 2021, a big jump of 210% year-over-year (YoY) compared to 3.2 GW installed in 2020.
China led the way in installations in 2021, with 46% of the total installations last year. However, the numbers were down by 2% YoY, with utility-scale installations and onshore wind installations registering a drop of 22% and 55% compared to 2020.
The European Union was second on the list in terms of increased capacity, with the region surpassing for the first time the all-time record in 2021. Solar alone accounted for most of the installations in the European Union last year due to the greater pace of project development in Spain, France, Poland, and Germany.
Forecast for 2022 and 2023
The IEA report states that unless there are some new developments on the policy side in 2023, global renewable capacity additions are expected to remain stable compared to 2022. While solar will continue on its upward trajectory in 2023, reaching almost 200 GW, and with the expansion of wind and bioenergy remaining stable, 40% lower hydropower additions in China will impede capacity growth in the global renewable energy market.
The prices of raw materials and freight costs have been on the rise since the beginning of 2021. By March 2022, the price of solar-grade polysilicon more than quadrupled, steel increased by 50%, copper rose by 70%, aluminum doubled, and freight costs increased almost five-fold. The report notes that compared with 2020, the overall investment costs of new utility-scale solar projects and onshore wind projects will be higher by 15% to 25% in 2022.
China will account for nearly 45% of global renewable capacity additions in 2022-2023, with the commissioning of over 140 GW on an average per year.
In the European Union, rapid implementation of policy targets and already awarded auctions, combined with continuous incentives for distributed solar, will further drive the expansion.
In India, new milestones are expected to be achieved in 2022 and 2023. However, the financial health of distribution companies remains the primary challenge to renewable energy growth in India.
In the United States, annual capacity additions will slow down in 2022 and 2023.
Growth in transportation fuels and strengthening biofuel policies will drive biofuel demand higher by 5% in 2022 and 3% in 2023.
Russia’s invasion of Ukraine has made the situation worse by further increasing the already high raw material prices. As a result, biofuel demand growth will slow by 20% in 2022.
However, global biofuels demand is still expected to increase YoY by 5%, or 8,500 million liters, and rise by a further 3%, or 5,200 million liters, in 2023.
Global energy crisis
The Russian invasion of Ukraine has highlighted the need for a transition to clean energy to reduce the dependency on imported fossil fuels from Russia, especially in the European Union.
The report states that government-led competitive wind and solar auctions in 2019 and 2020 remain the key driver for renewables expansion through 2023.
Higher wind and solar investment costs due to the increased commodity prices in the wake of Russia’s invasion of Ukraine and delays due to various other reasons resulted in the lowest first-quarter auction volumes globally in 2022 since 2016.
In an earlier report, IEA noted that renewable energy was expected to account for 90% of the global power capacity increase in 2021 and 2022. The report had predicted that around 280 GW of new renewable energy capacity would be operational in 2022.
Rakesh Ranjan is a staff reporter at Mercom India. Prior to joining Mercom, he worked in many roles as a business correspondent, assistant editor, senior content writer, and sub-editor with bcfocus.com, CIOReview/Silicon India, Verbinden Communication, and Bangalore Bias. Rakesh holds a Bachelor’s degree in English from Indira Gandhi National Open University (IGNOU). More articles from Rakesh Ranjan.