2021 is on course to break a global record for renewable energy growth, according to the International Energy Agency’s latest Renewables Market Report. That’s despite skyrocketing commodity prices, which could bog down the transition to clean energy in the future.
With 290 GW in additional capacity expected to be commissioned by the end of the year, 2021 will smash the record for renewable electricity growth that was just set last year. This year’s additions even outpace a forecast that the International Energy Agency (IEA) made in the spring.
“Exceptionally high growth” would be the “new normal” for renewable sources of electricity, the IEA said at the time. Solar energy, in particular, was on track to take the crown as the “new king of electricity,” the IEA said in its October 2020 World Energy Outlook report.
Solar continued to dominate in 2021, with an expected record growth of nearly 160 GW. It made up more than half of all the renewable energy capacity added this year, a trend that the IEA thinks will continue over the next five. Renewables will likely make up 95 percent of new power capacity globally through 2026, according to the new report. The IEA also predicts explosive growth for offshore wind capacity, which could more than triple over the same time period.
By 2026, the IEA says, the amount of renewable electricity capacity globally will likely be equivalent to today’s fossil fuel and nuclear energy capacity combined. That’s a huge shift. In 2020, renewable energy only made up 29 percent of electricity generation globally.
Still, there are some dark clouds in the IEA’s new forecast for renewables. Soaring prices for commodities, shipping, and energy all threaten the previously rosy outlook for renewable energy. The cost of polysilicon used to make solar panels has more than quadrupled since the start of 2020, according to the IEA. Investment costs for utility-scale onshore wind and solar farms have risen 25 percent compared to 2019. That could delay the completion of new renewable energy projects that have already been contracted.
More than half of the new utility-scale solar projects already planned for 2022 could face delays or cancellation because of larger price tags for materials and shipping, according to a separate analysis by Rystad Energy.
If commodity prices stay high over the next year, it could erase three to five years of gains solar and wind have made, respectively, when it comes to affordability. A dramatic price drop for photovoltaic modules over the past few decades has fueled solar’s success. Costs fell from $30 per watt in 1980 to $0.20 per watt for solar energy in 2020. By last year, solar was already the cheapest source of electricity in most parts of the world.
Renewables haven’t fallen too far behind, however, because costs are rising for all forms of energy. “The high commodity and energy prices we are seeing today pose new challenges for the renewable industry, but elevated fossil fuel prices also make renewables even more competitive,” IEA executive director Fatih Birol said in a press release today.
Still, the transition to renewable energy needs to speed up significantly to meet the scale of the climate crisis. Greenhouse gas emissions from burning fossil fuels need to virtually disappear by the middle of the century to avoid catastrophic climate change, according to a huge body of research. To make that happen, new renewable power capacity needs to grow at nearly twice the rate the IEA foresees over the next five years, the agency says.