Renewable Energy Market Update 2021
Renewable Energy Market Update: Outlook for 2021 and 2022
Highlights
- 2020: Annual renewable capacity additions reached 280 GW, marking a 45% increase from 2019—highest since 1999.
- 2021 and 2022: Renewables are expected to account for 90% of new power capacity expansion globally, with an average of 270 GW and 280 GW becoming operational each year.
- Solar PV: Annual additions will reach 162 GW by 2022, almost 50% higher than pre-pandemic levels in 2019.
- Wind Capacity: Increased by 90% in 2020 to 114 GW, with growth still 50% higher than the 2017-2019 average.
Regional Breakdown
- China: Capacity additions will decelerate post-rush to meet subsidy phase-outs, but the rest of the world will compensate, maintaining the pace of renewables expansion.
- Europe: Accelerating capacity growth due to further policy support and a booming corporate Power Purchase Agreement (PPA) market.
- United States: More optimistic forecast due to federal tax credit extensions; new emissions reduction targets and the infrastructure bill could boost expansion after 2022.
- India: Expected to set new records for renewables expansion in 2021 and 2022, though there is short-term forecast uncertainty due to the surge in COVID-19 cases.
Biofuels
- Transport Biofuel: Rebounds to 2019 volumes in 2021 and expands by another 7% in 2022.
- Hydrotreated Vegetable Oil (HVO): Expected to nearly double in the next two years, driven by clean fuel standards and policy support in the US.
Key Data Points
- Renewable Capacity Addition Changes (2019-2020):
- China: Over 80% increase in annual installations.
- United States: Wind developers rushed to complete projects before the production tax credit expired.
- Viet Nam: Phase-out of the feed-in tariff for solar PV projects led to a rush in installations.
- Quarterly Renewable Capacity Additions (2019-2020):
- Q4 2020 saw almost 150 GW of new renewable capacity commissioned, more than double the Q4 2019 figure.
Summary
- The exceptional level of renewable energy capacity additions in 2020 is expected to continue into 2021 and 2022, with renewables accounting for 90% of new power capacity expansion globally.
- Solar PV and wind capacity are projected to set new records, with solar PV reaching 162 GW by 2022.
- Regional expansions vary, with China and the United States showing strong growth, while Europe benefits from further policy support and corporate PPAs.
- Biofuels, particularly HVO, are expected to see significant growth, driven by clean fuel standards and policy support.