IEA Upgrades Solar To Energy ‘King’ In Outlook for 2021, 2022

The International Energy Agency (IEA), in its latest Energy market update, has flagged renewables as the only category which saw  demand increase. based on this, and the competitive filed for renewables versus other energy options, the agency sees a solid future ahead for renewable energy, particularly Solar.

For India, which has been hit hard by multiple factors including the Covid pandemic, with installations dropping by 50 percent over 2019 in 2020, the agency predicts a very strong rebound by 2022, as the pipeline of almost 35 GW of solar projects under implementation and bidding moves.

2020 was surprisingly, the best year on record for renewable energy additions, thanks to a massive push in China and minimal disruptions in the US due to Covid.

Renewable electricity added last year jumped 45% to 280 gigawatts (GW), marking it the largest year-over-year increase since 1999.

IEA predicts a 270 GW addition in 2021, followed by 280 GW in 2022. Coming just months after its last energy outlook report in November, these estimates are almost 25 percent higher, pointing to just how quickly Chinese ramp ups and new targets on emissions have affected numbers.

The new Biden administration and its green leanings are expected to play a key role too. Plus, offshore wind.

Their recently announced infrastructure package earmarks more than $600 billion for clean energy spending, including $100 billion for the power grid and $174 billion for  the development and rollout of electric vehicles. The plan also calls for a 10-year extension of the tax credits for renewable energy projects.

The U.S. jump was supported by  developers pushing some projects forward since the tax incentives were set to expire at the end of 2020. The credits were ultimately extended by former president Donald Trump in December, and President Joe Biden has outlined additional plans to extend them further.

IEA’s prediction of 160 GW capacity addition annually by 2022 compares very well to 2019’s 109 GW according to the same agency.  With Solar now the lowest-cost option for electricity generation in many large countries, the IEA forecasts annual solar PV expansion to reach 145GW in 2021 and 162GW in 2022, breaking records and accounting for almost over 55% of all renewable energy expansion this year and next. Utility-scale projects are expected to lead, moving from over 55% of annual additions to nearly 70% by 2022. with wind energy expected to slow down in growth, Solar is set to be the undisputed ‘king’, as far as new energy capacities go, for the foreseeable future. Of course, that will also open up a lot of opportunities for options like storage systems to balance out  solar supplies on the grid.

On supply disruptions, the agency expects module prices to be lower at the end of 2021, as supply chains in China diversify away from Xinjiang province, and freight rates for the rest of the world normalise from their record highs currently.