Pandemic is Hurting but not Halting Global Renewable Growth: IEA

The COVID-19 Pandemic will force 2020 to witness the first annual decline in new renewable additions in 20 years, but their growth is expected to bounce back next year.

The world is set to build fewer wind turbines, solar plants and other installations that produce renewable electricity this year because of the impact of the COVID-19 pandemic, marking the first annual decline in new additions in 20 years, according to the International Energy Agency. But their growth is expected to resume next year as most of the delayed projects come online and assuming a continuation of supportive government policies.

Renewable power sources have so far shown impressive resilience despite the disruptions and changes caused by the coronavirus pandemic, with their share of the electricity mix increasing in many markets. But the world is set to add 167 GW gigawatts (GW) of renewable power capacity this year, 13 percent less than in 2019, according to the IEA’s Renewable Market Update report, which was released today.

The decline reflects possible delays in construction activity due to supply chain disruptions, lockdown measures, and social distancing guidelines, as well as emerging financing challenges. But despite the slowdown in new additions, overall global renewable power capacity still grows by 6 percent in 2020, surpassing the total power capacity of North America and Europe combined.

Next year, renewable power additions are forecast to rebound to the level reached in 2019, with significant support coming from the partial commissioning of two mega hydropower projects in China. But despite the rebound, growth for 2020 and 2021 combined is expected to be 10 percent lower than the IEA had previously forecast before the coronavirus outbreak. Almost all mature markets are affected by downward revisions, except the United States where investors are rushing to finish projects before tax credits expire. After exceptional growth last year, Europe’s new additions are set to fall by one-third in 2020, their largest annual decline since 1996. A partial recovery is expected next year.

“The resilience of renewable electricity to the impacts of the COVID-19 crisis is good news but cannot be taken for granted,” said Dr. Fatih Birol, the IEA Executive Director. “Countries are continuing to build new wind turbines and solar plants, but at a much slower pace. Even before the COVID-19 pandemic struck, the world needed to significantly accelerate the deployment of renewables to have a chance of meeting its energy and climate goals. Amid today’s extraordinary health and economic challenges, governments must not lose sight of the essential task of stepping up clean energy transitions to enable us to emerge from the crisis on a secure and sustainable path.”

Solar PV accounts for more than half of the forecast expansion in renewable power in 2020 and 2021, but its additions decline from 110 GW in 2019 to over 90 GW in 2020. Large-scale solar PV projects are expected to rebound in 2021, but overall installations are unlikely to surpass 2019 levels. This is because of significantly slower recovery of distributed solar PV as households and small businesses review investment plans.

In the other segments, commissioning delays caused by the COVID-19 crisis have slowed the pace of onshore wind installations this year, but they should be mostly compensated for in 2021, as the majority of projects in the pipeline are already financed and under construction. However, uncertainty remains over projects that had planned to secure their financing this year and become operational next year. The impact of the crisis on offshore wind deployment is set to remain limited in 2020 and 2021 since offshore projects have longer construction periods than onshore ones.

At the start of this year, renewables were already facing challenges in several markets in terms of financing, policy uncertainty, and grid integration. COVID-19 is now intensifying those concerns. However, governments have the opportunity to reverse this trend by making an investment in renewables a key part of stimulus packages designed to reinvigorate their economies. The priority should be on sectors that offer early opportunities to create jobs and economic activity while developing more efficient and resilient energy systems and reducing emissions. That includes a focus on buildings and transport, which would support both renewables and energy efficiency at the same time.

The impact of the coronavirus pandemic on renewables extends well beyond the electricity sector. Successful transitions to clean energy will require decarbonising the rest of the economy as well, including transport fuels and the heating of buildings.