Global renewable energy capacity set a record last year and 2021 is expected to be even better. Renewables are already the fastest-growing source of electricity generation, they currently supply more than a quarter of global electricity production and they are on track to be the largest source of electricity in the world by 2025.
Renewable energy has experienced prodigious growth that has consistently outpaced expectations. A recent Ember and Agora Energiewende report indicates that in Europe renewable energy and wind have almost doubled in the last five years. Globally, solar installations have tripled in the last decade according to an IHS Markit report titled “Top Clean Tech Trends to Watch in 2021. There are 18 markets around the world that are producing more than 1 GW of cumulative solar installations. Ten years ago there were only 6.
Even reductions in energy demand associated with COVID-19 has not stopped the growth of renewables. Despite the pandemic the market for renewable energy has remained strong. Energy demand fell by 5 – 7 percent last year, representing the biggest drop since World War II, nonetheless, renewable energy grew by 6.6 percent. This performance led Fatih Birol, the Executive Director of the International Energy Agency (IEA) to say that renewable sources of energy are “immune to Covid”.
Both wind and solar installations set records in 2020 and they are expected do so again in 2021. An International Energy Agency (IEA) report predicts that wind and solar capacity will double over the next five years. The report anticipates that 130 GW of solar will be added each year between 2023 and 2025. A total of 95 percent of new electricity will come from clean sources, 60 percent of which will come from solar which currently produces the lowest cost electricity in history.
Economic incentives
The size of the green economy and the opportunities associated with renewable energy will continue to spur growth in 2021 and beyond. The job creating power of renewables is driving government support which according to the IEA is expected to grow renewables by almost 10 percent this year. The U.S. and China are expected to increase their wind and solar capacity by 30 percent in 2021 and the IHS predicts that this will help renewable energy to have another record setting year.
This growth is powered by the potential of renewables to play a key role in pulling us back from the brink of a climate catastrophe, A Climate Council report points to a “seismic shifts in the economics of renewables over the past decade”. The report reiterated that fossil fuels are the leading cause of climate change and transitioning to renewables is essential if we are to keep temperatures from surpassing the upper threshold limit (2 degrees Celsius above preindustrial norms).
Massive cost declines in wind, solar and battery storage are also driving the growth of renewables. Declines in the cost of energy storage is a game changer that addresses the problem of intermittency. In the last decade lithium-ion batteries fell 89 percent. According to BloombergNEF, 10 years ago the cost of battery storage was around $75 per megawatt-hour (MWh) but in 2020 the price fell to under $10 per MWh and it is expected to be around $5 per MWh by 2022. These declining price points suggest that we will see far more integration of battery technology into new utility scale solar projects and retrofits of existing projects.
The declining costs of renewable energy will propel them into a position of dominance going forward. Decreasing costs are expected to help renewable energy to surpass gas and coal as the largest source of electricity in the next few years according to the IEA. A report from Our World in Data, indicates that in most places around the world renewables are already a cheaper source of power than fossil fuels. This report predicts that the costs of clean energy will keep declining as they scale. They further argue that low emissions energy will contribute to economic growth in some of the world’s most impoverished regions.
As explained by Faaiqa Hartley, an energy economist at the Energy Research Centre of the University of Cape Town, South Africa, cheaper energy is especially meaningful to some of the poorest developing nations. Because renewables do not require power grids it will give some of the world’s poorest people access to electricity.
National government action
“Our projections for the next five years show that this 50% of the total new capacity may well go to about two-thirds of the new capacity additions by 2025,” the IEA’s Birol said. The IEA says installed solar and wind capacity should surpass natural gas capacity in 2023 and coal in 2024 and renewable energy will overtake coal as the largest source of electricity worldwide by 2025. However, Birol states this transition could come even sooner if we see more support from countries like the U.S. and China.Â
Led by North America, Europe, China and India, countries around the world are increasingly supporting renewables.
Globally, solar is expected to account for 30 percent of the expansion of renewable energy in 2021 and China is expected to generate 35 percent of this total. The IHS report predicts that solar will keep growing despite increases in the price of solar modules in the first half of the year. However, production costs are expected to decline in the second half of 2021. Offshore wind could almost double this year due to Chinese, European, American and Japanese developments.
Europe has committed to reduce their greenhouse gas emissions by 55 percent from 1990 levels by 2030. Led by nations like Ireland and Norway, European states are renewable energy leaders. The Swedish Government was one of the first to commit to 100 percent renewables. Germany has been a renewable energy powerhouse for years and in 2020 Germany also set new renewable energy generation records. Clean energy usage is also setting records in the UK while lowering both emissions and costs. By 2030 the UK is committed to getting half its electricity from renewable sources.
Renewables also soared last year in India with hybrid applications of wind and solar that are cheaper than coal. The MENA region‘s renewable capacity is also growing rapidly.
Renewables are unstoppable
Even governments that give preferential treatment to fossil fuels cannot seem to stop the rise of renewables. Market forces are driving the growth of clean energy and political regimes have been unable to stop it. Renewables are thriving in Australia despite a national government that has doubled down on its failed efforts to ramp up coal exports. In 2020, the Australian state of Tasmania got all of its power from renewables (wind and hydroelectricity projects). In a sign of the times, Newcastle, Australia’s coal capitol has embarked on an ambitious plan to transition to renewables.
Renewables grew steadily in the U.S. despite four years of American political leadership that was overtly hostile to clean energy. Last year the U.S. set a record for installed renewable energy capacity. According to the EIA Short-Term Energy Outlook the U.S. was expected to produce 37 gigawatts of new wind and solar capacity last year. This is 20 percent of U.S. electricity output which makes it equivalent to coal and nuclear. At the end of 2020 the U.S. Congress passed a omnibus that included clean energy incentives that will help boost renewable capacity in 2021.
The inauguration of U.S. President Joe Biden and his $2 trillion Building Back Better stimulus recovery plan will be a boon for renewable energy. The Biden administration has pledged to eliminate greenhouse gas emissions from America’s power grid by 2035 and completely decarbonize the U.S. economy by 2050. This plan will include $400 billion for clean energy research and development. A December report from Deloitte states that even in the absence of direct incentives for green infrastructure, clean energy demand proved to be “resilient” in 2020. According to Deloitte’s Renewable Energy Industry Outlook the election of Joe Biden and ongoing energy storage price declines will contribute to an even bigger bump for renewables in 2021. The EIA predicts that the U.S. will see a total of 39.7 GW of new electricity generating capacity in 2021, with solar photovoltaics (PV) accounting for 39 percent and wind power accounting for 31 percent.
Renewables are the future of energy
Even the fossil fuel industry is beginning to accept the realization that our world will be powered by renewables. As explained by Mark Jones, a political science fellow at Rice University in Houston, “there’s a clear understanding that in fact renewables are the future.”
Last year fossil fuel capacity declined while renewable energy output increased. COVID-19 has demonstrated that renewables are out competing fossil fuels. The pandemic hurt the energy sector as a whole, but it has had a far more negative impact on fossil fuels. This disproportionate impact is also evident in job losses.
There is little doubt that renewables are destined to bury fossil fuels and the transition away from dirty energy is already underway. For the first time Europe got more electricity from renewables than fossil fuels in 2020. According to the Ember report, last year European renewables delivered 38 percent of electricity, compared to 37 percent from fossil fuels. Coal usage for electricity declined by 20 percent last year to contribute only 13 percent of electricity production in Europe. This trend is also playing out globally. By 2025 renewables are expected to surpass coal as the largest energy source in the world.
Despite obstacles, research confirms that 100 percent renewable energy is possible. The changing political and economic energy landscapes will expedite this transition. Renewables and storage technologies are both mature and cost competitive, so we can expect that in 2021 and beyond we will continue to see tremendous growth.
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