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World seen to add 13% less renewables in 2020 as virus intensifies current challenges

Renewable electricity capacity additions, 2007-2021, updated IEA forecast. Source: International Energy Agency (IEA)

May 20 (Renewables Now) - Global renewable power capacity additions in 2020 are expected to drop by 13% year-on-year to 167 GW, marking the first annual decline in two decades, a new report says.

The International Energy Agency (IEA) released its Renewable Market Update on Wednesday in which it says that the COVID-19 crisis could lead to construction delays and financing challenges in the sector. The conclusion reached in the report is that renewable power is more resilient than fossil fuels but is still affected by the coronavirus pandemic.

IEA believes that installations could rebound in 2021 to the level reached in 2019, but notes that growth for 2020 and 2021 combined would still be 10% lower than what it projected before the health crisis. Moreover, next year’s expected rise will largely come because of the partial commissioning of two mega hydropower projects in China.

The agency said that almost all mature markets would see declines this year, except for the US as investors there are in a hurry to complete projects prior to the expiration of tax credits. Europe, on the other hand, is likely to witness a one-third drop in 2020 additions, the largest annual fall since 1996.

The table below shows IEA’s updated forecasts for 2020 and 2021 capacity additions, compared to 2019 installations.

Country/Region Forecast for 2020 Forecast for 2021 2019
China 72.6 GW 78.4 GW 65.3 GW
Europe 22.2 GW 31.9 GW 35.3 GW
USA 23.5 GW 24.4 GW 22 GW
India 10.8 GW 15.3 GW 12.5 GW
Japan 6.5 GW 5.5 GW 7.7 GW
Brazil 2.6 GW 3.4 GW 8.3 GW
Rest of the World 28.5 GW 37.2 GW 41.2 GW

The world is seen to deploy over 90 GW of solar photovoltaics (PV) in 2020 compared to 110 GW in 2019. Even with a rebound in 2021 for large-scale projects, total installations will not surpass those in 2019 because of a projected slower recovery of distributed solar PV.

As per onshore wind, while 2020 installations are slowed down, this should be mostly compensated for in 2021 by projects that already have financing in place or are under construction. According to the agency, the impact on offshore wind will be limited because of the longer construction periods for such projects.

IEA also pointed at governments’ role in the development of the industry, stressing that it is more important than ever. According to IEA, renewables should be included in economic stimulus packages with the justification that they can lead to job creation, economic development and innovation and emissions reduction.

“The spectacular growth and cost reductions of renewables over the past two decades have been a big success story for global energy markets, driven by innovation in both technology and policies. But continuing cost declines will not be enough to protect renewables from a range of uncertainties that are being exacerbated by COVID-19,” said Fatih Birol, IEA’s executive director.

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Ivan is the mergers and acquisitions expert in Renewables Now with a passion for big deals and ambitious capacity plans.

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