IEA Expects 145 GW Global Solar PV Additions In 2021

• IEA report sees exception growth of renewables in 2021 and 2022, driven by high amount of capacity auctioned globally, and PPAs being signed by companies
• For solar, the forecast is 145 GW for 2021 and 162 GW in 2022, while wind power growth is expected to slowdown
• China will remain the top market, but any slowdown here will be compensated by European nations
• High price of modules will come down as newer glass and silicon capacity starts to come online

Annual solar PV capacity additions in 2020 grew 23% to almost 135 GW, according to the International Energy Agency (IEA), and it expects further scale up in the annual PV numbers for 2021 to grow to 145 GW and to 162 GW in 2022. It would not only mean solar would be 'breaking records', but also accounting for almost over 55% of all renewable energy expansion in this year and next.

This 145 GW will include 92.7 GW of utility scale capacity, 24.9 GW of commercial and industrial (C&I), and 27.2 GW of residential solar installations. Share of utility scale applications in annual PV additions is anticipated to increase to almost 70% in 2022 representing 111 GW, growing from over 55% in 2020. C&I capacity will account for 30.5 GW, while residential solar will reflect 19.5 GW in total.

In its latest market update Renewable Energy Market Update 2021, the IEA says together renewable sources of electricity as wind and solar grew at their fastest rate in 2020 adding a total of 280 GW, growing 45% annually. And this increase is set to become the 'new normal' with IEA forecasting around 270 GW coming up in 2021 and close to 280 GW in 2022.

In its Renewables 2020 report published in November 2020, the IEA had guided for 117 GW new solar PV capacity additions under main case scenario and 142 GW under accelerated scenario for 2021 (see IEA Expects 107 GW Solar PV Addition In 2020).

Analysts have offered the upward revision in the forecast citing high amounts of renewable capacity being auctioned globally, and 'record-level' power purchase agreements (PPA) signed by companies despite the macroeconomic uncertainties and suppressed demand.

In the new report, the IEA sees wind capacity additions slowing down in 2021 and 2022, after increasing more than 90% in 2020 to reach 114 GW.

"Governments need to build on this promising momentum through policies that encourage greater investment in solar and wind, in the additional grid infrastructure they will require, and in other key renewable technologies such as hydropower, bioenergy and geothermal," said IEA's Executive Director Fatih Birol. "A massive expansion of clean electricity is essential to giving the world a chance of achieving its net zero goals.''

Markets

Maximum renewable capacity additions in 2020 were reported in China that accounted for 50% of global additions thanks to the rush to complete projects to avail of government subsidies (see China Added 48.2 GW Solar PV Capacity In 2020).

According to the IEA report, in 2021 and 2022 China's renewables growth will stabilize below the 2020 record, and 'slowdown in China in the coming years will be compensated for by strong growth in Europe, the United States, India and Latin America where government support and falling prices for solar PV and wind continue to drive installations'. In Europe, it names growth centers as Germany, the Netherlands, Turkey, Poland, Spain, Sweden and the UK.

As the country aims to achieve net zero carbon emissions target before 2060, China may see a growth in renewables once again after 2022.

Extension of federal tax credits will boost installations in the US, however if the Biden administration's new emissions reduction targets of infrastructure bill are enacted, one can expect 'much stronger acceleration' after 2022. Installation forecast for India for 2021 is uncertain since India is currently facing major surge in COVID-19 cases, however for 2022 the analysts are more optimistic.

Nonetheless, the IEA also warns of a rise in CO2 emissions in 2021 due to parallel rise in coal use 'underscoring the major policy changes and investments in clean energy needed to meet climate goals'.

Supply chain constraints

The report blames supply chain complications, including fires in silicon manufacturing plants at Xinjiang, and rising commodity prices to have pushed up solar module prices between July 2020 and April 2021, 'erasing the 25% price reduction achieved during H1/2020. At the same time, PV-grade glass prices have surged 50%, according to the report, due to increased demand for bifacial modules and delays to the modernization of high-cost production lines.

Authors of the report point out, "Steel and copper prices also rose 40% from September 2020 to March 2021, boosted by rapid economic recovery in China and other emerging economies. In addition, relatively higher oil prices and the global economy's recovery from the pandemic tripled global freight costs, raising the price of Chinese modules exported around the world."

Relief is set to come as several new polysilicon plants outside Xinjiang start coming online in 2021 and 2022 which will also lead to geographical diversification of its production, and solar grade glass capacity is also coming up in China.

The IEA believes module prices will be lower at the end of 2021 compared to average Chinese price of around $0.0205 per W in 2020.

The report can be downloaded for free on the IEA's website.