- In its new Renewables 2022 report, IEA has announced its largest ever renewables forecast, anticipating these to grow by almost 2.4 TW during 2022-2027
- The revision is mainly influenced by IRA, REPowerEU and China’s 14th FYP, along with supportive policy framework in India
- Competitive auctions with CPPAs, bilateral contracts and merchant activity also provide a boost to the forecast
- Solar PV’s installed capacity will surpass coal by 2027 thus becoming the largest power source in the world, swelling 1.5 TW during 2022-2027
The International Energy Agency (IEA) has offered an upward revision of its renewable power forecast—its ‘largest ever.’ The Renewables 2022 – Analysis and Forecast to 2027 report expects renewables to grow by almost 2.4 TW during 2022-2027, an improvement of 85% from the previous 5 years. This is driven mainly by China that will achieve its 1.2 TW goal 5 years in advance, the European Union (EU), the US and India with their existing policies, market reforms and newer, friendlier regulatory framework.
The revised forecast is heavily influenced by China’s 14th Five-Year-Plan (FYP), the US Inflation Reduction Act (IRA), and EU’s REPowerEU plans, leading to an almost 30% improvement in forecast in its latest Renewables 2022 report, compared to its last year’s report.
For the EU, its energy crisis unleashed by the Russian invasion of Ukraine, has emerged as an additional strong motivation and a ‘decisive moment’ to accelerate renewable energy deployment. For its revised forecast for the EU, the IEA sees Germany and Spain leading installations for the bloc over the next 5 years.
“An even faster deployment of wind and solar PV could be achieved if EU member states were to rapidly implement a number of policies, including streamlining and reducing permitting timelines, improving auction designs and providing better visibility on auction schedules, as well as improving incentive schemes to support rooftop solar,” opine the analysts.
At the same time, competitive auctions too guide the improved forecast, with increasing number of corporate power purchase agreements (CPPA), bilateral contracts and merchant activity.
The latest annual addition of the report forecasts renewables to account for over 90% of global electricity expansion over the next 5 years, overtaking coal to become the largest source of global electricity by early 2025.
Share of renewables in the global power mix is anticipated to account for 38% in 2027, with wind and solar PV alone representing 20% stake.
As for solar PV, analysts believe its installed capacity will surpass coal by 2027 thus becoming the largest power source in the world, swelling 1.5 TW during 2022-2027. Along with utility scale solar that is the least costly option for new electricity generation in several economies despite high module prices, distributed solar PV too will grow fast due to higher retail electricity prices and growing policy support for end consumers. Annual additions for distributed PV reach almost 170 GW by 2027.
“Solar PV on its own accounts for over 60% of all renewable capacity expansion, setting records for annual additions every year through 2027,” reads the report. “Achieving faster solar PV expansion in the next five years also depends on a decline in module prices, which are currently 25-30% higher than in 2020.”
In comparison, over 570 GW of onshore wind capacity is likely to come online during the forecast period.
In 2022, the pace of annual renewable installations should grow to between 350 GW in main case scenario to 400 GW under accelerated scenario, with onshore wind and solar PV accounting for almost 90% of new additions, but it will depend on the pace of commissioning for utility scale and distributed PV in China and EU.
In 2027, there will likely be a record 460 GW renewable capacity addition in the main case.
“The report sees emerging signs of diversification in global PV supply chains, with new policies in the United States and India expected to boost investment in solar manufacturing by as much as $25 billion over the 2022-2027 period. While China remains the dominant player, its share in global manufacturing capacity could decrease from 90% today to 75% by 2027,” states the IEA.
Analysts believe rapid penetration of renewables in heating and transport sectors needs to be ensured to further boost their application and help decarbonize the globe.
“The world is set to add as much renewable power in the next 5 years as it did in the previous 20 years,” said IEA Executive Director Fatih Birol. “This is a clear example of how the current energy crisis can be a historic turning point towards a cleaner and more secure energy system. Renewables’ continued acceleration is critical to help keep the door open to limiting global warming to 1.5 °C.”
The IEA Renewables 2022 report is available for free download on the IEA’s website.