As the COVID-19 pandemic began to reveal its seriousness in early 2020, renewable energy market predictions for hydropower, solar and wind were dire; but the realities have turned out quite differently. The IEA’s 2020 Outlook, published in May, predicted: “…additions of renewable electricity capacity will decline by 13% in 2020 compared with 2019, the first downward trend since 2000.” However, a more recent “Renewables 2020” anticipates a year of
excellent growth, once all data has been compiled. “In sharp contrast to all other fuels, renewables used for generating electricity will grow by almost 7% in 2020.” Despite the pandemic, both 2020 and the future look positive for hydropower, solar and wind.
Hydropower additions grew by more than 18 GW in 2020, with significant large project installations in China, Lao PDR, India, Nepal, Viet Nam and Indonesia. In Europe, new projects in Portugal (pumped storage) and Turkey (large dams) helped to increase capacity additions. Over the next five years, global hydropower is expected to add about 10 GW to 13 GW annually, not including China. Asia will likely account for over 40% of that growth, led by India and Pakistan. Much of the remainder will occur in Southeast Asian countries where the private sector is becoming increasingly involved in hydropower development. China is expected to see the largest national increase, likely exceeding 107 TWh. Growth in Latin America is being led by Colombia, Argentina and Brazil. Overall, global hydropower generation (excluding pumped storage) is forecast to increase 9.5% by 2025, rising from 4,250 TWh to 4,650 TWh, and to remain the world’s largest source of renewable generation.
Solar PV additions are expected to have reached 107 GW in 2020, though progress across application segments has been uneven. For utility-scale projects, COVID-19 delayed construction activity in March and April but progress picked up in May. Initially, projections were for a drop in these large-scale installations, but instead both the U.S. and China saw growth (3% from the U.S. and 33% from China). Industrial installations fell as the global economy tightened, but a shift in demand toward residential load precipitated an increase in home installations. It is anticipated that 2021 will be another record year globally, with a 10% rise over 2020 and installations of about 117 GW.
Wind capacity additions are expected to have reached 65 GW by the end of 2020, 8% more than in 2019. Again, COVID-19 led to a slowdown in onshore construction between February and April because of global supply chain disruptions and logistical challenges. By contrast, the offshore sector was only mildly affected because longer project lead times mean short term disruptions have a smaller impact. For 2021, the forecast assumes a further acceleration of wind additions to 68 GW, 7.3 GW of which will be offshore.
What began as a seemingly devastating circumstance for the energy transition, has instead demonstrated a resiliency in the sector.
International Energy Agency. May 2020. “Renewable energy Market Update; Outlook for 2020 and 2021.”
International Energy Agency. November 2020. “Renewables 2020; Analysis and Forecast to 2025.”
International Energy Agency. July 2020. “World Energy investment 2020.”
Richard Swanson, Ph.D.
Asset valuation and project finance expert, specializing in financial and economic analysis of civil infrastructure assets.