Sign in
Your Position: Home >Energy >Renewable electricity growth is accelerating faster than ...

Renewable electricity growth is accelerating faster than ...

Dec. 06, 2023
  • 82
  • 0
  • 0
Tags: Energy

The growth of the world’s capacity to generate electricity from solar panels, wind turbines and other renewable technologies is on course to accelerate over the coming years, with 2021 expected to set a fresh all-time record for new installations, the IEA says in a new report.

Despite rising costs for key materials used to make solar panels and wind turbines, additions of new renewable power capacity this year are forecast to rise to 290 gigawatts (GW) in 2021, surpassing the previous all-time high set last year, according to the latest edition of the IEA’s annual Renewables Market Report.

By 2026, global renewable electricity capacity is forecast to rise more than 60% from 2020 levels to over 4 800 GW – equivalent to the current total global power capacity of fossil fuels and nuclear combined. Renewables are set to account for almost 95% of the increase in global power capacity through 2026, with solar PV alone providing more than half. The amount of renewable capacity added over the period of 2021 to 2026 is expected to be 50% higher than from 2015 to 2020. This is driven by stronger support from government policies and more ambitious clean energy goals announced before and during the COP26 Climate Change Conference.

“This year’s record renewable electricity additions of 290 gigawatts are yet another sign that a new global energy economy is emerging,” said IEA Executive Director Fatih Birol. “The high commodity and energy prices we are seeing today pose new challenges for the renewable industry, but elevated fossil fuel prices also make renewables even more competitive.”

The growth of renewables is forecast to increase in all regions compared with the 2015-2020 period. China remains the global leader in the volume of capacity additions: it is expected to reach 1200 GW of total wind and solar capacity in 2026 – four years earlier than its current target of 2030. India is set to come top in terms of the rate of growth, doubling new installations compared with 2015-2020. Deployments in Europe and the United States are also on track to speed up significantly from the previous five years. These four markets together account for 80% of renewable capacity expansion worldwide.

“The growth of renewables in India is outstanding, supporting the government’s newly announced goal of reaching 500 GW of renewable power capacity by 2030 and highlighting India’s broader potential to accelerate its clean energy transition,” said Dr Birol. “China continues to demonstrate its clean energy strengths, with the expansion of renewables suggesting the country could well achieve a peak in its CO2 emissions well before 2030.”

Solar PV remains the powerhouse of growth in renewable electricity, with its capacity additions forecast to increase by 17% in 2021 to a new record of almost 160 GW. In the same time frame, onshore wind additions are set to be almost one-quarter higher on average than during the 2015-20 period. Total offshore wind capacity is forecast to more than triple by 2026.

The IEA report expects this record growth for renewables to take place despite today’s high commodity and transport prices. However, should commodity prices remain high through the end of next year, the cost of wind investments would go back up to levels last seen in 2015 and three years of cost reductions for solar PV would be erased.

Despite rising prices limiting growth, global biofuel demand in 2021 is forecast to surpass 2019 levels, rebounding from last year’s huge decline caused by the pandemic. Demand for biofuels is set to grow strongly to 2026, with Asia accounting for almost 30% of new production. India is expected to rise to become the third largest market for ethanol worldwide, behind the United States and Brazil.

Governments can further accelerate the growth of renewables by addressing key barriers, such as permitting and grid integration challenges, social acceptance issues, inconsistent policy approaches, and insufficient remuneration. High financing costs in the developing world are also a major obstacle. In the report’s accelerated case, which assumes some of these hurdles are overcome, average annual renewable capacity additions are one-quarter higher in the period to 2026 than is forecast in the main case.

However, even this faster deployment would still fall well short of what would be needed in a global pathway to net zero emissions by mid-century. That would require renewable power capacity additions over the period 2021-26 to average almost double the rate of the report’s main case. It would also mean growth in biofuels demand averaging four times higher than in the main case, and renewable heat demand almost three times higher.

AFP via Getty Images

Key takeaways

  • Renewable energy has become increasingly important as more people have concerns about climate change.
  • Trends across the industry include domestic production and the growing importance of storage.
  • Production capacity is set to continue accelerating over the next few years.

Renewable energy has grown in importance over the past few decades as more people begin to understand the impacts of climate change and countries look to limit their dependence on foreign sources of fossil fuels.

The renewable industry includes various sources of power, including hydroelectric, wind, solar, and more. Despite the variety of ways to generate power, there have been common trends across the industry.

Here’s what you should keep in mind if you are considering investing in this sector.

Renewable energy history

Renewable energy was the only energy source that existed for a large portion of history. Before the widespread use of coal in the mid-1800s, people burned wood and other biomass that could be regrown. Wind and water were also common power sources, with boats using large sails and mills relying on wind or water flows.

The discovery of coal and other fossil fuels upended the way of doing things as people began to burn these fuels to power the Industrial Revolution.

More recently, renewables have regained their importance as a way to fight against climate change. They also offer a way for nations to improve their energy security by reducing reliance on imported oil and other fossil fuels.

Current trends

Renewable energy encompasses many different industries, from wind power to solar power industries. However, these businesses are interconnected in many ways, and there are common trends for investors to keep an eye on.

Batteries and storage

One major drawback of many renewable energy sources is that they struggle to produce consistent output 24/7/365.

Solar panels are great in many sunny regions, but the sun goes down every night, and some days see clouds. Wind power can produce huge amounts of electricity, but the wind doesn't always blow.

With fossil fuels and other power sources, you can produce energy without worrying about the whims of nature.

A significant trend in the renewable energy sector is finding a way to store excess power when conditions are suitable for production. Many companies have entered the power grid energy storage industry to try to solve this problem.

Some companies have started to focus on making batteries that are less expensive and have greater capacity. This crosses over into other aspects of green energy, such as electric vehicles, where battery capacity is essential. Businesses like Tesla, Toshiba, General Electric and NextEra Energy have focused on this problem.

Given that batteries have applicability to all forms of renewable power, investors are keeping a close eye on the growth of this industry and looking for companies that might be close to a breakthrough.

Home solar installations

A popular way for individuals to go green and save on electricity costs is to put solar panels on their homes. Thanks to the potential savings and tax incentives available, people have added solar to their homes at an accelerated rate.

In 2020, residential solar production capacity was 2.9 gigawatts. That grew by 34% to 3.9 gigawatts in 2021. Through 2022, the industry continued to set quarterly growth records, adding more capacity each consecutive quarter.

Investors looking to profit from this trend may invest in the businesses responsible for marketing and installing home solar systems. Last year, President Biden signed a bill increasing the tax incentive for solar installations, which may help installations grow even further.

Offshore wind

One major problem for wind power is finding space to put windmills. Wind farms require large amounts of open space, which can be challenging to find in developed areas such as cities along the east and west coasts.

Offshore wind, meaning windmills located in waters off the coast of the United States, solves this issue by offering large amounts of open space. In mid-2022, more than 40 gigawatts of generating capacity was under development compared to just 42 megawatts of currently operating offshore wind power.

With roughly 20 gigawatts of capacity under construction or in the permitting phase, this portion of the industry is likely to grow massively in the next few years.

Domestic manufacturing

The COVID-19 pandemic showed how fragile the world’s supply chains were, setting off a cascade of rising prices and product shortages. This has caused many companies to bring their manufacturing back to the United States to ease supply chain issues.

American manufacturers have increased their production capacity for green energy technology, including solar panels and other equipment. However, production has fallen well short of demand, with U.S. manufacturers making just five gigawatts of solar panels compared to the 20 gigawatts installed in 2021.

If domestic manufacturing continues to grow in popularity, investors may look to purchase shares in the companies making those panels locally.

What it means for investors

Green energy is here to stay and will likely grow in importance in the following decades. About two-thirds of Americans state that they are somewhat or very worried about climate change, and green energy is one of our best ways to fight this issue.

Investors interested in the industry may look for investment opportunities that expose them to new and growing renewable technologies or look for investments in related sectors. They may also consider divesting themselves of companies that focus on fossil fuels, which may lose importance as the capacity of renewables increases.

Even if you know you want to invest in renewables, finding what to invest in can be complicated. uses artificial intelligence to help you invest toward any goal and in any economy. With its Investment Kits, investing can be simple and fun.

The bottom line

Climate change is a massive problem that could impact everyone. Renewable energy has gained importance as a tool for fighting against further changes to our climate.

Investors who want to profit from a greener planet might look to add renewables to their portfolios.

Download today for access to AI-powered investment strategies.

Renewable electricity growth is accelerating faster than ...

Renewable Energy Is Growing Quickly Worldwide



Related Articles
Get in Touch
Guest Posts