New renewable energy capacity will exceed 300 gigawatts this year for the first time, with mounting concerns about climate change and energy security driving an 8% increase over 2021 despite rising costs and supply chain bottlenecks, the International Energy Agency (IEA) reports this week in its annual renewables market update.
“Although costs for new solar PV and wind installations have increased, reversing a decade-long cost reduction trend, natural gas, oil, and coal prices have risen much faster, therefore actually further improving the competitiveness of renewable electricity,” the Paris-based agency writes.
“Energy market developments in recent months—especially in Europe—have proven once again the essential role of renewables in improving energy security, in addition to their well-established effectiveness at reducing emissions,” Executive Director Fatih Birol added in a release.
The analysis predicts new renewable capacity editions totalling 320 GW—that’s 320 billion watts—exceeding last year’s record of 295 GW, writes S&P, in an alert republished by the Institute for Energy Economics and Financial Analysis.
“Unprecedented growth in capacity additions is mainly driven by solar PV in China and Europe as renewables demonstrate their energy security benefits amid market turmoil,” the IEA says. “The U.S. outlook is clouded by uncertainty over new incentives for wind and solar and by trade actions against solar PV imports from China and Southeast Asia.”
Meanwhile, ‘the impact of the COVID-19 pandemic and Russia’s invasion of Ukraine has driven inflation to multi-decade highs and led to soaring energy prices in some advanced economies, leaving policy-makers scrambling to find cheaper and reliable energy,” Reuters reports. The IEA see higher commodity and freight costs preventing continuing declines in solar costs that had gone on for a decade before the pandemic hit.
The report points to stagnant growth in the wind industry and a 40% drop in hydropower expansion.