Renewables’ new capacity additions are forecast to drop 13% this year to 167 gigawatts (GW) due to the Covid-19 crisis, the International Energy Agency (IEA) said on Wednesday.
Releasing its Renewable Market Update, the agency said the coronavirus pandemic is hurting, but not halting, global growth in renewable power capacity.
The decline reflects possible delays in construction activity due to supply chain disruptions, lockdown measures and social distancing guidelines, as well as emerging financing challenges.
This will be the first decline in new renewables additions in 20 years, Kallanish Energy reports. New installations are set to rebound next year to the level reached in 2019, as delayed projects come online and assuming a continuation of supportive policies.
However, the rebound for 2020 and 2021 combined is still 10% lower than previously forecast by the IEA – prior to the pandemic.
While U.S. developers are rushing to finish projects before tax credits expire, new additions in Europe will fall by one-third this year. This is the biggest decline since 1996, the IEA said, noting there will be a partial recovery in the region next year.
In terms of technology, solar photovoltaic (PV) will see more than half of expected expansion in 2020 and 2021, but deployment will fall from 110 GW in 2019 to over 90 GW this year.
Onshore wind installations have slowed down this year, but should be mostly compensated for in 2021, as the majority of projects are already financed and under construction.
The impact of Covid-19 in the offshore wind sector will be “limited,” as these projects have longer construction periods than onshore, the IEA said.
“The resilience of renewable electricity to the impacts of the Covid-19 crisis is good news but cannot be taken for granted,” said IEA’s Executive Director Fatih Birol. “Amid today’s extraordinary health and economic challenges, governments must not lose sight of the essential task of stepping up clean energy transitions to enable us to emerge from the crisis on a secure and sustainable path.”
Birol warns that even before the pandemic there was need for policies to be accelerated. Now, more than ever, investor confidence is relying on policy certainty, he added.
The IEA also expects renewables fuels to lose its competitiveness to fossil fuels, given the low oil and gas prices. “Planned investments to switch from fossil fuel heating to renewable or electric alternatives are likely to be postponed or cancelled unless governments introduce stronger policy support,” it said
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