Despite market uncertainty and construction delays in the pandemic, U.S. renewable power capacity installations have surged to a record this year.
Both the solar and wind power markets will see record capacity additions in 2020, while electricity generation from those renewable energy sources has seen double-digit increases amid a decline in the overall U.S. power generation market due to reduced consumption in the pandemic.
Solar capacity installations are set for a 43-percent annual surge this year, with more than 19 GW of installations expected by the end of 2020-a record for new solar power additions in one year, Wood Mackenzie and the Solar Energy Industries Association (SEIA) said in their latest Solar Market Insight Report 2020 Q4 on Tuesday.
Quarterly volumes of solar power installations have shown more resilience to COVID-19 related impacts than originally thought, which gave WoodMac confidence to increase its outlook for the year to 19 GW, compared to the projections in Q3, when the forecast was of 37-percent annual growth in 2020, with over 18 GW of installations expected.
The Q4 report showed that through the third quarter, the U.S. solar market installed 3.8 GW of solar PV, up 9 percent quarter over quarter, as the industry began recovering from the worst impacts of the pandemic. Utility solar accounted for nearly 70 percent of the 3.8 GW additions.
Residential solar installations also rose sequentially in the third quarter, after shelter-in-place orders during the spring caused the largest quarterly decline in history in the second quarter. Growth in residential solar installations returned in Q3, prompting WoodMac to revise up its forecast for 2020 residential capacity additions to over 3 GW, which would be 7-percent growth from 2019. Related: Low Oil Prices Force Saudi Arabia To Cut 2021 Budget Plan
"This is just shy of our outlook prior to the pandemic, demonstrating the resilience of the residential solar market," Wood Mackenzie said.
"This report points to the incredible resilience of our companies and workers in the face of the pandemic and continued demand for clean, affordable electricity sources," said Abigail Ross Hopper, president and CEO of the SEIA.
Not only showed solar power more resilience than initially expected, but solar also accounted for a massive 43 percent of all new electric generating capacity additions in the U.S. through the third quarter of 2020, more than any other electricity source.
This is the second year in a row in which solar power has beaten natural gas for new U.S. electricity-generating installations. Natural gas-fired installations accounted for 30 percent of new power capacity additions year to date in 2020, followed by wind power, which accounted for 26 percent of new installations, according to WoodMac estimates.
U.S. wind power is also set for a record year in 2020, the EIA said last month. The United States is on course to see a record-breaking 23 GW of wind turbine capacity additions this year, smashing the previous record from 2012 by nearly 10 GW. This year wind capacity additions are set to be higher than in previous years because of the impending phase-out of the full value of the U.S. production tax credit (PTC) at the end of 2020.
This year, due to the pandemic, global electricity demand is expected to drop by around 2 percent, but renewable electricity generation is set for nearly 7-percent growth, squeezing conventional generation, the International Energy Agency (IEA) said in its Electricity Market Report earlier this week.
"Long-term contracts, priority access to the grid and sustained installation of new plants are all underpinning strong growth in renewable electricity production," the IEA said.
The U.S. electricity market has also seen renewable electricity eating up market share from fossil fuel-powered generation, according to the IEA estimates. Due to the decline in overall consumption and the rise in renewable generation output, the share of fossil fuel generation declined to 60.2 percent in the first eight months of 2020 compared to 62.4 percent in the same period of 2019.
Between January and August, U.S. power generation from wind and solar jumped by 14.4 percent and 24.8 percent, respectively, while coal-fired electric generation plunged by 24 percent, also due to increased competitiveness from ultra-low natural gas prices for most of the spring and summer of 2020, the IEA said.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More