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The Next South American Oil Giant

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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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IHS Predicts A Record Year For Renewables In 2021

Global renewable capacity additions defied COVID-19 to set new records in 2020, while global renewable energy output in the electricity sector jumped, unlike other energy sources.  This year, renewable installations are set to further surge globally, with solar and wind posting new records on the back of strong Chinese development and a growing number of markets auctioning off solar, onshore wind, and offshore wind capacity, IHS Markit said in a new report this week. 

Last year, renewables turned out to be the most resilient energy sector to the COVID slump. In sharp contrast to all other fuels, renewables used for generating electricity were set to have increased by 6.6 percent in 2020, compared to a 2.2-percent decline in the world’s total energy demand, the International Energy Agency (IEA) said in its Renewables 2020 report in November.   

 Moreover, investor appetite for renewables continued to be strong, unlike in fossil fuels, despite the economic uncertainties, the IEA said, noting that auctioned renewable capacity rose by 15 percent from January to October 2020 compared to the same period in 2019, reaching a new record. 

In 2021, renewable capacity additions are on track for a record expansion of nearly 10 percent, according to the IEA, thanks to government support in many economies and robust pipelines of projects from before the pandemic. 

In its Top Clean Tech Trends to Watch in 2021, IHS Markit expects solar installations globally to jump by more than 30 percent this year, with China accounting for 35 percent of all capacity additions. Many more markets have joined the 1 GW-plus total solar capacity club over the past decade, and those will also grow in 2021. 

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“There are now 18 markets globally that have +1 GW cumulative solar installations, compared to just six a decade earlier,” IHS Markit said.

Solar demand will soar despite the fact that solar module prices are expected to be higher in the first half of the year. But production costs are expected to decline in the latter half of 2021, “and this will lay the groundwork for record solar installations at the end of 2021,” IHS Markit noted. 

Wind power installations will also jump this year, following a record 2020. Onshore wind additions in 2021 will continue to be driven by installation in markets facing imminent subsidy cuts, while offshore wind installations could nearly double in 2021 from 2020 to exceed 10 GW, thanks again to Chinese development. Many European countries, the U.S., and Japan are also set to auction offshore wind projects while floating offshore wind may finally be moving into the commercial phase, Andrei Utkin, senior associate, clean energy technology at IHS Markit, says. 

The United States will also see a continued boom in solar and wind installations this year, following record-breaking capacity additions in 2020. 

Renewables, mostly solar and wind, will dominate new electricity generation capacity in the United States in 2021, the U.S. Energy Information Administration (EIA) said earlier this month. A total of 39.7 GW of new electricity generating capacity is expected to start commercial operation in 2021, with solar photovoltaics (PV) accounting for 39 percent of the new capacity. Wind power generation capacity will represent 31 percent of the newly installed U.S. electricity generating capacity this year, followed at a distant third by natural gas with 16 percent of new generation. Solar installations of 15.4 GW are set to beat this year the 2020 record of 12 GW, according to EIA estimates. Solar capacity growth is set to exceed wind growth for the first time in 2021, the EIA said in its January Short-Term Energy Outlook. 

It’s not only record solar and wind installations in the U.S. and globally that will draw attention to the renewables sector this year. IHS Markit sees green hydrogen development, geothermal energy, and policies on battery recycling as the other top clean energy trends to watch in 2021.  

By Tsvetana Paraskova for Oilprice.com

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