INCREASED CAPITAL SPENDING REQUIRED TO ACHIEVE CLIMATE TARGETS

Renewable energy capacity saw significant growth last year, according to the most recent Renewable Energy Market report of the International Energy Agency (IEA). The growth saw 295GW more of renewable energy capacity in 2021.

Highlights from the report include:

• Rising energy and shipping costs have contributed to increased prices for PV-grade polysilicon, steel, aluminium and copper. Alongside trade restrictions, solar PV modules and wind turbines have become more expensive since 2020 for important markets such as the US, India and EU.
• However, as natural gas and coal prices rise, the competitiveness of wind and solar PV has heightened.
• Less capacity for solar PV and wind projects is being awarded by governments, due to challenges including permitting and grid integration. For some countries, lack of social acceptance of wind and hydropower has resulted in projects being delayed or cancelled.
• In the majority of countries, utility scale solar PV allows for the lowest cost for developing new electricity, particularly in relation to increasing prices of natural gas. Utility scale PV projects provide 60% of solar PV additions worldwide. Deployment of commercial and residential projects in the EU and India is supporting this.

Global renewable electricity capacity is estimated to increase as much as ~305GW per year between 2021 and 2026 based on IEA predictions. This will allow the amount of electrical demand that could be met with renewable energy to become greater each year.  However, the IEA report suggests that these expected increases may not be enough to achieve Net Zero by 2050 goals and ultimately tackle the energy and climate crisis. Challenges in developing a renewable energy grid could arise from insufficient global capital spending as well as issues with grid integration.

The report states that energy security concerns as well as increased prices could encourage further investment in fossils fuels such as coal. Clean energy investment increased by only 2% a year in the 5 years after the Paris Agreement was signed in 2015. This level of investment would need to increase in order to reduce pressure on consumers experiencing high energy costs, secure the energy systems and achieve climate goals.

To read the full report, please use the following link:

https://www.iea.org/reports/renewables-2021/renewable-electricity?mode=market&region=World&publication=2021&product=Total