A new report by the IEA states that clean energy capacity additions are set to surpass the annual record set last year. Thanks to increased solar PV addition, about 290GW of renewable energy will be commissioned in 2021, a 3 per cent increase from 2020. Solar PV contributed to over 50 per cent of new clean energy additions this year, followed by wind and hydro.
The Report goes on to forecast that clean energy addition will increase tremendously over the next half-decade and account for almost 95 per cent of increased global electricity capacity. Renewable energy will increase by 60 per cent between 2020 and 2026 to about 4,800GW. China will lead growth with 43 per cent of new additions. Europe, the U.S. and India will account for 37 per cent of new clean energy additions globally by 2026. This accelerated growth will be fueled by stronger policy support following the ambitious climate targets announced at COP26, which will outweigh the rising solar and wind components costs.
Global Onshore wind additions through 2026 will be 25 per cent higher on average than in the preceding half-decade. Total offshore wind, on the other hand, will triple to 21GW and makeup 20 per cent of the global wind market. Hydropower, bioenergy, geothermal, and concentrated solar power are Dispatchable clean energy sources essential for more wind and solar integrations. However, they make up only 11 per cent of new additions globally. This low capacity addition would be influenced by their higher costs, the lack of policy support as well as low earnings. On the other hand, policy support for green hydrogen production and biojet has increased many projects. Planned projects could lead to the rise in global electrolyser capacity for hydrogen, leading to the additional deployment of 18GW wind and solar.
Despite this positive outlook, components price shocks could impact about 100GW of contracted capacity. OEMs, installers and developers are currently absorbing increasing costs. This could affect smaller companies with limited finances. Increased component costs would require over $100 billion of additional investment for the deployment of the same capacity. However, higher natural gas and coal prices have made wind and solar PV cost-effective.