IEA report shows renewable energy’s pain, ‘resilience’

Source: By Maxine Joselow, E&E News reporter • Posted: Wednesday, May 20, 2020

The world will build fewer wind turbines and solar plants this year because of the coronavirus pandemic, marking the first annual decline in new renewable power capacity in 20 years, according to a report released this morning from the International Energy Agency.

The findings demonstrate that the pandemic is hurting — but not halting — the growth of renewable electricity around the globe, IEA Executive Director Fatih Birol said in an exclusive phone interview yesterday with E&E News.

“The renewable sector has shown impressive resilience,” Birol said, “despite the disruptions and changes caused by the coronavirus pandemic.”

The report, known as the “Renewable Energy Market Update,” found that the world is set to add 167 gigawatts of renewable capacity this year, marking a 13% reduction from last year.

The decline stems from several pandemic-related factors, including lockdown measures, social distancing guidelines, supply chain disruptions and construction delays, the report says.

Nevertheless, the 167 GW still represents a 6% increase in global renewable power capacity, which exceeds the combined size of power systems in both Europe and North America, it says.

With solar, IEA expects that solar photovoltaic panels will account for more than half of the growth in renewable power this year. But their additions will fall from 110 GW in 2019 to roughly 90 GW in 2020.

With onshore wind, IEA expects its annual expansion to decline by 12% compared with last year, as the pandemic has created uncertainty for projects that were planning to become operational next year.

IEA noted, however, that the COVID-19 crisis will have a limited impact on renewable technologies with long lead times, including offshore wind, hydropower and geothermal. The agency pointed out that many offshore wind projects in the pipeline are already financed and under construction.

The findings differ by country and region.

In Europe, new additions of renewable power capacity are set to fall by one-third this year, marking their largest annual decline since 1996. But the outlook is rosier in the United States and China, which are both expected to see an increase in capacity additions in 2020 and 2021.

The U.S. is even expected to return to 2019 levels of capacity growth in 2021, as developers rush to claim renewable tax credits before they expire.

“Of all the countries, the United States is the bright spot in 2020,” Birol said. “It is the only big market to see an increase, mainly driven by the tax credits for renewable energy projects.”

‘Very much in demand’

As world governments craft stimulus packages to rescue their economies from the pandemic, the last section of the report recommends that governments pursue recovery plans that boost investments in renewables and energy efficiency.

“Policy makers need to put clean energy at the centre of recovery efforts to secure a structural downward trend in carbon emissions,” it says.

Birol was more blunt. “If governments are serious about seeing an increasing share of renewables in their energy mix, they need to continue to support renewables through different mechanisms,” he said. “In the absence of this support, renewable investment may take a serious hit.”

In the European Union, several leaders — including German Chancellor Angela Merkel and United Kingdom Prime Minister Boris Johnson — have endorsed calls for a green stimulus. But in the U.S., Congress has largely omitted climate and environmental provisions from its four coronavirus response packages thus far.

The “Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act,” which passed the House last week but faces long odds in the Senate, did not include clean energy provisions sought by advocates (E&E Daily, May 18).

The clean energy sector has lost 17% of its jobs since the COVID-19 outbreak began, according to a recent analysis conducted by the firm BW Research Partnership on behalf of clean energy advocacy groups, including the American Council on Renewable Energy (ACORE), E2 and E4TheFuture (Energywire, May 14).

Asked for comment on the IEA report, ACORE President Gregory Wetstone said in an emailed statement: “While IEA’s projection that renewable power installations are on track to decline for the first time in twenty years is troubling, the underlying long-term health of the renewable sector remains strong. Wind and solar power are increasingly cost-effective and very much in demand by American businesses and consumers.”

He added: “Through the negotiations around the HEROES Act passed by the House of Representatives last week, Congress has an opportunity to extend critical time-sensitive tax credit deadlines and provide temporary refundability to make renewable tax credits easier to use. These two commonsense changes to the tax code will allow the American renewable industry to stem its job losses and serve as a key economic driver in this downturn, as well as an effective climate solution over the long haul.”

Reporter David Iaconangelo contributed.