Global renewable generation capacity is expected to increase by more than 60 per cent from 2020 levels to over 4,800 GW by 2026. Renewables are also expected to account for about 95 per cent of the growth in worldwide capacity by 2026, with solar energy accounting for majority of the increase. Between 2021 and 2026, the amount of renewable capacity added is predicted to be 50 per cent more than what was added between 2015 and 2020. Stronger government regulations and more ambitious renewable energy objectives established before and during the COP26 Climate Change Conference are driving this trend.
Future growth in the sector will be boosted by factors including favourable government regulations as well as lowering price of solar panels and wind turbines and their installation costs.
Ember’s “Global Electricity Review 2022” provides an overview of changes in the global electricity transition in 2021. The report covers data from about 209 countries for the period between 2000 to 2020.
Wind and solar generated over a tenth (10.3%) of global electricity for the first time in 2021, up from 9.3% in 2020. This is more than double the market share (4.6%) from when the Paris agreement was signed in 2015. Their growth rate has also increased: wind generation rose by +14% in 2021 (the highest since 2017), and solar by +23% (the highest since 2018); combined, they rose by 17%. This wind and solar growth was slower in 2021 than last decade, when they had an average of 20% year-on-year growth. Clean electricity sources generated 38% of the world’s electricity in 2021. Taken together, wind and solar are now the fourth largest source of electricity in the world. They were also the fastest-growing clean sources in 2021; other zero emissions sources of electricity either fell (hydro) or were roughly static (bioenergy and nuclear). Fossil fuels still generated 62% of global electricity; mainly coal (36%) and gas (22%).
50 countries had over a tenth of their electricity from wind and solar in 2021, up from 43 in 2020 and 36 in 2019. Seven countries hit this landmark in 2021 for the first time: China (11.2% in 2021), Japan (10.2%), Mongolia (10.6%), Viet Nam (10.7%), Argentina (10.4%), Hungary (11.1%) and El Salvador (12.0%). All five of the world’s largest economies have reached this landmark: the US, China, Japan, Germany and the UK.
Europe leads the way with nine of the ten top countries. Three countries have even exceeded 40% of their electricity from wind and solar. In 2021, Denmark, Luxembourg and Uruguay achieved 52%, 43% and 47% respectively, leading the way on technology for high renewable grid integration. The Middle East and Africa had the fewest countries reach a landmark tenth of wind and solar. Saudi Arabia’s electricity is still less than 1% wind and solar, and the next two hosts of UN climate summits — Egypt and the UAE — have only 3%.
The countries which have transformed their electricity system the fastest since the pandemic were the Netherlands, Australia and Viet Nam. From 2019 to 2021, they switched over 8% of their total electricity demand to wind and solar.
What’s more, that new wind and solar directly replaced fossil fuels. In the Netherlands, the share of wind and solar rose from 14% to 25% in just two years, whilst the share of fossil fuels fell from 78% to 63%. In Australia, wind and solar rose from 13% to 22%, whilst the share of fossil fuels fell from 79% to 70%. In Viet Nam, the share of wind and solar rose from 3% to 11%, whilst the share of fossil fuels fell from 73% to 63%. If these trends can be replicated globally, and sustained, the power sector would be on track for 1.5 degree goal.
Viet Nam’s solar boom
Viet Nam has seen unparalleled growth in solar power. This has not only reduced power sector emissions, but also reduced its costly gas import bill. In 2021, Viet Nam saw astonishing growth in solar as it increased its generation by 337% (+17 TWh) in a single year, to become the world’s 10th largest solar generator. This solar growth meant that Viet Nam was the only country in Asia to meet and exceed its entire demand rise with new wind and solar.
The solar increase, even as demand grew, reduced fossil fuel share, with coal down from 55% to 52%, and gas from 17% to 12% — driving emissions down by a significant 6%. Viet Nam’s combined wind and solar capacity has increased by four times since 2019. Another four-fold increase to 89 gigawatts by 2030 would be enough to match all their increase in demand even in a high electricity growth scenario. When rapid renewables growth happens, the rest of the electricity system needs to adapt quickly, and in Viet Nam’s case, there are some key lessons.
The feed-in-tariffs were so popular they were put on hold. But to get the cheapest prices, countries need a long-term renewables policy to create a stable investment environment; stop-start policy needs to be avoided.
The grid also had problems integrating such large amounts. More upfront planning would have helped, to strengthen the grid and add sufficient interconnection, alongside flexible demand and storage capacity. This rapid growth poses some very interesting questions in relation to plans for a new thermal plant. Viet Nam has made a high level commitment to stop building new coal plants, and yet there are still new coal plants in planning, and an incredible 56 gigawatts of planned gas power plants. The speed and cost of the solar boom, if well managed, could undermine the investment case significantly.
High demand growth
Electricity demand rose by the most ever in absolute terms: 1,414 TWh from 2020 to 2021 — approximately the equivalent of adding a new India to the world’s electricity demand. At 5.4%, 2021 saw the fastest demand growth since 2010. The rise followed from a small 1% fall in 2020.
Many advanced countries rebounded after the fall in 2020, back to pre-pandemic levels. Some countries had levels slightly lower than pre-Covid, such as the UK (4% lower in 2021 than in 2019), Germany (-2%) and Japan (-2%). But most developed countries, including the US, rebounded back to 2019 demand levels. Poland (+3%), Korea (+3%) and Russia (+3%) were all slightly higher.
The real growth continues to be in Asia, in large part as economic growth boomed. In many countries, it followed on from a growth year even in 2020 when the pandemic struck. China saw the biggest rise, with 14% higher electricity demand in 2021 compared to 2019.
The top ten coal power countries accounted for 90% of the world’s coal power generation in 2021. Coal power in the US, EU and Japan strongly rebounded compared to 2020, but remained below 2019 levels. The US rebounded 16% in 2021, but was 7% below 2019 levels, Germany rebounded 24% in 2021, but was 4% below 2019 levels, Japan rebounded 3% in 2021, but was 2% below 2019 levels.
The rebound in coal was mostly caused by the rebound in electricity, but it was also partly exacerbated by a rise in gas prices. A switch from gas generation to coal generation happened at three points in 2021: in Europe at the end of the year as gas prices spiked, in the US during the Texan crisis in February 2021, and in Japan.
As the high gas prices continue into 2022, our analysis for Europe finds that the gas crisis is interrupting the EU’s coal exit, and identifies a ‘paradigm shift’ as new renewables replace gas instead of coal. This new feature of the market only partly impacted full-year 2021 data, but will undoubtedly impact 2022 and beyond. For the IEA 1.5 degree pathway, OECD countries will have to phase out coal by 2030, and the rest of the world by 2040. So far, of the remaining top 10 coal countries, only Germany has a commitment to phase out by 2030.
The entire report can be accessed here.