Rising concerns over energy security and climate change will galvanize record new capacity to generate renewable power in 2022, the International Energy Agency forecast on Wednesday.
The IEA forecasts that 320 gigawatts will come online this year, equivalent to Germany’s total annual demand, up from a previous record of 295 gigawatts in 2021.
Last year’s additions, which were driven by growth of solar energy in China and Europe, exceeded the Paris-based agency’s expectations, it said in a new report on renewables.
“Energy market developments in recent months – especially in Europe – have proven once again the essential role of renewables in improving energy security, in addition to their well-established effectiveness at reducing emissions,” IEA executive director Fatih Birol said.
The impact of the COVID-19 pandemic and Russia’s invasion of Ukraine has driven inflation to multidecade highs and led to soaring energy prices in some advanced economies, leaving policy-makers scrambling to find cheaper and reliable energy.
But the growth of renewable power has been hampered by supply chain difficulties, the IEA added, saying that the cost of installing solar photovoltaic (PV) panels will remain high this year and next owing to higher commodity and freight prices.
Before the coronavirus crisis, prices for solar power had been declining for a decade, the IEA said.
And in the absence of stronger policies, the growth of renewables is expected to plateau next year as progress in solar power is offset by a 40-per-cent decline in hydropower expansion and stagnant growth in wind power generation.
Renewables growth was led by China, the European Union and Latin America in 2021, the IEA said, but it had lagged in the United States.
“The U.S. outlook is clouded by uncertainty over new incentives for wind and solar and by trade actions against solar PV imports from China and Southeast Asia,” it added.
Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.