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Renewable Electricity

Subsector
More efforts needed
Renewables

About this report

Renewables play a key role in clean energy transitions and the deployment of renewable power is one of the main enablers of keeping the rise in average global temperatures below 1.5°C. Recent progress has been promising: initial estimates suggest that 2022 is a record year for renewable capacity additions, with annual capacity expected to amount to about 340 GW. Key policies announced this year, especially REPowerEU and the US Inflation Reduction Act, will lend further support to accelerate renewable electricity deployment in the coming years. 

Still, renewable electricity needs to expand faster to reach the milestones in the Net Zero Emissions by 2050 Scenario, where the renewable share of generation increases from almost 29% in 2021 to more than 60% by 2030. Annual generation has to increase at an average rate of over 12% during 2022-2030, which is twice the average of 2019-2021. 

Energy

In 2021 renewable electricity generation rose by almost 7%, a record 522 TWh increase, with wind and solar PV technologies together accounting for almost 90% of this growth. The share of renewables in global electricity generation reached 28.7% in 2021, after modest growth of 0.4 percentage points. The slow growth of renewables’ share was due to global electricity demand reaching its highest level in history, as economic activity rebounded after the Covid-19-related slowdown, and droughts in several regions decreased hydropower generation. 

Renewables share of power generation in the Net Zero Scenario, 2010-2030

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China was responsible for more than half of renewable electricity generation growth in 2021, mostly due to record wind and solar PV capacity additions in 2020. The United States and the European Union were responsible for 8% of the growth each. Unfortunately, renewable generation decreased in Brazil and Turkey due to persistent droughts causing lower hydropower generation, and in the United Kingdom and Germany due to extended periods of low wind conditions hampering generation at wind farms. 

Renewable power generation needs to continue expanding by over 12% annually over 2022-2030 to get on track with the Net Zero Scenario. Despite record renewable capacity additions, generation growth was still significantly below the Net Zero Scenario milestone in 2021. Much faster deployment of all renewable technologies in all regions of the world will be needed. 

Technology deployment

Wind accounted for about half of 2021’s record 522 TWh increase in renewable electricity generation, mostly due to the almost tripling of wind capacity additions in China in 2020 and continuation of strong growth in 2021. Solar PV represented one-third of generation growth, thanks to the acceleration of installations in China, the European Union and the United States in 2020 and 2021. Bioenergy power generation accounted for the remaining 15% uplift. In contrast, hydropower generation decreased by about 0.4% in 2021 for the first time in 20 years, due to droughts in Brazil, the United States, Turkey, China, India and Canada. Generation growth in geothermal, concentrated solar power and ocean technologies remained stalled in 2021, due to limited capacity additions.

Renewable power generation by technology in the Net Zero Scenario, 2010-2030

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Solar PV has been the fastest growing technology by capacity additions in recent years; however, even the record 150 GW added in 2021 is only about one-third of the average annual additions during 2022-2030 in the Net Zero Scenario milestones. In the case of wind, average annual installations need to double those seen in 2021, while for hydropower and bioenergy, growth needs to be about double the average of the last five years. Overall, much greater endeavours are needed to put these mainstream technologies firmly on the Net Zero Scenario trajectory, while CSP, geothermal and ocean power are still well below the growth rates needed to get on track with the scenario’s long-term levels. 

Policy

Renewable power is a subject to policy support and national targets in the majority of countries around the world. Various types of support have been implemented, including technology-specific measures. The following important changes have been implemented in 2021-2022: 

  • China published its 14th Five-Year Plan in June 2022, which includes an ambitious target of 33% of electricity generation to come from renewables by 2025 (up from about 29% in 2021), including an 18% target for wind and solar technologies. 
  • In August 2022 the federal government of the United States introduced the Inflation Reduction Act, a law significantly expanding support for renewable energy in the next 10 years through tax credits and other measures. 
  • In July 2021 the European Commission proposed increasing the bloc’s renewable energy target for 2030 from 32% to 40%. The proposed target was further increased by the REPowerEU Plan to 45% in May 2022 (which would require total installed renewable capacity of 1 236 GW). Many European countries have already expanded their renewables support mechanisms in order to accelerate capacity growth with a view to the 2030 targets and in response to the energy crisis resulting from Russia’s invasion of Ukraine.  
  • During COP26, held in November 2021 in Glasgow, India announced new targets for 2030, comprising 500 GW of total non-fossil generating capacity and a 50% renewable electricity generation share (more than double the 22% share in 2020), as well as net zero emissions by 2070

Policies

Policy
Country
Year
Status
Jurisdiction
International collaboration

Numerous international organisations, collaboration programmes, groups and initiatives are working to accelerate renewable energy growth around the world, including the following:  

  • The renewable power targets included in the Nationally Determined Contributions submitted by 109 Parties to the Paris Agreement, as of November 2021. 
  • Corporate initiatives containing renewable energy targets and net zero emission initiatives, including RE100 and The Climate Pledge
  • The European Union’s binding 2030 renewable energy targets. 
  • Multiple bilateral and multilateral initiatives focusing on renewable energy knowledge sharing, technological development and policy design support, including IEA Technology Collaboration Programmes
Private-sector strategies

The main renewable power activity of the private sector, beyond the companies directly involved in developing renewable projects, is signing corporate power purchase agreements. This way, companies can purchase clean electricity directly from producers, hedging the price and ensuring the use of green technologies. The capacity contracted through PPAs rose to almost 25 GW in 2020, with majority of contracts signed in the United States and Europe with solar and wind power generators.  

Recommendations for policy makers

For all renewable power technologies, long-term target and policy stability is essential to ensure investor confidence and continued growth. At the same time, policies need to adapt continuously to changing market conditions to achieve greater cost-competitiveness and improve the integration of renewables into the system. 

Policy instruments used to support renewable power include administratively set feed-in tariffs or premiums, renewable portfolio standards, quotas and tradeable green certificate schemes, net metering, tax rebates and capital grants. Recently, auctions for the centralised competitive procurement of renewables have become increasingly widespread and have been instrumental in discovering renewable energy prices and containing policy costs in many countries, especially for solar PV and wind. However, the success of such policies in achieving deployment and development objectives relies on their design and consequent ability to attract investment and competition. 

Increasingly competitive, renewables – especially solar PV and wind – are rapidly transforming power systems worldwide. However, reforms to power market design and policy frameworks will be needed to ensure investment at scale both in new renewable capacity and in power system flexibility to integrate high shares of variable renewables in a reliable and cost-effective manner. As the share of variable renewable energy increases, policies ensuring investment in all forms of flexibility become crucial. Solutions include enhancing power plant flexibility, unlocking demand-side management, supporting energy storage and improving grid infrastructure. 

Some renewable technologies are still relatively expensive and/or face specific technology and market challenges, so they require more targeted policies. Better remuneration of the market value of storage is necessary to accelerate deployment of CSP, pumped-hydro storage and reservoir hydropower technologies. Timely grid connection and continued implementation of policies that spur competition are needed to achieve further cost reductions in offshore wind.  

Lengthy and complicated permitting processes are hampering deployment of new renewable capacity, especially in Europe. Due to complicated requirements, responsibility split between multiple government agencies and understaffing, the development of renewable energy projects can take up to 10 years. Establishing one-stop shops, providing clear guidance for developers and public participation in site identification should be considered by policy makers to remove the permitting bottlenecks.  

Analysis