Renewables 2021: Analysis and Forecast to 2026

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December 31, 2021
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(International Energy Agency) Renewables 2021 is the IEA’s primary analysis on the sector, based on current policies and market developments. It forecasts the deployment of renewable energy technologies in electricity, transport and heat to 2026 while also exploring key challenges to the industry and identifying barriers to faster growth.

Renewables are the backbone of any energy transition to achieve net zero. As the world increasingly shifts away from carbon emitting fossil fuels, understanding the current role renewables play in the decarbonisation of multiple sectors is key to ensuring a smooth pathway to net zero. While renewables continued to be deployed at a strong pace during the Covid-19 crisis, they face new opportunities and challenges. This year’s report frames current policy and market dynamics while placing the recent rise in energy and commodities prices in context. In addition to providing detailed market analysis and forecasts, Renewables 2021 also explores trends to watch including storage, producing hydrogen from renewable electricity, stimulus packages, aviation biofuels and residential heating.  READ MORE

Table of contents
Executive summary................................................................................................................ 14
Improved policies and COP26 climate goals are set to propel renewable electricity growth to
new heights .............................................................................................................................. 14
Despite rising prices, solar PV will set new records and wind will grow faster than over the
previous five years ................................................................................................................... 15
Asia is set to overtake Europe as India and Indonesia lead renewed growth in global demand
for biofuels................................................................................................................................ 16
Renewable heat has gained some policy momentum, but its market share is not set to
increase significantly ................................................................................................................ 16
High commodity and energy prices bring significant uncertainties .......................................... 17
Supported by the right policies, recovery spending on renewables could unleash a huge wave
of private capital ....................................................................................................................... 18
Faster growth of renewables is within reach but requires addressing persistent challenges.. 18
Renewables’ penetration in to hard-to-decarbonise sectors is slowly emerging and promises a
bright future .............................................................................................................................. 19
Renewables need to grow faster than our forecasts to close the gap with a pathway to net
zero by 2050............................................................................................................................. 19
Chapter 1. Renewable electricity.......................................................................................... 21
Forecast summary ................................................................................................................ 21
Renewable capacity additions are set to grow faster than ever in the next five years, but the
expansion trend is not on track to meet the IEA Net Zero by 2050 Scenario.......................... 21
Growing policy momentum worldwide is driving our forecast upward ..................................... 22
Government-led auction capacity is in slight decline, but is compensated by robust corporate
PPA activity .............................................................................................................................. 24
Top-10 countries continue to dominate renewables expansion, indicating that more diversity is
needed ..................................................................................................................................... 25
Solar PV breaks new records in our forecast, despite rising prices......................................... 26
Low wind conditions and droughts in key markets hamper more rapid growth of renewable
generation in 2021 ................................................................................................................... 30
Achieving the IEA Net Zero by 2050 Scenario requires policy makers to significantly increase
their ambition for all renewables .............................................................................................. 34
Country and regional analysis .............................................................................................. 35
China ........................................................................................................................................ 35
United States............................................................................................................................ 37
Asia Pacific............................................................................................................................... 40
India.......................................................................................................................................... 41
Japan........................................................................................................................................ 45
Korea........................................................................................................................................ 46
ASEAN ..................................................................................................................................... 47
Australia ................................................................................................................................... 50
Europe...................................................................................................................................... 52
Germany................................................................................................................................... 54
Spain ........................................................................................................................................ 56
France ...................................................................................................................................... 58
The Netherlands....................................................................................................................... 60
Turkey ...................................................................................................................................... 62
Poland ...................................................................................................................................... 64
Italy........................................................................................................................................... 65
United Kingdom........................................................................................................................ 67
Denmark................................................................................................................................... 68
Belgium .................................................................................................................................... 69
Latin America ........................................................................................................................... 71
Sub-Saharan Africa.................................................................................................................. 78
Middle East and North Africa ................................................................................................... 81
References............................................................................................................................ 84

Chapter 2. Biofuels................................................................................................................. 89
Forecast summary ................................................................................................................ 89
Biofuels recover in 2021 despite high costs............................................................................. 89
Asia to surpass European biofuel production before 2026 ...................................................... 90
Ethanol and renewable diesel lead biofuels growth................................................................. 91
Four policy discussions to watch that will help double biofuel growth rates ............................ 91
Demand and supply .............................................................................................................. 93
Asia surpasses European biofuel demand and supply............................................................ 95
Different fuels for different parts of the world ........................................................................... 96
Fuel demand and government policies are driving different supply outcomes in different
regions...................................................................................................................................... 98
Biofuel demand growth doubles in the accelerated case ...................................................... 102
Biofuels need to expand faster to align with the IEA Net Zero by 2050 Scenario ................. 105
Trade................................................................................................................................... 107
Renewable diesel and biojet lead growth in net trade ........................................................... 108
Singapore climbs to second largest exporter, while top importers remain the same ............ 109
Ethanol and biojet import demand drives trade growth in the accelerated case ................... 110
References.......................................................................................................................... 111

Chapter 3. Renewable heat.................................................................................................. 114
Recent trends...................................................................................................................... 114
Global progress on conversion to renewable heat has been limited ..................................... 114
Policy update....................................................................................................................... 115
Renewable heat has gained some policy momentum, but not enough to put the heat sector on
track to meet climate ambitions.............................................................................................. 115
Outlook to 2026................................................................................................................... 122
Buildings................................................................................................................................. 123
Industry................................................................................................................................... 125
References.......................................................................................................................... 129
Chapter 4. Renewable energy trends to watch ................................................................. 133
What is the impact of increasing commodity and energy prices on solar PV, wind and biofuels?.............................................................................................................................. 133
Wind and solar PV ................................................................................................................. 133
How do commodity prices affect the investment costs of solar PV and onshore wind?........ 134
Rising energy prices and trade policies put additional upward price pressure on wind and
solar........................................................................................................................................ 138
Despite rising equipment prices, wind and solar remain competitive .................................... 140
How much will renewable energy benefit from global stimulus packages? ....................... 145
Focus on the EU Recovery and Resilience Facility ............................................................... 148
Could the green hydrogen boom lead to additional renewable capacity by 2026? ........... 151
How rapidly will the global electricity storage market grow by 2026? ................................ 154
Are conditions right for biojet to take flight over the next five years?................................. 157
Condition 1 – Confidence in biojet ......................................................................................... 158
Condition 2 – Costs................................................................................................................ 159
Condition 3 – Policies............................................................................................................. 160
Condition 4 – Production........................................................................................................ 161
Condition 5 – Feedstock sustainability................................................................................... 162
Are renewable heating options cost-competitive with fossil fuels in the residential sector?
............................................................................................................................................. 163
Upfront costs .......................................................................................................................... 163
Operating costs ...................................................................................................................... 165
Overall cost-competitiveness of heating technologies........................................................... 166
References.......................................................................................................................... 168
General annex....................................................................................................................... 172
Abbreviations and acronyms............................................................................................... 172
Units of measure................................................................................................................. 173

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