Economic upheaval due to the COVID-19 pandemic was the story of 2020. Now, a new report from the International Energy Agency shows renewable energy growth is recovering from the slowdown and that wind and solar power are on pace to surpass natural gas and coal within the next four years.
Back in May, an IEA update reported COVID-19 was slowing but not halting renewable energy growth globally, mainly due to the impacts of lockdown measures implemented worldwide in the spring. Disrupted supply chains and limited mobility delayed construction of new onshore wind and solar projects. The report shows the second half of 2020 saw renewable markets rebounding despite the ongoing pandemic with construction projects and licensing bouncing back to nearly normal levels.
Announced economic stimulus aimed at renewable elecriticy plants is now on target to reach almost $10 billion worldwide, although the expiration of production tax credits here in the U.S. for new wind farms in 2022 could slow growth in that sector.
The IEA report forecasts that renewable energy sources will be the main source of electricity for the world by 2025 supplying one-third of the market. Renewable capacity is forecast to jump almost 10% in 2020, with hydropower holding onto the top spot followed by solar and wind.
Renewables have adapted quickly with growth being driven mainly by economics in the next few years. The IEA report shows oil and gas companies are expected to increase investment in renewable electric capacity over the next five years.
The strong outlook for renewables comes as the U.S. Energy Information Administration published its short-term energy outlook showing renewable electricity will continue to gain this year. Natural gas claimed 39 percent of the market in 2020, but is expected to dip in 2021 due to higher prices, while electricity from renewable sources is expected to rise from 18 to 20 percent.
While renewables will become a larger part of the energy mix, natural gas is expected to remain a significant part of the energy mix for some time.