Renewables 2020

Yasmina Abdelilah, Energy Analyst

14 December 2020, The Issam Fares Institute, AUB

Online report: https://www.iea.org/reports/renewables-2020

Page 1
Renewables are resilient in electricity but demand shock hits heat & transport

Change in energy demand and renewables output in electricity, heat and transport between 2019 to 2020

10%
y-o-y % change
5%
Total energy
demand
0%

-5%
Renewables
output
-10%

-15%
Electricity Heat Transport fuels

Global energy demand is set to decline by 5% while renewables demand will increase by 1%, thanks to
almost 7% growth in electricity generation. Bioenergy use in industry and transport gets the biggest hit.
IEA 2020. All rights reserved. Page 2
Investor appetite for renewables remains strong

Equity performance Global auctioned renewable capacity

2.5 60
1=December 2019

GW
2.0 50

40
1.5
30
1.0
20

0.5
10

0.0 0
9 0 0 0 0 0 0 0 0 0 Jan-Oct 2019 Jan-Oct 2020
c-1 n-2 b-2 r-2 r-2 y-2 n-2 l-2 g-2 p-2
a p a u
De energy
Àll Ja Fesector
M A M WindJu J Au Se
Solar

Indexed stock market prices for traded energy companies

Publicly traded wind and solar companies continued to attract investors and have outperformed the overall
energy sector. Countries worldwide have auctioned record levels of capacity, led by China, India and Europe.
IEA 2020. All rights reserved. Page 3
Renewable capacity additions to grow in 2020 despite Covid-19
Global renewable annual capacity additions by technology
250
GW

200

150

100

50

0
2015 2016 2017 2018 2019 2020 2021 2022 2023-25
Historical Forecast Average
annual

Other renewables Hydropower Wind Solar PV May 2020 forecast

Resuming construction activity led to 18% forecast revision for 2020 since our May update. Additions will increase
10% in 2021, the fastest since 2015 but renewables’ resilience will be re-tested in 2022 due to policy deadlines.
IEA 2020. All rights reserved. Page 4
A major shift in global electricity generation in 2025
Electricity generation by technology

Renewables 2019
2025
27%
33%

Coal

Natural gas

0 2 000 4 000 6 000 8 000 10 000 12 000

TWh

Wind and solar PV’s combined installed capacity surpasses that of natural gas in 2023 and coal in 2024.
Renewables will become the largest source of electricity generation in 2025, overtaking coal.
IEA 2020. All rights reserved. Page 5
Wind and PV growth emerges beyond common policy schemes

Capacity growth by remuneration policy type 2020-25 Capacity growth by region 2020-25

Sub-Saharan
Africa
Administra- Auctions MENA 2% Eurasia
tively set tariffs 35% 2% 2%
36%
Remuneration –
administratively set Americas
Remuneration - 19%
competitive

Beyond policy China

schemes 36%
1300 GW 1300 GW
Green cer-
Government
tificates Europe
utility in-
4% 20%
vestment
4%
Corporate
Combination PPAs
7% Merchant Unsolicited Asia-Pacific
Plants contracts 7%
20%
2% 6%

Common policy schemes drive 80% of expansion over 2020-2025 (mostly auctions and administratively set tariffs)
but corporate PPAs, merchant plants, unsolicited projects and combinations drive 20% thanks to lower costs.
IEA 2020. All rights reserved. Page 6
MENA: Renewable capacity doubles by 2025
Renewable electricity capacity growth 2020-25
70 7
GW

GW
60 6

50 5

40 4

30 3

20 2

10 1

0 0
2019 2020-25
AE
i pt co e l ar an n ai
t
on si
a ri a n f.
..
u d ia y
oc ra at rd
a n ni Ira
U a Eg Is m w
ba ge to
S rab or Q O Jo Ku Tu Al es
A M Le R
MENA

Solar PV accounts for 70% of MENA’s renewable capacity growth between 2020-25. Half of the total growth is in the
top three countries.
IEA 2020. All rights reserved. Page 7
MENA: Solar PV growth triples driven by cost-effectiveness
Solar PV capacity growth Solar PV bid prices by capacity size (bubble size)
in five-year increments
40 Dubai, [BUBBLE SIZE]
GW

60 MW

USD/MWh
35 Morocco, [BUBBLE
SIZE] MW
50
30
25 40
Dubai, [BUBBLE SIZE] Jordan, Tunisia,
20 30
MW Abu Dhabi, [BUBBLE
SIZE] MW
[BUBBLE SIZE] MW
[BUBBLE SIZE] MW

Saudi Arabia,
15 [BUBBLE SIZE] MW
20
Saudi Arabia, Dubai Qatar, [BUBBLE SIZE]
10 [BUBBLE SIZE] MW [BUBBLE SIZE], MW MW
10
5 Dubai,
[BUBBLE SIZE] MW
Abu Dhabi, [BUBBLE
SIZE] MW

0 0
2014 2015 2016 2017 2018 2019 2020 2021
2008-13 2014-2019 2020-25
Year

Two-thirds of MENA’s solar PV growth between 2020-25 will be from net fossil fuel exporters due PV’s increasing cost
effectiveness, in part due to cost reductions achieved in competitive auctions.
IEA 2020. All rights reserved. Page 8
MENA: Wind expands at a slower pace
Wind capacity growth in five-year increments
GW 2.5 2.5
40

GW
GW

35 2.0 2
30
1.5 1.5
25
20 1.0 1
15
0.5 0.5
10
5 0.0 0
2018 2019 2020 2021 2022 Main Acc. Egypt Morocco Saudi Jordan Israel
0
Historical Main Arabia
200 201 202 case 2023-25
Utility-owned Unsolicited contracts
Egypt Morocco Saudi Arabia Corporate PPA Green certificates
Jordan Israel Rest of MENA Auction

Net fossil fuel importers account for three-quarters of the wind growth between 2020-25. Auctions become the largest
policy driver but lengthy tender procedures and grid constraints remain challenges.
IEA 2020. All rights reserved. Page 9
MENA: System flexibility needs drive other renewables
Distributed solar PV Concentrating Solar Power (CSP) Hydropower
3.0 3.0 3.0
GW

2.5 2.5 2.5

Other
MENA
2.0 2.0 2.0

UAE
1.5 1.5 1.5 Other
MENA

1.0 1.0 Morocco 1.0

UAE

Israel Israel
0.5 0.5 0.5
UAE
Morocco
0.0 0.0 0.0
Series1 Series1 Series1

Distributed PV will be driven by commercial systems and net-metering and self-consumption. New CSP plants have
5-15 hours. Over 70% of the region’s hydropower growth will be from pumped-storage plants.
IEA 2020. All rights reserved. Page 10
Conclusions

• Unlike all other fuels, renewable electricity was very resilient in 2020, underpinned by record growth of solar
and wind. Renewables are set to grow globally by almost 40% by 2025, becoming the first source of
electricity.

• Despite Covid-19, investor appetite for renewables remains strong in 2020, in particular in countries with
supportive policies providing transparent and predictable remuneration.

• The Middle East and North Africa region is set to almost double its renewable capacity over the next five-
years - adding almost 30 GW - largely driven by the increasing cost-effectiveness of solar PV.

• Solar PV accounts for 70% of the MENA renewable capacity growth, followed by wind, and technologies for
increasing system flexibility such as CSP with storage and pumped storage hydropower.

• Renewable capacity growth in the MENA region could be 75% higher between 2020-25 if the pace of
auctions was accelerated, barriers to new markets entrants were removed, access to affordable financing
increased and grid constraints were addressed.

IEA 2020. All rights reserved. Page 11

Thank you

Online report: https://www.iea.org/reports/renewables-2020

Data tool: https://www.iea.org/articles/renewables-2020-data-explorer?mode=market&region=World&product=Total

IEA 2019. All rights reserved. Page 12