The IEA has released its May 2022 update on Renewable Energy Markets, with rising costs for raw materials and transportation forecast to lead to the first year-on-year fall in new renewable capacity net additions in 2023.

The IEA’s Renewable Energy Market Update – May 2022 set out a number of updates relating to recent geopolitical and economic headwinds. Notably, it set a new urgency to accelerate clean energy transitions, with wind and solar PV having the potential to reduce the European Union’s energy sector dependence on Russia's natural gas by 2023. While solar PV and wind costs are expected to remain high in 2022 and 2023 due to elevated raw material and transportation prices, their competitiveness will improve due to higher relative increases in natural gas and coal prices.

Annual renewable capacity additions increased by 6% in 2021 to almost 295GW, despite the continuation of COVID-19 supply chain challenges, construction delays and record raw material prices. Renewable capacity is expected to further increase by 8% in 2022, reaching almost 320GW. However, growth is forecast to fall back slightly in 2023, with solar PV expansion not fully compensating for lower hydropower and steady year-on-year wind capacity additions.

A new focus on energy security – most notably in the European Union – has led to an unprecedented acceleration of new policies looking to deliver energy efficiency and renewables. The short-to-medium-term forecast for renewable markets will depend on new and far-reaching policies being introduced and implemented before the end of 2023. Project Blue’s forecasts for renewables capacity net additions are currently unchanged, with short-term market uncertainty and higher renewables costs countered by a new security imperative to fast-track green energy alternatives to Russian gas and oil.