BNEF’s top ten predictions for the energy sector in 2021


Bloomberg New Energy Finance (BNEF) has released its top ten predictions for the energy sector in 2021.

The COVID-19 health crisis will ease gradually during the course of this year and most economies and the energy sector will stage recoveries. Ironically, 2021 might also be less uniformly bright for clean energy than its lugubrious predecessor turned out to be, according to BNEF.

The US will re-enter the arena on climate leadership, probably with a 2050 zero-carbon pledge that will mean that the vast majority of the world’s economy will be in countries with zero-carbon commitments. However, the gap between policy ambition and actual dollars invested will continue to widen, accoring to Angus McCrome, chief editor at BloombergNEF.

The research firm’s top ten predictions for 2021 include:

Half a trillion dollars of investment in energy decarbonisation again, but stock market bumps

Following the world committing a record $501.3 billion to decarbonisation in 2020, beating the previous year by 9% despite the economic disruption caused by the Covid-19 pandemic, BNEF expects the investment level to be maintained in 2021.

BNEF expects the new administration in the US to preside over an upsurge in activity in US renewables and electric transport.

Globally, electric vehicle sales are expected to jump and solar installations to have yet another record year, more than offsetting further cost reductions per megawatt. 

Sustainable finance to roar on

One of the most persistent trends of recent years has been record issuance of sustainable debt. BNEF predicts that the issuance of green bonds, social bonds, sustainability-linked loans and sustainability bonds to continue to increase in 2021.

Issuance of sustainable debt came to a record $732 billion in 2020, up 29% on the previous year and is expected to reach yet another record at $900 billion in 2021.

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Annual solar installations to pass 150GW in 2021

BNEF predicts an increase from 2020 record installations of 132GW to more then 150GW in 2021.

Module prices, ending 2020 at 20 US cents per Watt, will fall again, to average 18 US cents per Watt as supply of key materials like suitable glass is increased.

Wind additions to jump by 15%

Just as it did in 2020, the wind sector will set new records this year. Across sea and land, a total of 84GW of new wind capacity will be added in 2021. Most of this will be onshore (75GW). Europe and the Americas will pick up the slack from an expected drop in installations in China. After an expected dip in installations in 2020 (unrelated to the pandemic), new offshore additions will jump 33% this year with 8.7GW added worldwide.

In 2021, owners of around 4.8GW of onshore capacity to be faced with end-of-life decisions on the assets. Most of it (3.9GW) is likely to be repowered, with the remainder decommissioned.

A breakout year, with 4.4 million passenger EVs sold globally

There are now over 10 million electric vehicles on the road globally and adoption will continue to accelerate in 2021. Driving this will be generous subsidies, tighter fuel economy/CO2 regulations, fleet purchases, and a growing number of competitive models.

Around 4.4 million passenger EVs (including battery electrics and plug-in hybrids) will be be sold globally this year, up about 60% from 2020. After a close finish in 2020, the race between China and Europe is heating up.

Jump in heat pump sales

A  record year for heat pump installations is expected with sales of more than 12 million units globally in 2021.

The growth will reflect increasingly stringent regulatory standards – particularly in Europe – and greater policy support worldwide, including stimulus packages that could spur new housing construction as well as retrofits of heat pumps into existing homes.

Battery metal prices firm, but battery prices fall

Demand for gas is recovering fast from the coronavirus pandemic, but the year ahead also looks likely to stir up more fundamental questions about the future role of gas in the energy transition.

This year, global LNG trade is expected to rise 6% from 2020, to reach 375 million metric tons, compared to the mere 0.9% growth between 2019 and last year.

Hydrogen electrolyzer additions to more-than-double in 2021

BNEF predicts the volume of hydrogen electrolyzers reaching commissioning to set a record in 2021.

BNEF has identified 240MW of projects announced for completion in 2021, compared to just 90MW finished in 2020.

How this trend continues will depend largely on government support. Such help is now beginning to emerge, with nine countries announcing hydrogen strategies in 2020.

Oil supply toils to meet rebound in demand

Oil markets in 2021 will be dominated by the speed and extent of the demand recovery, and by the evolution of both OPEC+ supply cuts and US production growth.