Infrastructure: 2021 in Review

2021 in Review

January 2022

In January 2021, Infrastructure Ideas made our annual 10 predictions for 2021.  With the year closed, it’s time to take a look at how things unfolded.  2021 was a banner year for our forecasts: nine out of ten predictions proved accurate.  By comparison, 6 of our ten predictions for 2020 were on the mark, after 7 in each of 2018 and 2019.

Let’s take a look at all the predictions that unfolded as expected:

A post-COVID boom for new renewable capacity.  As expected, investment in new renewable capacity showed a big jump in 2021, after several relatively flat years.  Final numbers are expected to come in at between $330 to $350 million, up from $304m in 2020.  Renewables accounted for 70% of all new generation investment worldwide.  Solar installations recorded record growth of nearly 160 GW, a jump of over 15% from 2020. For the first time, solar made up more than half of all the renewable energy capacity added in the year — solar installations recorded record growth of nearly 160 GW, a jump of over 15% from 2020.

The energy storage market gets back on track.  According to Wood Mackenzie, global energy storage deployments will have nearly tripled in 2021 compared to 2020, reaching 12 Gigawatts.

Cyber risks grow for Utilities.  Regrettably, this has become a “safe” annual prediction.  The attack which shut down the Colonial Pipeline in the US in May 2021 was only the most publicized incident.  Concerns in the US were high enough for the Biden administration to issue a “100-day plan” to protect security in the utility and energy sector. 

Joint Action on Climate.  With a new administration in place in the United States, multilateral progress on climate change resumed in 2021.  While the Glasgow COP26 meeting had a glass half-empty, glass half-full character, over 150 countries did submit strengthened Nationally Determined Contribution (NDC) plans, and on the sidelines, the US and China – the world’s two biggest emitters of GHGs, agreed to wide-ranging cooperation going forward.

Cash for clunkers makes headway.  We predicted that 2021 would see the first proposals to buy-down coal-fired generation plants before the end of their technical life, and retire them early – similar to the “cash for clunkers” model which various governments have implemented at times to get old polluting automobiles off the roads.  In the Fall of 2021 we got exactly that, with a proposal from the Asian Development Bank at its annual meeting to raise a fund to buy and retire coal plants in Asia.  Heavyweights HSBC, Prudential and Citigroup are part of the group working with ADB on its “Energy Transition Mechanism.”

More airline bankruptcies.  The continued travel disruptions from COVID-19 that saw several carriers fold early in the epidemic (see “the Airline Shake-out Starts Up”) continued to hit the industry hard in 2021.  Seventeen more carriers ceased operating last year: the long list of bankruptcies included Air Antwerp, Air Namibia, and Interjet (Mexico), among many others.

The US gets its Trillion-dollar infrastructure plan.  Implementation has a long way to go, but the Biden administration did manage to get congressional approval for the Infrastructure Investments and Jobs Act.  Biden signed the $1.2 trillion bill into law on November 15, 2021.

The BRI gets a facelift.  We predicted that President Xi Ping’s desire to show China as a leader in the global fight against climate change would lead to changes in another of his flagship foreign priorities, the Belt and Road Initiative.  The penny dropped in September, with the announcement that China would no longer finance coal-fired generation plants internationally.  This will make a significant difference in many countries, as China was the last remaining major funder of such facilities, and make a big difference in the BRI.

This is (not) the time for the Emerging Markets infrastructure boom.  According to the Global Infrastructure Hub, private infrastructure investment in Emerging Markets fell 14% in 2021, on top of a 10% fall in 2020.  Soon?

The only prediction we had which was off the mark was a rethinking of mass transit.  We still believe this is coming, but 2021 was more about salvaging what there was and limping along with low ridership in most countries. 

Our 10 Infrastructure Predictions for 2022 are coming out in parallel.