The International Energy Agency (IEA) has released a major report on the process of moving to renewables that found the world’s renewable capacity was up by half in 2023 and is currently growing at the fastest pace ever.

But the agency warned that despite the gains, the pace needs to accelerate even more if the Paris Accord targets are to be met. Global renewable energy capacity is expected to grow by two and a half times by 2030, but governments need to ensure it triples if temperature rises are to stay below the target 1.5C, as was agreed at the recent COP28 summit in Dubai.

The world added 50% more renewable capacity in 2023 than in 2022, rising to 510 GW. That takes the total installed capacity to 3,700 GW. And the next five years will see the fastest growth yet, but lack of financing for emerging and developing economies is a key issue.

0124 GLOBAL Renewable electricity capacity additions by technology and segment IEA

"In the absence of any help for African and low-income countries in Asia and Latin America, they will not be able to reach their clean energy targets. That will be a fault line in reaching the 2030 goal," Fatih Birol, executive director of the IEA, told Reuters.

At COP28 more money was put aside for helping emerging markets to meet the greening challenge, but countries like India, which are growing fast and hungry for energy, are paying lip service to green goals, while also investing heavily into new coal power stations to fuel their growth.

However, last year China had the largest growth in renewables and is expected to account for nearly 60% of new renewable capacity by 2028. China’s role is crucial in reaching the 2030 goal because it is expected to install more than half of the new capacity required globally by the end of the decade, the IEA said.

0124 GLOBAL Renewable electricity capacity forecast revisions by country, 2023-2027 bneGreen IEA

China accounts for almost all the gains in solar PV units, but progress in the rest of the world is far slower.

“For other countries, this year’s forecast is almost 7% higher than our December 2022 outlook. China accounts for almost 90% of the global upward forecast revision, consisting mainly of solar PV,” the IEA said. “In fact, its solar PV manufacturing capabilities have almost doubled since last year, creating a global supply glut.”

Solar photovoltaic and onshore wind additions to 2028 are also expected to more than double in the United States, the European Union, India and Brazil compared with the last five years.

Under current policies and market conditions, global renewables capacity is forecast to grow to a total of 7,300 GW by 2028. To reach the 2030 goal agreed last year, it will require reaching at least 11,000 GW.

The world’s capacity to generate renewable electricity is expanding faster than at any time in the last three decades, giving it a real chance of achieving the goal of tripling global capacity by 2030 that governments set at the COP28 climate change conference last month.

The amount of renewable energy capacity added to energy systems around the world grew by 50% in 2023, reaching almost 510 GW, with solar PV accounting for three-quarters of additions worldwide, according to Renewables 2023, the latest edition of the IEA’s annual market report on the sector. The largest growth took place in China, which commissioned as much solar PV in 2023 as the entire world did in 2022, while China’s wind power additions rose by 66% year on year. The increases in renewable energy capacity in Europe, the United States and Brazil also hit all-time highs.

0124 GLOBAL Electricity generation by technology, 2000-2028 bneGReen IEA

The latest analysis is the first comprehensive assessment of global renewable energy deployment trends since the conclusion of the COP28 conference in Dubai in December. The report shows that under existing policies and market conditions, global renewable power capacity is now predicted to grow to 7,300 GW during the 2023-28 period covered by the forecast. Solar PV and wind account for 95% of the expansion, with renewables overtaking coal to become the largest source of global electricity generation by early 2025. But despite the unprecedented growth over the past 12 months, the world needs to go further to triple capacity by 2030, which countries agreed to do at COP28.

Alongside the report, the IEA also released a new Renewable Energy Progress Tracker, which allows users to explore historical data and forecasts at the regional and country level, including tracking progress towards the tripling goal.

“The new IEA report shows that under current policies and market conditions, global renewable capacity is already on course to increase by two-and-a-half times by 2030. It’s not enough yet to reach the COP28 goal of tripling renewables, but we’re moving closer – and governments have the tools needed to close the gap,” said IEA Executive Director Fatih Birol. “Onshore wind and solar PV are cheaper today than new fossil fuel plants almost everywhere and cheaper than existing fossil fuel plants in most countries. There are still some big hurdles to overcome, including the difficult global macroeconomic environment. For me, the most important challenge for the international community is rapidly scaling up financing and deployment of renewables in most emerging and developing economies, many of which are being left behind in the new energy economy. Success in meeting the tripling goal will hinge on this.”

“This report is the first key instalment of the IEA’s follow-up work on the energy outcomes of COP28 that will continue throughout 2024 and beyond,” Dr Birol said. “This is based on the five key pillars we set out ahead of COP28 and covers tripling renewables, doubling energy efficiency, cutting methane emissions, transitioning away from fossil fuels and scaling up financing for emerging and developing economies. We will be following very closely to see whether countries are delivering on their promises and implementing appropriate policies.”

Solar PV and onshore wind deployment through 2028 is anticipated to more than double in the US, EU, India and Brazil, compared with the last five years.

Prices for solar PV modules in 2023 declined by almost 50% y/y, with cost reductions and fast deployment set to continue. This is because global manufacturing capacity is forecast to reach 1,100 GW by the end of 2024, significantly exceeding demand. By contrast, the wind industry (outside China) is facing a more challenging environment due to a combination of ongoing supply chain disruption, higher costs and long permitting timelines, which require stronger policy attention.

The report also provides a reality check on the momentum behind renewable-based hydrogen, assessing how many announced projects are likely to go ahead. Of all the projects announced worldwide to use renewables to produce hydrogen this decade, only 7% of the proposed capacity is expected to come online by 2030.

“The slow pace of projects reaching an investment decision combined with limited appetite from off-takers and higher production costs have led to slower progress on many projects. To fully convince investors, ambitious project announcements will have to be followed by consistent policies supporting demand,” the IEA said, chiding over-loud project leaders.

In 2023, the role of biofuels has also come to the fore. Emerging economies, led by Brazil and India, are anticipated to drive 70% of global demand over the next five years as biofuels start to show their true potential in hard-to-abate sectors such as air travel and as a replacement for highly polluting fuels like diesel. While biofuels deployment is accelerating, the report shows that this is not happening quickly enough, with a significant increase in demand by 2030 needed to align biofuels with a net-zero pathway.

Challenges remain

Prior to the COP28 climate change conference in Dubai, the IEA urged governments to support five pillars for action by 2030, among them the goal of tripling global renewable power capacity.

“Several of the IEA priorities were reflected in the Global Stocktake text agreed by the 198 governments at COP28, including the goals of tripling renewables and doubling the annual rate of energy efficiency improvements every year to 2030,” the report says. “Tripling global renewable capacity in the power sector from 2022 levels by 2030 would take it above 11,000 GW, in line with IEA’s Net Zero Emissions by 2050 (NZE) Scenario. Under existing policies and market conditions, global renewable capacity is forecast to reach 7,300 GW by 2028. This growth trajectory would see global capacity increase to 2.5 times its current level by 2030, falling short of the tripling goal.”

The report goes on to say that several goals need to be reached over the next five years if the programme is to succeed:

·       In 2024, wind and solar PV together generate more electricity than hydropower.

·       In 2025, renewables surpass coal to become the largest source of electricity generation.

·       Wind and solar PV each surpass nuclear electricity generation in 2025 and 2026 respectively.

·       In 2028, renewable energy sources account for over 42% of global electricity generation, with the share of wind and solar PV doubling to 25%.

Solar good, wind challenged

China accounts for almost 60% of new renewable capacity expected to become operational globally by 2028 and will play a big role in meeting the goal to triple capacity. The US, the EU, India and Brazil are also “bright spots” for onshore wind and solar PV growth, says the IEA.

0124 GLOBAL Renewable electricity capacity growth by country/region, main case bneGreen IEA

In 2023, spot prices for solar PV modules declined by almost 50% y/y, with manufacturing capacity reaching three times 2021 levels as a global glut of solar PV modules appeared, making solar a more attainable goal. Both solar and wind generation have become cheaper than fossil fuel as a result.

However, wind generation is facing more challenges. The wind industry has experienced a significant decline in market value as European and North American wind turbine manufacturers have seen negative net margins for seven consecutive quarters due to volatile demand, limited raw material access, economic challenges and rising interest rates, according to the IEA.

“The wind industry, especially in Europe and North America, is facing challenges due to a combination of ongoing supply chain disruptions, higher costs and long permitting timelines. As a result of these challenges, the forecast for onshore wind outside China has been revised downwards as overall project development has been slower than expected,” says the IEA. “Offshore wind has been hit hardest by the new macroeconomic environment, with its expansion through 2028 revised down by 15% outside China.”

Regional outlooks for renewables

China’s renewable energy capacity is expected to expand by over 2 TW over 2023-2028, tripling growth of the last five-year period, with solar PV making up three-quarters of the increase. Owing to new investments since mid-2022, China’s solar PV manufacturing capacity now strongly exceeds both local and global demand, which has driven module prices down significantly and made solar installations more competitive with regulated power prices.

The US is forecast to add nearly 340 GW of renewable energy capacity over 2023-2028, almost all in solar PV and wind installations. While supply chain issues and trade concerns still linger in the market in the near term, the Inflation Reduction Act (IRA) has accelerated the pace of additions from last year’s forecast. Growth is stronger especially for the later years of the forecast period, as final credit guidance from the Internal Revenue Service doubles annual investments in renewable electricity from five years ago. Nevertheless, the offshore wind forecast has been revised down by more than 60% because project developers are cancelling or delaying planned or contracted capacity due to current macroeconomic conditions.

The ASEAN region and India have the greatest potential for acceleration. For India, its already-dynamic development could jump almost 45% if policymakers address the poor financial performance of utility companies (DISCOMs) and sluggish distributed PV deployment, and facilitate wind project development. India is forecast to add 205 GW over 2023-2028, doubling 2022’s cumulative installed capacity, making it the world’s third-largest market for renewables.

Europe’s pace of renewable capacity growth will more than double in 2023-2028 compared with the previous six years, with additions totalling 532 GW. Solar PV accounts for over 70% of the expansion, led by distributed systems, which is one-third more than utility-scale. Wind accounts for another 26% led by onshore projects.

0124 EURO European Union renewable energy share in electricity generation by country bneGreen IEA

Latin America will add over 165 GW of renewable energy capacity from 2023 to 2028. Four markets represent 90% of the region’s additions: Brazil (108 GW), Chile (25 GW), Mexico (10 GW) and Argentina (4 GW). Solar PV leads capacity additions, followed by wind power. Large-scale hydropower development in the region has slowed, as most economically viable locations have been developed and some large projects have been delayed by permitting or financing concerns.

Sub-Saharan Africa is forecast to add over nearly 64 GW of new renewable capacity from 2023 to 2028, more than doubling the region’s current installed capacity. The forecast has been revised up nearly 20% because of strong expansion in South Africa, which accounts for nearly 50% of additions in the region. Outside South Africa, hydropower drives over 6 GW of additions in Ethiopia, distributed solar PV enables 5 GW of additions in Nigeria, and Angola and Kenya add over 2 GW of new renewable capacity each.

The Middle East and North Africa should see renewable capacity increase 62 GW in 2023-2028. Over the next five years the pace of growth is forecast to accelerate to more than three times the previous five-year period, with solar PV making up over 85% of the increase. Onshore wind and concentrated solar power also contribute. More than one-third of the growth will be in Saudi Arabia alone, followed by the United Arab Emirates, Morocco, Oman, Egypt, Israel and Jordan. These seven countries account for over 90% of the region’s growth.

0124 MENA Middle East and North Africa capacity additions, and primary drivers of utility-scale growth by country bneGreen IEA