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Global renewable energy capacity is set to grow by 2.7x by 2030, falling short of COP28 targets to triple renewables by the end of the decade, according to a recently released International Energy Agency (IEA) report (pdf) which outlines the progress made on COP28 targets of tripling renewables and doubling energy efficiency and hydrogen by 2030. The projected 2.7x growth surpasses countries’ own 25% growth goals.
Solar PV is leading the charge: New solar capacity added up until 2030 will represent 80% renewable energy capacity growth globally. The energy source is gaining popularity due to decreasing costs, faster permit approvals, and social and political support, reinforcing its popularity among households and companies wanting to lower costs.
But PV investment might die down: An oversupply-induced price drop is expected by 2025 as global solar production reaches double the projected PV demand at over 1.1 TW. As a result, prices have more than halved since 1H 2023.
Wind to recover despite earlier woes: The global wind sector has been experiencing supply chain and financial issues but is expected to be on track to recover. Global policy changes, streamlining auctions and grid connections will likely make wind more attractive and see the industry double by 2030 compared to the period between 2017 and 2023, IEA finds.
Hydrogen and biofuels are struggling: Only 4% of renewables capacity in 2030 will be derived from clean hydrogen fuel. There needs to be more than increased policy support for the green fuel to offset the impact of projected insufficient demand creation, the report predicts. Renewable fuels — which the IEA deemed “essential to energy transitions” — are set to grow by only 20% while their share in energy demand will remain at less than 6% by 2030. The report highlights the urgent need for policy support to double the growth of renewable fuel if net zero is to be achieved.
What about other renewables? Hydropower’s growth is to remain steady, but bioenergy, geothermal, and concentrated solar power’s shares in the renewables growth are set to decline due to insufficient policy support.
Salvaging COP28 Pledges: In an accelerated transition scenario, the report says China, Europe, India, and the United States collectively could provide 80% of total installed capacity and put the world back on track to meet the tripling goal. Under this optimistic scenario, China will have addressed its grid challenges, solar PV systems will be installed faster, and EU and US governments will streamline permit processes and boost investments.
How did MENA fare? The region’s countries are expected to succeed in tripling their renewable capacity to around 150 GW, but would fall short of achieving its target to expand renewable capacity to 201 GW by 2030 due to “significant implementation challenges.” Saudi Arabia, Egypt, and Algeria would account for almost 60% of that capacity goal but are among those off track to meet their ambitious targets. UAE, Oman, and Morocco, however, are on track to hit their expansion targets.
What can be done to boost MENA’s performance? The entire region has the potential to push growth to 60% above projections by speeding up auctions, improving regulation and policy for solar PV that “allow self-consumption and introduce remuneration for excess electricity generation,” and developing industrial electrification while removing barriers to entry.
Solar PV is also leading the charge in MENA: Solar PV is set to account for over 85% of renewables expansion in MENA. The technology is attractive economically due to solar resources in the region, scalability, more accessible financing, and attractive cheaper-than-global-average bids.
Hydrogen was another driver of regional growth, accounting for 10% of growth capacity by 2030, which stands in contrast to the overall negative trends facing clean hydrogen growth elsewhere, like Europe.
China is coming out on top: China will be responsible for 60% of the growth. The country has gone beyond its 1.2k GW of solar PV and wind six years ahead of schedule with the help of eliminating feed-in tariffs in 2020, quadrupling solar PV, and doubling wind.
And expected to continue its reign: China is predicted to account for over 80% of global PV manufacturing capacity by 2030. The US and India’s renewable capacity is set to almost triple by 2030, but Chinese products will still cost about two to three times less, and China’s competitive advantage is projected to remain for the foreseeable future.
The EU, US, and India are also doing well: The EU and the US are on track to double renewable capacity growth between 2024 and 2030 on the back of competitive auctions and private power purchase agreements (PPA) and Inflation Reduction Act subsidies, respectively. The EU is close to achieving its 600 GW solar PV target for 2030 but is still falling behind on wind. In India, auctions and financial support have also helped renewables expansion, putting the country on track to be the fastest-growing renewable energy market amongst global large economies through 2030.
Developing countries have potential: Developing countries have high potential when it comes to renewables but struggle with high financing costs. On top of that, these economies tend to be put at a disadvantage with insufficient grid infrastructure. Policy support can help overcome these challenges by reducing risks associated with renewables investment, setting clear, reliable regulatory frameworks, and pushing for fossil fuel phaseouts.
More flexibility is needed in general: Several countries have struggled with grid capacity not keeping up with renewables deployment, forcing them to turn to curtailment. Wind and solar PV curtailment reached between 5 and 15% in Chile, Ireland, and the UK. Increasing battery storage and grid capacity will be necessary to address the issue. At present, there is at least 1.65 GW of renewable capacity that is nearing deployment readiness but awaiting grid access.
