Insights
The International Energy Agency’s (IEA) ‘Renewables 2024’ report forecasts that renewables will generate almost half of the global electricity demand by the end of 2030, with the world edging closer to the COP28 target of tripling renewable energy capacity by the end of the decade.
By 2030, the world will add 5,500 Gigawatts of new renewable energy capacity – roughly equivalent to the current power systems of the United States, China, the European Union and India combined, the IEA predicts.
Globally, renewables are set to grow by a factor of 2.7 between now and 2030, driven by supportive policies and favourable economics. This surpasses current country-level policy ambitions by nearly 25%.
Source: IEA (2024), Renewable capacity growth and the gap to global tripling, 2022-2030, IEA, Paris
This latest IEA forecast shows that the world is not far from the pace required to meet the COP28 target of tripling world renewable energy capacity by the end of this decade, keeping net zero within reach.
Dr Fatih Birol, Executive Director of the IEA mused that “we are not yet exactly there but we are very close.” In an optimistic press conference, he referenced investor action as a positive signal and suggested that there could be more good news ahead:
“Looking at market trends and the appetite from investors around the world, I wouldn’t be surprised if next year […] there will be more positive surprises coming.”
To compete and win
China is on course to account for 60% of the new renewable capacity installed by 2030, the IEA reports. This is driven mainly by major domestic policies and its world-leading solar photovoltaic (PV) manufacturing capacity.
“If I had to simplify this beautiful story into two words,” Dr Birol said: “it is China and solar.” Interestingly, the IEA notes that while China is adding the most volume, India has the highest growth rate.
SolarPV looks set to retain the “lion’s share” of this new capacity, around 80%, with manufacturers in China even forced to limit expansion plans due to a ‘supply glut’ - where manufacturing capacity exceeds installations. The report includes a closer look at these national manufacturing nuances in the context of global competitiveness.
“Today, renewables […] especially solar, is the cheapest option to build new power plants in almost every country around the world."
To compete with China’s market dominance, manufacturing capacity is set to triple in India and the US by 2030. Though compared to the cost of production in China, producing solar panels in India will cost twice as much, and in the States, three times as much.
Balancing these additional costs with the benefits of local manufacturing, job creation and energy security will add to the just transition challenges facing governments as they look to compete and win in a new global economy.
Separately, the IEA reports that wind power is also poised for a recovery; Its rate of expansion is forecast to double between 2024 and 2030 compared to the period 2017 to 2023. Though the wind turbine manufacturing sector still needs more investment to avoid supply chain bottlenecks by 2030.
Driven by economics
Dr Birol stressed that this renewables overperformance is driven by economics rather than climate policies, in what will be a welcome message to investors implementing net zero commitments and considering climate solutions investments:
“Today, renewables […] especially solar, is the cheapest option to build new power plants in almost every country around the world,” he said. The IEA reports that renewables are now moving faster than national governments can set targets for.
A dedicated chapter on renewable fuels, a first for the annual report, paints a more complicated picture. Increasingly seen as an option to reduce greenhouse gas emissions in sectors that are difficult to electrify, it warns that these fuels lag and need dedicated policy support.
Aviation and shipping will be responsible for more than 75% of new biofuel demand by 2030, the report explains, though their share in total global energy will remain below 6% due to being more expensive than fossil equivalents.
Cautious optimism
Addressing challenges to success, the IEA warns that rates of curtailment – where renewable electricity generation isn’t put to use – have increased substantially, reaching 10% in some countries. It estimates the amount of new capacity not being utilised because of grid constraints to be around 1,700 Gigawatts:
“From a policy perspective, reducing the permitting time is critical,” Dr Birol warned: “The average for wind is now up to seven years and for solar up to five years.”
Nonetheless, the IEA report presents an upbeat view of renewables expansion. The right action from governments, including more ambitious national commitments, grid expansion and modernisation, could further tip the scales.
Together with a policy focus on the high financing costs in developing economies, the IEA makes clear that the global tripling renewables target set in Dubai may yet be achieved.
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