Renewable capacity soared by 50% in 2023
What’s happening? The world added 50% more renewable capacity last year than in 2022, according to a report by the International Energy Agency (IEA). The growth was driven by solar photovoltaics (PV), which accounted for 75% of the new additions. The most rapid expansion was seen in China, with the country commissioning as much solar PV in 2023 as the whole world did in 2022. It also increased its wind power by 66% YoY. Records were also broken in Europe, the US and Brazil. The analysis suggests that renewables will increase by 2.5 times this decade. (The Independent)
Why does this matter? The IEA’s Renewables 2023 report indicates that under current policies and market conditions, global renewable capacity will reach 7,300 GW by 2028. Several milestones are expected to be achieved over the 2023-2028 forecast period. For example, wind and solar PV will likely generate more electricity than hydropower this year, while renewables will overtake coal to become the largest source of electricity generation in 2025. Meanwhile, wind and solar PV are on track to surpass nuclear electricity generation between 2025-2026 and renewable energy sources look set to account for more than 42% of global electricity generation by 2028.
Work to be done – Despite this impressive growth, it still falls short of the goal of tripling renewable capacity by 2030 against 2022 levels, a pledge set at COP28 in Dubai late last year to limit global warming to 1.5C as outlined in the Paris Agreement. The report states that this will require more than 11,000 GW of renewable capacity and argues that reaching this target is possible if governments overcome current challenges and speed up the implementation of existing policies.
Country-specific challenges – The report states that these challenges vary from country to country. Advanced and large emerging economies need to overcome issues related to policy uncertainty in fragile economic environments and inadequate investment in grid infrastructure to bring more renewable projects online. Administrative barriers, permitting delays and social resistance are also a problem. In other emerging and developing economies, obstacles include access to finance and a lack of robust regulations needed to reduce risk and attract investment. Should these challenges be successfully addressed, renewables could grow by 21%, which would put the world close on track to meeting the tripling goal under an accelerated case scenario.
Supply chains opportunities and challenges – The report also points out that prices for solar PV modules tumbled by 50% YoY in 2023 and that global manufacturing is expected to reach 1,100 GW by the end of the year – three times more than the predicted demand. The US, EU, India and Brazil are likely to double their deployment of solar PV and onshore wind power in the coming years, although the wind industry outside of China is experiencing challenges related to continued supply chain disruption, higher costs and long permitting timelines.
Economical power – Another positive note highlighted by the report is that around 96% of newly installed solar PV and onshore wind capacity had lower generation costs than new coal and natural gas plants. Three-quarters of new wind and solar PV plants also offered cheaper power than fossil fuel-based facilities. These technologies are likely to become even more cost-competitive in the years leading up to 2028. Commenting on the report, Ember’s programme director, Dave Jones, said, “2024 will be the year that renewables changed from a nuisance for the fossil fuel industry, to an existential threat,” meaning the sector will face a long-term market risk.
Other sources – Meanwhile, the report estimates that just 7% of the proposed capacity to use renewables for hydrogen production will come online by 2030. Progress is sluggish due to a slow pace of investment decisions, low demand for off-take agreements and higher production costs. Additionally, the deployment of biofuels, which are starting to show potential for hard-to-abate sectors like aviation, is not accelerating fast enough to align them with a net-zero pathway by 2030.