Global shift from fossil fuels to renewables, rise in legislative and financial initiatives, and increase in electricity usage fuel the growth of the global renewable energy market

According to a recent report published by Allied Market Research, titled “Renewable Energy Market by Type, (Hydroelectric Power, Wind Power, Bioenergy, Solar Energy, and Geothermal Energy) and End Use (Residential, Commercial, Industrial, and Others): Global Opportunity Analysis and Industry Forecast, 2021–2030", the global renewable energy sector was valued at USD 887.1 billion in 2021 and is expected to reach $1,977.6 billion by 2030, growing at a compound annual growth rate (CAGR) of 8.4% from 2021 to 2030.

Levers of Growth

Collectively, renewable energy provides approximately 7% of the globe’s energy demand. Commanding factors that are driving the consumption of renewable energy sources include:

A fundamental global shift from fossil fuels to renewable energy as more countries capitalise on the benefits and energy potential of renewables. To this end, both developing and developed countries are increasingly investing in clean energy.

Governments across the globe are increasingly adopting renewables because of improved output efficiency, pollution reduction and lower maintenance costs.

Technological advancements are accelerating rapidly as more economies seek efficient and innovative methods to produce and store renewable energy to meet the world’s ever-growing energy demands.

Increased private investment in renewable energy sources are further driving improvement in the renewables sector economics. What’s more, these investments in renewables are closing the gap in oil’s historic cost-effective energy supply dominance, thereby enhancing the competitive nature that renewables present and challenging the position of fossil fuel derivatives.

Major corporations as well as small businesses will continue to play a major supporting role in the drive towards a cleaner grid amidst the surge in legislative and financial initiatives being employed. 

Key Insights

By type, the hydropower segment accounted for the highest revenue share of 29.4% in 2021 and will expand further at a steady CAGR from 2022 to 2030. Hydropower, alternatively referred to as hydroelectric power, offers benefits to the communities and is pivotal in supporting climate change by providing storage, power, and flexibility services.

By end user, the industrial segment accounted for a revenue share of approximately 62.5% in 2021. The considerable need for clean electricity is anticipated to proliferate the number of utility projects and charge the PV modules market expansion across the industrial sector. According to the Solar Energy Industries Association, there are over 37 GW of renewable energy power plants in operation in the U.S. in 2020, with an additional 112 GW in development.

By region, the market across Asia-Pacific has generated a revenue share of more than 40.6% in 2021. The rising demand for renewable energy in the Asia Pacific is ascribed to the growing installation of solar power projects in China and India. However, the global renewable energy market across Europe held the largest share in 2020, accounting for more than one-third of the market, owing to a sharp rise in investments in renewable energy.

Major market players:

ABB

ACCIONA

EDF

Enel Spa

General Electric

Geronimo Energy

Invenergy

Innergex

THE TATA POWER COMPANY LIMITED (Tata Power)

Xcel Energy Inc.

An African Perspective

The current global energy crisis reaffirmed the urgency with which Africa needs to expedite investment in cleaner, more cost-effective energy alternatives. Considering the surge in global aspirations for reducing emissions, coupled with the declining costs of clean technologies, and evolving international investment trends and patterns since COP26, many shifts in investments are expected to be observed in the coming decade. Renewables are not only anticipated to take the lion’s share of investments but are poised to be Africa’s primary source of electricity by 2030, notably solar photovoltaic, wind and hydropower.

Such investments into renewable energy infrastructure will expedite Africa’s transition to cleaner technologies. Further to this, an equal amount of investment is imperative to develop Africa’s transmission and distribution networks to fully realise energy access targets. This presents significant opportunity for private-sector stakeholders to participate in the energy realm, provided the policy and regulatory frameworks are conducive and systematically implemented.

The global clean energy transition holds new promise for Africa’s economic and social development, with solar and various other renewable sources offering substantial potential for growth if governed appropriately. To this end, African nations are well positioned to benefit from these trends and attract an influx of climate funding.

Africa’s flagship energy conference, the Africa Energy Indaba (AEI) is set to explore multiple strategies to transition the continent’s energy system towards realising all African development goals, including universal access to modern and affordable energy services by 2030. The 15th Edition of the AEI, to be held in Cape Town, South Africa, on the 7th – 9th March 2023, will provide a crucial platform for African leaders to define the agenda for the medium to long term, considering the next decade is monumental for both global climate action and the essential investments that will enable Africa – home to the world’s youngest population – to thrive in future decades.