Renewable power is on course to shatter more records, as countries around the world speed up deployment. With the global energy crisis as a catalyst, solar photovoltaic (PV) and wind are set to lead the largest yearly increase in new renewable capacity ever, the International Energy Agency's (IEA's) 'Renewable Energy Market Update' report shows.

Global additions of renewable power capacity are expected to jump by one-third this year as growing policy momentum, higher fossil fuel prices and energy security concerns drive strong deployment of solar PV and wind power.

Global renewable capacity additions are set to soar by 107 GW, which is the largest absolute increase ever, to more than 440 GW in 2023.

This unprecedented growth is being driven by expanding policy support, growing energy security concerns and improving competitiveness against fossil fuel alternatives. These factors are outweighing rising interest rates, higher investment costs and persistent supply chain challenges, the IEA highlighted at the release of the report on June 1.

The dynamic expansion is taking place across the world’s major markets. Renewables are at the forefront of Europe’s response to the energy crisis, accelerating their growth there. New policy measures are also helping drive significant increases in the US and India over the next two years. China, meanwhile, is consolidating its leading position and is set to account for almost 55% of global additions of renewable power capacity in both 2023 and 2024, the report noted.

“Solar and wind are leading the rapid expansion of the new global energy economy. The global energy crisis has shown renewables are critical for making energy supplies not just cleaner but also more secure and affordable, and governments are responding with efforts to deploy them faster,” said IEA executive director Fatih Birol.

“But, achieving stronger growth means addressing some key challenges. Policies need to adapt to changing market conditions, and we need to upgrade and expand power grids to ensure we can take full advantage of solar and wind’s huge potential,” he said.

Recently installed solar PV and wind capacity is estimated to have saved European Union electricity consumers €100-billion during 2021 to 2023 by displacing more expensive fossil fuel generation. Wholesale electricity prices in Europe would have been 8% higher in 2022 without the additional renewable capacity, according to the new IEA report.

The forecast for renewable capacity additions in Europe has been revised upwards by 40% compared to before Russia’s invasion of Ukraine, which led many countries to boost solar and wind uptake to reduce their reliance on Russian natural gas.

Further, the growth is driven by high electricity prices that have made small-scale rooftop solar PV systems more financially attractive and by increased policy support in key European markets, especially in Germany, Italy and the Netherlands, the IEA report indicated.

While the competitiveness of wind and solar PV has improved since last year, government policies need to adapt to changing market conditions, particularly for renewable energy auctions, which were undersubscribed by a record 16% in 2022, the IEA advised.

Further, policies need to focus on timely planning and investment in grids in order to securely and cost-effectively integrate high shares of variable renewables in power systems.

Multiple countries in Europe, including Spain, Germany and Ireland, will see the combined share of wind and solar PV of their overall yearly electricity generation rise above 40% by 2024, the report highlighted.

SOLAR AND WIND
Solar PV additions will account for two-thirds of this year’s increase in renewable power capacity and are expected to keep growing in 2024.

The expansion of large-scale solar PV plants is being accompanied by the growth of smaller systems. Higher electricity prices are stimulating faster growth of rooftop solar PV, which is empowering consumers to reduce their energy bills.

Simultaneously, manufacturing capacity for all solar PV production segments is expected to more than double to 1 000 GW by 2024, led by China and increasing supply diversification in the US, India and Europe.

Based on those trends, the world will have enough solar PV manufacturing capacity in 2030 to comfortably meet the level of annual demand envisaged in the IEA’s 'Net-Zero Emissions by 2050' scenario, the report showed.

In response to higher electricity prices caused by the global energy crisis, policy makers in many countries, particularly in Europe, have actively sought alternatives to imported fossil fuels that can improve energy security. This shifting focus created a favourable environment for solar PV, especially for residential and commercial systems that can be rapidly installed to meet growing demand for renewable energy.

These smaller distributed PV applications are on track to account for half of this year’s overall deployment of solar PV, which will be larger than the total deployment of onshore wind over the same period, the IEA said in the report.

Wind power additions, meanwhile, are forecast to rebound sharply this year, growing by almost 70% year-on-year following two consecutive years of decline. The faster growth is mainly owing to the completion of projects that had been delayed by Covid-19 restrictions in China and by supply chain issues in Europe and the US.

"However, further growth in 2024 will depend on whether governments can provide greater policy support to address challenges in terms of permitting and auction design."

Faster expansion is expected in Europe and the US as a result of supply chain challenges pushing project commissioning from 2022 into 2023. However, offshore wind growth is not expected to match the record expansion it achieved two years ago owing to the low volume of projects under construction outside of China.

"In contrast to solar PV, wind turbine supply chains are not growing fast enough to match accelerating demand over the medium term. This is mainly owing to rising commodity prices and supply chain challenges, which are reducing the profitability of manufacturers," the organisation noted.