Global Renewable Energy to Break Records in 2023, IEA Says
Global additions of renewable power capacity will increase by a third this year, says the International Energy Agency (IEA).
In the IEA’s 2023 Renewable Energy Market Update report, the agency said new global renewable capacity will jump by 107 gigawatts (GW) to over 440 GW. This is the largest increase ever reported.
Yet, the manufacturing capacity for all solar PV productions will further rise to more than double to 1,000 GW by 2024, with China taking the lead.
Leaders of the New Global Energy Economy
The need to decarbonize the global economy calls for a new energy system that does away with fossil fuels.
Per IEA Executive Director Fatih Birol, solar and wind power dominate the Rapid growth of this new global energy economy. She further noted that:
“This year, the world is set to add a record-breaking amount of renewables to electricity systems – more than the total power capacity of Germany and Spain combined.”
Three major things drive strong demand for solar PV and wind power: growing policy concerns, higher fossil fuel and energy security issues.
In 2024, global renewable electricity capacity is estimated to rise to 4,500 GW. That’s about the same as the combined power output of China and the U.S.
Solar PVs will account for 2/3 of the increase in renewable energy (RE) capacity this year and they will keep growing in 2024. The chart shows the IEA’s estimates for 2023 and 2024.
Net RE Capacity Additions by Technology, 2017-2024
This growth is due to continued expansion of large-scale solar PV applications along with smaller distributed systems. The smaller distributed PVs such as rooftop PVs account for half of this year’s total solar PV deployment. Higher electricity costs are pushing the growth of the smaller solar PV applications, the report noted.
Meanwhile, onshore wind capacity additions are also on track to rise by 70% this year to 107 GW, another record high, after 2 years of decline as seen in the chart above. The major reason for this rebound is the completion of projects previously delayed due to COVID-19 pandemic and supply chain issues.
RE: At the Heart of Europe’s Energy Plan
In Europe, renewables are at the heart of the bloc’s response to the energy crisis caused by the Russia-Ukraine war. Policy actions in many EU nations will bring a 40% uptick in the region’s new renewable capacity forecasts.
The newly installed renewables in 2021-2023 will bring a whopping energy savings to EU consumers of about 100 billion Euros.
European Union Capacity Additions in 2023-2024
Also, the bloc has made more policy and regulatory changes to ease RE permitting in the last 18 months than over the whole past decade.
New policy actions will also help drive substantial RE increases in India and the US over the next 2 years.
The Undisputed Leader in RE Deployment
The IEA further said that China will remain as the undisputed leader in global RE deployment. Its new renewable capacity will grow this year and the next.
In 2022, the 3rd-largest polluter took the share of about 50% of all new renewable power capacity globally. In 2024, China’s share will hit a record 55% of global RE capacity deployment.
Meanwhile, there’s also a growing supply diversification in other parts of the world, particularly the US, Europe, and India.
Meeting Net Zero Emissions Scenario
Based on the upward trends, the report claims that the world will have enough solar PVs in 2030 to meet the annual demand projected in the IEA’s Net Zero Emissions by 2050 Scenario.
In contrast, wind manufacturing capacity will expand more slowly and may struggle to keep up with demand growth through 2030.
However, despite those record-breaking increases, renewable energy auctions were under-subscribed also by a record 16% last year. ⅙ of RE auction volume was unallocated due to policy uncertainties and volatile as shown below.
Governments have to address this challenge to achieve stronger growth of the sector. investment in upgrading grids to accommodate higher volumes of RE in power systems is also necessary. In the authors’ words, that means:
“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.”
growth in 2024 largely relies on how governments’ policy support will turn out, particularly on permitting and auction design. Several countries will see their annual share of solar PV and wind power reach over 40% by 2024, which calls for effective grid management.
Global solar PV market set for spectacular growth over next 5 years – IEA report
The installation of solar photovoltaic (PV) systems on homes, commercial buildings and industrial facilities is set to take off over the next five years, transforming the way electricity is generated and consumed, according to the International Energy Agency’s (IEA) latest renewable energy market forecast. Released on October 21, 2019, the Renewables 2019 report also sees an expansion of vastly underexploited renewable heat and a 25% growth in biofuels with China being the main driver.
The report “Renewables 2019” forecasts that the world’s total renewable-based power capacity will grow by 50 percent between 2019 and 2024. This increase of 1 200 gigawatts – equivalent to the current total power capacity of the United States – is driven by cost reductions and concerted government policy efforts.
Solar PV accounts for 60 percent of the rise. The share of renewables in global power generation is set to rise from 26 percent today to 30 percent in 2024. The expected growth comes after renewable capacity additions stalled last year for the first time in almost two decades. However, the report notes that the renewed expansion remains well below what is needed to meet global sustainable energy targets.
Renewables are already the world’s second-largest source of electricity, but their deployment still needs to accelerate if we are to achieve long-term climate, air quality, and energy access goals, said Dr Fatih Birol, the IEA’s Executive Director.
Three challenges for renewable deployment
The report highlights the three main challenges that need to be overcome to speed up the deployment of renewables: policy and regulatory uncertainty, high investment risks and system integration of wind and solar PV.
Distributed PV accounts for almost half of the growth in the overall solar PV market through 2024. Contrary to conventional wisdom, commercial and industrial applications rather than residential uses dominate distributed PV growth, accounting for three-quarters of new installations over the next five years.
This is because economies of scale combined with better alignment of PV supply and electricity demand enable more self-consumption and bigger savings on electricity bills in the commercial and industrial sectors.
Still, the number of solar rooftop systems on homes is set to more than double to some 100 million by 2024, with the top markets on a per capita basis that year forecast to be Australia, Belgium, California, the Netherlands, and Austria.
As costs continue to fall, we have a growing incentive to ramp up the deployment of solar PV, said Dr Birol.
The cost of generating electricity from distributed solar PV systems is already below retail electricity in most countries. The IEA forecasts that these costs will decline by a further 15 percent to 35 percent by 2024, making the technology more attractive and spurring adoption worldwide.
The report warns, however, that important policy and tariff reforms are needed to ensure distributed PV’s growth is sustainable. Unmanaged growth could disrupt electricity markets by raising system costs, challenging the grid integration of renewables and reducing the revenues of network operators.
By reforming retail tariffs and adapting policies, utilities and governments can attract investment in distributed PV while also securing enough revenues to pay for fixed network assets and ensuring that the cost burden is allocated fairly among all consumers.
Distributed PV’s potential is breathtaking, but its development needs to be well managed to balance the different interests of PV system owners, other consumers, and energy and distribution companies. The IEA is ready to advise governments on what is needed to take full advantage of this rapidly emerging technology without jeopardising electricity security, Dr Birol said.
According to the report’s Accelerated Case, improving economics, policy support, and more effective regulation could push distributed PV’s global installed capacity above 600 GW by 2024, almost double Japan’s total power capacity today. Yet this accelerated growth is still only 6 percent of distributed PV’s technical potential based on the total available rooftop area.
Renewable heat set to expand
As in previous years, Renewables 2019 also offers forecasts for all sources of renewable energy. Buildings account for over half of global renewable heat growth, followed by industry. Renewable heat is set to expand by one-fifth between 2019 and 2024.
China, the European Union (EU), India, and the United States (US) are responsible for two-thirds of the global increase in renewable heat consumption over the forecast period. However, renewables’ share of global heat consumption increases only marginally, from 10 percent today to 12 percent in 2024.
The heat and power sectors become increasingly interconnected as renewable electricity used for heat rises by more than 40 percent. But overall, the report finds that “renewable heat potential remains vastly underexploited” and deployment is not in line with global climate targets, calling for greater ambition and stronger policy support.
China to drive biofuels
Biofuels currently represent some 90 percent of renewable energy in transport and their use is set to increase by 25 percent over the next five years. Growth is dominated by Asia, particularly China, and is driven by energy security and air pollution concerns.
In 2018, production grew at its fastest pace for five years, propelled by a surge in Brazil’s ethanol output. Overall, Asia accounts for half of the growth, as its ambitious biofuel mandates aimed at reinforcing energy security boost demand for agricultural commodities and improve air quality. In addition to biofuels, renewable electricity provides around 10 percent of renewable energy in transport by 2024, most of which is in China.
Bolstered by the rollout of 10 percent ethanol blending in a growing number of provinces and increasing investments in production capacity, China is set to see a tripling of ethanol production by 2024. Brazil registers the second-largest growth, boosted by the introduction of the RenovaBio programme in 2020. The US and Brazil still provide two-thirds of total biofuel production in 2024.
Despite the Rapid expansion of electric vehicles, renewable electricity only accounts for one-tenth of renewable energy consumption in transport in 2024. And the share of renewables in total transport fuel demand still remains below 5 percent.
The Accelerated Case sees renewables in transport growing by an additional 20 percent through 2024 on the assumption of higher quota levels and enhanced policy support that opens new markets in aviation and marine transport.
Has the International Energy Agency finally improved at forecasting solar growth?
Something strange has happened at the IEA — the agency has finally begun to take solar and other renewables seriously.
Something strange has happened at the International Energy Agency (IEA) — the agency has finally begun to take solar and other renewables seriously.
The IEA annual World Energy Outlook (WEO) is perhaps the world’s most respected energy forecast. They’re not modest with their own description of the WEO: “The world’s most authoritative source of energy-market analysis and projections”
It’s a massive report and costs a goodly sum to purchase the full version. The executive summary is free. The latest one is here.
The IEA is the energy watchdog for the wealthy and mostly western nations in the Organization for Economic Cooperation and Development (OECD), now comprised of 37 nations.
IEA’s solar PV forecasts have been inexplicably and wildly wrong, year in and year out, as demonstrated by Auke Hoekstra’s chart from last year (each colored line is the projected amount of solar for that year, changing steadily upward in each year’s new report):
This chart shows that for every year since 2002 the WEO solar forecasts have been wrong, and, in almost every year, from the very first year of the forecast. This is because solar has grown far faster even in the first year of the forecast period than most of the forecasts project for 25 years later. That’s not just wrong. That’s catastrophically and laughably wrong. Year in and year out.
So why have these forecasts been so wrong? This would be a real mystery for any reputable forecasting entity, let alone the OECD’s official energy watchdog.
I asked Hoekstra himself why he thinks IEA has gotten it so wrong. Here is his answer.
IEA says “it’s not a prediction/forecast and that everybody is using it that way is not their problem. It’s a scenario assuming current policies are kept and no new policies are added. Many people have pointed out that they are still very wrong if you try to account for that but no reactions from IEA to that as far as I can tell.”
He adds that “the discrepancy basically implies that every year loads of unplanned subsidies are added while that is not always the case but so far I know of no reaction to those criticisms either. So it boils down to: it’s not a forecast and any error you find must be attributed to that. And no you cannot see how the model works.”
The IEA website explains the WEO process: “The detailed projections are generated by the World Energy Model, a large-scale simulation tool, developed at the IEA over a period of more than 20 years that is designed to replicate how energy markets function.”
Clearly there’s a rather large discrepancy between IEA’s perception of its forecasting accuracy and its actual accuracy.
IEA finally wakes up
But here’s the good news: IEA has finally, in its 2019 report, begun to take solar and other renewables seriously. They’ve created two new “scenarios” in their modeling and made them the FOCUS of the WEO: 1.) Stated Policies Scenario, which as you might guess represents existing commitments to renewables; 2.) Sustainable Development Scenario, which represents a more ambitious set of policies considered necessary to meet climate mitigation goals – achieving more than twice the global greenhouse gas emissions reductions by 2040, compared to the SPS.
The executive summary of the 2019 WEO states:
Cost reductions in renewables and advances in digital technologies are opening huge opportunities for energy transitions, while creating some new energy security dilemmas. Wind and solar PV provide more than half of the additional electricity generation to 2040 in the Stated Policies Scenario and almost all the growth in the Sustainable Development Scenario.
Recognizing that even stated policies will lead to renewables being “more than half” of additional electricity by 2040 is a major step forward. And it seems likely that nations of the world will steadily adopt more ambitious green energy goals as they realize that green energy is already cheaper than fossil fuel and nuclear energy in most circumstances, so there’s very little political risk in adopting steadily more ambitious green energy goals.
Here’s the “money” chart from the new report, showing that in the Stated Policies Scenario solar PV becomes the world’s largest source of energy by 2040:
Why did this change happen? We still don’t know. But it’s likely that Hoekstra’s frequent heckling of the absurd WEO forecasts for solar played a role in this shift. Gadflies do achieve large-scale change sometimes – particularly when they multiply.
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From Rwanda to Riverside: How the solar industry provided new opportunities for an immigrant entrepreneur
It is still pretty laughable that coal generated electricity is forecast to continue its current generation level over the next 20 years. (Or sad if it does) Even in their North American stated policies they have coal still having 67% of 2018 demand by 2030 and 57% of 2018 demand by 2040. This is pretty absurd. With their Sustainable policy it goes to 16% of 2018 demand by 2030 and 10% by 2040. My swag forecast is that North American coal demand will be down to 67% by 2023, 57% by 2025 and 16% by 2030. The death spiral of coal in NA is very real and the demand destruction will accelerate. Even now look at all the coal bankruptcies among coal producers and coal generators. A huge swath of coal mining has lost economies of scale. They are having to pay for the same amount of equipment, but digging less coal. And, then you look at the supposed coal growth countries like Vietnam which installed 5GW of solar last year. And, S Korea which is curtailing coal because of pollution. And Australia which had 9x proposals for the RE zone in NSW. I think world solar installed capacity will double by 2025 from current estimate of 583GW to 1200GW. Wind generating capacity will also grow since off-shore wind is pretty much in its infancy.
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Wind to Double and Solar to Triple in 6 Years, Says IEA
For Greentech Media this week, I reviewed the new Medium-Term Renewable Energy Market Report 2013 from the International Energy Agency (IEA), and found a surprisingly bullish forecast for renewables, especially wind and solar. Most interesting are the phenomenal growth rates they project for the developing world.
And a lot of it will be deployed in developing countries.
The headline summary of the new Medium-Term Renewable Energy Market Report 2013from the International Energy Agency (IEA) has been well reported: Renewables will surpass natural gas for electricity generation globally by 2016, doubling nuclear output and coming in second only to coal in power generation.
Total renewable capacity is expected to grow from 1,580 gigawatts in 2012 to 2,350 GW in 2018, while renewable electricity generation grows from 4,860 terawatt-hours to 6,850 terawatt-hours. Renewable generation will be 50 percent greater over the six-year forecast period than it was over the six years from 2006 to 2012.
It’s a remarkably bullish outlook compared to most forecasts. It’s particularly remarkable for the IEA, whose conservative outlook on renewables has historically lagged behind reality.
But the full report contains even more bullish details, which so far have gone largely unremarked-upon.
From 2012 to 2018, wind generation is expected to more than double globally, from 519 terawatt-hours to 1220 terawatt-hours. Generation from solar PV will more than triple from 100 terawatt-hours to 358 terawatt-hours.
Although starting from a lower level, concentrating solar power (CSP) generation will post even more stunning growth, increasing 567 percent from 6 terawatt-hours annually to 34 terawatt-hours.
World wind capacity will double to 559 gigawatts, with the majority of the growth (57 percent) happening in non-OECD countries. Onshore wind will continue to dominate in absolute terms, with 254.7 gigawatts of new capacity, but offshore wind in the non-OECD will grow the most proportionally, increasing a whopping 20 times over its 2012 capacity, to 8 gigawatts.
In the U.S., solar PV capacity is expected to more than quadruple, from 7.7 gigawatts to 31 gigawatts, and wind capacity is expected to nearly double, from 58.8 gigawatts to 93 gigawatts.
Global solar PV capacity will triple to 308 gigawatts, with 57 percent of new capacity being built in the OECD. But non-OECD countries will take the lead in growth rates over the forecast period as European growth moderates and developing countries, notably China, power ahead. Non-OECD solar capacity is expected to increase more than nine times over 2012 levels, to 101.6 gigawatts.
Source: IEA Medium-Term Renewable Energy Market Report 2013
China’s solar PV capacity additions are expected to overtake European OECD additions this year. “Improved economic attractiveness, reduced barriers for the integration of small-scale capacity and higher government targets” have caused the IEA to sharply raise its estimate for China’s solar PV expansion.
Last year, the agency estimated China would have 35 gigawatts of PV in 2017; now it thinks the Asian giant will have 69 gigawatts by 2018.
Not only will non-hydro renewables grow in scale where their development is already well underway, but they will spread geographically as well. IEA expects the number of countries with at least 100 megawatts of solar PV to increase from 30 in 2012 to 65 in 2018, while 75 countries will have at least 100 megawatts of onshore wind. Most of the countries set to join the 100-megawatt club will be in the non-OECD region.
Source: IEA Medium-Term Renewable Energy Market Report 2013
Even greater growth possible
As bullish as the IEA’s outlook is, it still might not be quite bullish enough.
In the IEA’s view, the combined world wind and solar capacity will more than double from 2012 to 2018, adding just under 500 gigawatts of new capacity in six years. But in its latest report, Navigant Consulting forecasts that global wind and solar capacity will grow by 1,300 gigawatts in the next ten years.
To underscore how significant the growth rates might be in smaller, largely off-the-radar developing nations, consider Chile. IEA expects that nation’s solar capacity to grow from a mere 3.5 megawatts today to 1,100 megawatts in 2018, citing 3.1 gigawatts of solar projects that had received environmental approval from the government as of April 2013, with another 0.8 gigawatts under review.
But the June 2013 report [Portuguese PDF] from the Chilean Center for Renewable Energy (Centro de Energías Renovables) lists 69 megawatts of solar currently under construction, another 4 gigawatts of solar projects approved, and another 2.2 GW under review. Applications for 649 megawatts were submitted in the month of May alone.
Of course, how many of those projects will get built, and when, remains to be seen. But the mere fact that gigawatts’ worth of additional solar projects were approved and taken under review in Chile in just three months suggests that solar could grow much faster than IEA expects in the developing world, particularly in South America. Chile could take out the IEA’s target for 2018 in the next year or two if the country were able to execute projects at North American or European speed.
Competitive without incentives
With this report, IEA joins a number of other agencies in forecasting that onshore wind and solar PV “have reached, or are approaching, competitiveness in a number of markets without generation-based incentives.” While the levelized cost of generation (LCOE) from renewables is generally still higher than that of new fossil-fueled power plants, the claims that renewables are too expensive or that they can’t compete without subsidies will soon be dead and buried. In Spain, Italy, southern Germany, southern California, Australia, Denmark, and certain other market segments, the LCOE of solar PV is already cheaper than retail electricity prices.
However, it’s important to recognize that the competitiveness of renewables is enormously dependent on their specific locations, and on the grid power mix in those areas. For example, the IEA notes that the LCOE of onshore wind is competitive with new gas-fired plants in Brazil, Chile, and Mexico, but not in the U.S., where gas is currently extraordinarily cheap. (If natural gas in the U.S. were to return to levels last seen a few years ago, wind would be cheaper.)
In Australia, wind is competitive with new coal- and gas-fired plants with carbon pricing, but only the best wind sites can compete without it. In oil-exporting countries of the Middle East, solar PV is cheaper than burning oil for power generation, because the value of exported oil is so much higher. And so on.
To illustrate this point, consider the IEA’s updated LCOE figures for various power generation technologies:
Source: IEA Medium-Term Renewable Energy Market Report 2013
That chart suggests that the cost of utility-scale solar PV ranges from roughly 125 to 250 per megawatt-hour globally, making it considerably more expensive than new coal- or gas-fired generation. How can that be, when the IEA said that solar PV is competitive with grid power in certain areas?
The answer is that LCOE is a useful way of comparing generation fuels on a global basis, but it doesn’t tell you much about the actual cost of generation from a specific wind or solar farm, where the price of the energy generated is established under a long-term power purchase agreement (PPA).
Richard Caperton, an energy analyst with the Center for American Progress, offered his perspective on LCOE vs. PPA prices.
“LCOE and PPA are fundamentally two different things, and it’s a mistake to treat them as substitutes. […] A survey of PPAs is much more useful for information about the market characteristics right now,” said Caperton.
“While LCOE estimates for a worldwide industry aren’t exactly relevant for a project, it is worth keeping in mind that every individual project has an actual cost structure. If the PPA isn’t sufficient to cover that cost structure, you’d better hope you have patient investors, since they won’t ever make any money,” Caperton explained.
Caperton gave this analogy: “Think about the differences in the Case-Shiller Home Price Index and what you actually can expect to pay for a house. The Case-Shiller index is useful for knowing something about broad industry trends, but no one in their right mind would just look at that Index to figure out what to offer on a house. You have to consider the location, the mortgage rates at that time, the condition of the house, and whether or not you’re eligible for any tax incentives. LCOE estimates are like the Case-Shiller Index, but PPAs are what a house actually sells for.”
So, for example, while the IEA’s lowest LCOE for utility-scale solar PV is currently around 125 per megawatt-hour, the actual cost of one new utility-scale solar PV project in New Mexico is just 57.90 per megawatt-hour after the state production tax credit and around 84.90 per megawatt-hour before it, making the project cheaper than the average 128.00 per megawatt-hour for a new coal plant.
If the growth curves of utility-scale wind and solar projects proceed as the IEA expects — or even faster, as they very well may — then the renewable revolution will indeed be “unstoppable.”
Chris is an energy analyst, journalist, and investor, who consults and lectures on energy investing and policy. During a decade of studying energy, he has written two books on investing and energy Profit from the Peak and Investing in Renewable Energy, as well as over 900 blog posts and articles.
Tags: energy transition, IEA, Renewable Energy, Solar Energy, Wind Energy
We’re Having a Violent Meltdown
Although weather disasters of many kinds can increase public concern about climate change, they can also help to whip up an oppressively violent sociopolitical climate that may prove ever more hostile to the very idea of reducing greenhouse-gas emissions — especially in large, affluent, high-emission societies.
The Lie of a Cleaner Oilsands
The oilsands have accumulated vast volumes of toxic mining fluids (1.4 billion litres or more than 540,000 Olympic sized pools) in the world’s third largest watershed under the watch of a captive regulator and an industry-dominated oilsands monitoring program.
The kids are alright
It got…somewhat less coverage than the imploded sub, but for me the titanic story of the last week was the truly remarkable trial held in Montana over the last ten days—one of the first times that the climate story has played out in an American courtroom.
The Mercury is Off the Charts
The Rapid warming over the next couple of years is likely to be our last opportunity to really act coherently as a civilization to reduce the magnitude of this crisis, and so far we are blowing it.