Electricity generation from renewable sources is growing rapidly worldwide, and the global installed capacity is expected to more than double by the end of this decade, according to the latest medium-term forecast of the International Energy Agency (IEA).
The IEA’s ‘Renewables 2025’ report forecasts an increase in global renewable power capacity by 4,600GW by 2030, which is equivalent to the combined power generation capacity of China, the EU, and Japan.
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Over the next five years, solar photovoltaics (PV) are expected to deliver roughly 80% of this global growth in renewable power capacity.
The surge is propelled by declining costs and quicker permitting processes.
Wind will contribute the next largest share, followed by hydropower, bioenergy, and geothermal.
Geothermal installations are expected to reach highs in key markets such as the US, Japan, and Indonesia, along with several emerging and developing economies.
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By GlobalDataMoreover, increasing challenges with grid integration are sparking renewed interest in pumped-storage hydropower.
This sector is projected to expand nearly 80% faster over the next five years compared to the preceding five-year period.
Emerging economies in Asia, the Middle East, and Africa are experiencing faster renewable growth due to cost competitiveness and stronger policy support.
India is set to become the second-largest renewables growth market globally, after China, and is expected to meet its ambitious 2030 targets comfortably.
Confidence in renewables remains strong at the company level, with most major developers maintaining or raising their 2030 deployment targets.
However, offshore wind faces a weaker growth outlook, about 25% lower than last year’s report, due to policy changes, supply chain bottlenecks, and rising costs.
IEA executive director Fatih Birol said: “The growth in global renewable capacity in the coming years will be dominated by solar PV – but with wind, hydropower, bioenergy and geothermal all contributing, too. Solar PV is on course to account for some 80% of the increase in the world’s renewable capacity over the next five years.
“In addition to growth in established markets, solar is set to surge in economies such as Saudi Arabia, Pakistan and several Southeast Asian countries. As renewables’ role in electricity systems rises in many countries, policymakers need to play close attention to supply chain security and grid integration challenges.”
The forecast for global renewable capacity growth has been slightly adjusted downward from last year’s predictions, primarily due to policy shifts in the US and China.
Specifically, early termination of federal tax incentives and various regulatory changes in the US have significantly reduced growth projections by nearly 50%.
Meanwhile, China’s transition from fixed tariffs to auction-based systems is affecting project economics, leading to a decreased forecast for the growth of renewable energy in the country.
These changes are somewhat counterbalanced by positive developments in other areas, notably India, Europe, and emerging markets, where growth forecasts have been upgraded due to bold new policies and increased auction volumes.
Corporate power purchase agreements, utility contracts, and merchant plants play a significant role, contributing to 30% of the global increase in renewable capacity projected by 2030.
The rapid growth of variable renewables is increasing pressure on electricity systems, with curtailment and negative price events already appearing in more markets.
