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The global energy crisis is causing a sharp acceleration in renewable energy installations, with total capacity worldwide set to nearly double over the next five years, overtaking coal as the largest source of electricity generation along the way and helping to maintain the ability to limit global warming. to 1.5 °C, the IEA says in a new report.
Concerns about energy security caused by Russia’s invasion of Ukraine have motivated countries to increasingly turn to renewable energy sources such as solar and wind to reduce reliance on imported fossil fuels, the prices of which have risen dramatically. Global renewable energy capacity is expected to grow by 2,400 gigawatts (GW) in the period 2022-2027, an amount equal to the total energy capacity of China today, according to Renewable energy sources in 2022the latest edition of the IEA’s annual report on the sector.
This huge expected increase is 30% higher than the amount of growth forecast just a year ago, highlighting how quickly governments have thrown extra policy weight behind renewables. The report reveals that renewables will account for over 90% of global electricity expansion over the next five years, overtaking coal to become the largest source of global electricity by early 2025.
“Renewables were already expanding rapidly, but the global energy crisis has pushed them into a remarkable new phase of even faster growth as countries strive to take advantage of their energy security.” The world will add as much renewable energy in the next 5 years as it did in the previous 20 years,” said IEA Executive Director Fatih Birol. “This is a clear example of how the current energy crisis can be a historic turning point towards a cleaner and safer energy system.” The continued acceleration of renewables is critical to help keep the door open to limiting global warming to 1.5°C.”
The war in Ukraine is a defining moment for renewable energy in Europe where governments and businesses want to quickly replace Russian gas with alternatives. The amount of renewable energy capacity added in Europe in 2022-27 is projected to to be twice as large as in the previous five-year period, driven by a combination of energy security concerns and climate ambitions. Even faster deployment of solar and wind power could be achieved if EU member states quickly implemented a number of policies, including simplifying and reducing licensing deadlines, improving auction design and providing better visibility of auction schedules, and improving incentive schemes to support rooftop solar.
Apart from Europe, the upward revision of renewable energy growth over the next five years is also driven by China, the United States and India, all of which are implementing policies and introducing regulatory and market reforms faster than previously planned to combat the energy crisis. As a result of its recent 14th Five-Year Plan, China is expected to account for nearly half of global new renewable energy capacity in 2022-2027. Meanwhile, the American Inflation Reduction Act has provided new support and long-term visibility for the expansion of renewable energy sources in the United States.
Solar PV and onshore wind are the cheapest options for new electricity generation in the vast majority of countries around the world. Global solar PV capacity will nearly triple over the period 2022-2027, surpassing coal to become the world’s largest source of energy capacity. The report also predicts an acceleration of residential and commercial rooftop solar panel installations, which help consumers lower their energy bills. Global wind capacity almost doubled over the forecast period, with offshore projects accounting for one-fifth of the growth. Together, wind and solar will account for over 90% of the renewable energy capacity being added over the next five years.
The report sees new signs of diversification in global PV supply chains, with new policies in the United States and India expected to boost solar investment by as much as $25 billion over 2022-2027. Although China remains the dominant player, its share of global production capacity could decline from 90% today to 75% by 2027.
Total global demand for biofuel will increase by 22% in the period 2022-2027. The United States, Canada, Brazil, Indonesia and India account for 80% of the expected global expansion in biofuel use, with all five countries having comprehensive policies to support growth.
The report also presents an accelerated case where renewable energy capacity grows by an additional 25% above the main forecast. In advanced economies, this faster growth would require solving various regulatory challenges and challenges that allow for a faster penetration of renewable electricity in the heating and transportation sectors. In emerging and developing economies, this would mean addressing policy and regulatory uncertainty, weak network infrastructure, and lack of access to affordable financing that hinder new projects.
Around the world, the accelerating case calls for efforts to address supply chain issues, expand networks and deploy more flexible resources to safely manage a greater share of variable renewables. Faster growth in renewables in this accelerated case would move the world closer to a path consistent with reaching net zero emissions by 2050, offering an equal chance of limiting global warming to 1.5 °C.
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