The growth is set to continue next year with the world’s total renewable electricity capacity rising to 4,500 GW. Global renewable capacity additions are set to soar by 107 GW, the largest absolute increase ever, to more than 440 GW in 2023, says the IEA.

The dynamic expansion is taking place across the world’s major markets, according to the new report, with renewables at the forefront of Europe’s response to the energy crisis and new policy measures 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 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. 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,’ IEA Executive Director Fatih Birol comments.

Solar photovoltaic (PV) additions will account for two-thirds of this year’s increase in renewable power capacity and are expected to keep growing in 2024, according to the report, with the expansion of large-scale solar PV plants being accompanied by the growth of smaller systems and the fast growth of rooftop solar. At the same time, 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.

The report notes that wind power additions are forecast to rebound sharply in 2023 growing by almost 70% year-on-year after a difficult couple of years in which growth was slacking. The faster growth is mainly due 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. 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 due to rising commodity prices and supply chain challenges, which are reducing the profitability of turbine manufacturers.

The forecast for renewable capacity additions in Europe has been revised upwards by 40% from before Russia’s invasion of Ukraine, which led many countries to boost solar and wind uptake to reduce their reliance on Russian natural gas, the report notes. The growth is driven by high electricity prices that have made small-scale rooftop solar PV systems more financially attractive. There has also been increased policy support in key European markets, especially in Germany, Italy and the Netherlands.

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

Government policies will need to adapt to changing market conditions, particularly for renewable energy auctions, which were undersubscribed by a record 16% in 2022, the IEA says. Moreover, 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.

SDG 7 may not be met
Meanwhile, a joint report by the IEA, the International Renewable Energy Agency (IRENA), the United Nations Statistics Division, the World Bank, and the World Health Organisation (WHO) finds that the world is not on track to achieve the Sustainable Development Goal (SDG) 7 for energy by 2030. According to the report, 675 million people were without electricity in 2021 with 2.3 billion people reliant on ‘harmful’ cooking fuels.

IRENA estimates show that international public financial flows in support of clean energy in low- and middle-income countries have been decreasing since before the COVID-19 pandemic, with funding limited to a small number of countries. To meet SDG 7 targets, it will be necessary to structurally reform international public finance and define new opportunities to unlock investments.

The report finds that mounting debt and rising energy prices are worsening the outlook for reaching universal access to clean cooking and electricity. These gaps will negatively impact the health of the most vulnerable populations and accelerate climate change. According to WHO, 3.2 million people die each year from illness caused by the use of polluting fuels and technologies.

Energy efficiency progress needs to double in pace
Another new report from the IEA highlights that ramping up annual energy efficiency progress from 2.2% today to over 4%/y by 2030 would deliver vital reductions in greenhouse gas emissions and at the same time create jobs, expand energy access, reduce energy bills, decrease air pollution and diminish reliance on fossil fuel imports.

Energy efficiency investment in 2023 is expected to reach record levels, with current expected and announced policies set to raise efficiency-related investment by a further 50%. However, to see annual progress double, investments in the sector must increase from $600bn today to over $1.8tn by 2030, with policy having a critical role to play in whether the world can deliver, the IEA says.