Global renewable power capacity is expected to experience a significant surge this year, with an estimated increase of one-third, driven by factors such as policy momentum, higher fossil fuel prices, and energy security concerns. This forecast comes from the International Energy Agency (IEA), which released its latest Renewable Energy Market Update. The report predicts that renewable electricity capacity worldwide will reach 4,500 gigawatts (GW) by next year, equivalent to the combined power output of China and the United States.
The IEA anticipates a record-breaking addition of 107 GW of renewable capacity in 2023, surpassing 440 GW in total. This growth is occurring across major global markets. Europe, responding to the ongoing energy crisis, is rapidly accelerating its renewable deployment, while the United States and India are also experiencing significant increases supported by new policy measures. China, as a leader in the renewable energy sector, is set to account for nearly 55% of global capacity additions in 2023 and 2024.
Solar photovoltaic (PV) installations will contribute to two-thirds of the increase in renewable power capacity this year and are expected to continue growing through 2024. Large-scale solar PV plants are expanding, alongside a rise in smaller systems. Rising electricity prices are driving the adoption of rooftop solar PV, enabling consumers to reduce their energy costs.
Manufacturing capacity for all solar PV production segments is projected to more than double to 1,000 GW by 2024, primarily led by China but also driven by increased diversification in the United States, India, and Europe. This indicates that the world will have ample solar PV manufacturing capacity by 2030 to meet the annual demand outlined in the IEA’s Net Zero Emissions by 2050 Scenario.
Wind power additions are expected to rebound strongly in 2023, growing by nearly 70% compared to the previous year. The completion of projects delayed by COVID-19 restrictions in China and supply chain challenges in Europe and the United States contributes to this rapid growth. However, the pace of growth in 2024 will depend on governments providing robust policy support to address permitting and auction design challenges. Unlike solar PV, wind turbine supply chains are not expanding rapidly enough to match increasing demand, primarily due to rising commodity prices and supply chain constraints affecting manufacturers’ profitability.
In Europe, the forecast for renewable capacity additions has been revised upward by 40% since Russia’s invasion of Ukraine. This geopolitical event led many countries to bolster their solar and wind deployment to reduce reliance on Russian natural gas. High electricity prices have made small-scale rooftop solar PV systems more financially attractive, and key European markets, notably Germany, Italy, and the Netherlands, have increased policy support.
The IEA report also highlights that newly installed solar PV and wind capacity in the European Union has saved consumers EUR 100 billion by displacing more expensive fossil fuel generation. Without the additional renewable capacity, wholesale electricity prices in Europe would have been 8% higher in 2022. However, it emphasizes the need for government policies to adapt to changing market conditions, particularly regarding renewable energy auctions, which faced significant undersubscription in 2022. Furthermore, timely planning and investment in grids are crucial for the secure and cost-effective integration of high shares of variable renewables in power systems.
Several European countries, including Spain, Germany, and Ireland, are expected to surpass a combined wind and solar PV share of 40% in their overall annual electricity generation by 2024. The competitiveness of wind and solar PV has improved, but governments must continuously update policies to align with market dynamics and prioritize grid investments to facilitate the seamless integration of renewable energy sources.
, the global energy crisis is propelling a substantial surge in renewable energy capacity. Solar photovoltaic (PV) and wind power are expected to lead the way, contributing to the largest annual increase in new renewable capacity ever recorded. Discover the key findings and implications of the IEA report in this insightful article.){kind=link}