Energy crisis strengthens renewable energies more than expected
The global energy crisis is driving a sharp acceleration in renewable energy installations, with total capacity growth worldwide set to nearly double in the next five years. Overtaking coal as the largest source of electricity generation in the medium term. And helping to keep alive the possibility of limiting global warming to 1.5°C.
Energy security concerns caused by the Russian war in Ukraine have prompted countries to turn more strongly to renewables. Primarily solar and wind, to reduce dependence on imported fossil fuels, the prices of which have skyrocketed, driving up inflation.
Global renewable energy capacity is now expected to increase by 2,400 gigawatts (GW) over the period 2022-2027. An amount equivalent to China’s total power capacity today, according to Renewables 2022. The latest edition of the International Energy Agency’s (IEA) annual report on the sector.
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This massive expected increase in renewables is 30% higher than the amount of growth that was forecast just a year ago. It highlights, therefore, the speed with which governments have put additional political weight behind renewables. The report finds that renewables will account for more than 90% of global electricity expansion over the next five years, overtaking coal to become the world’s largest source of electricity by early 2025.
Global renewable energies are on the rise
“Renewables were already expanding rapidly, but the world’s energy crisis has taken them into an extraordinary new phase of growth. Even faster as countries seek to capitalize on their energy security benefits. The world is poised to 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 more secure energy system. Continued acceleration of renewables is critical to help keep the door open to limit global warming to 1.5 °C.”
The war in Ukraine is a watershed moment for renewables in Europe, where governments and companies are looking to quickly replace Russian gas with alternatives. The amount of renewable energy capacity added in Europe in the 2022-27 period is forecast to be double that of the previous five-year period. Driven by a combination of energy security concerns and climate ambitions.
Even faster deployment of wind and solar PV could be achieved. If EU member states quickly implemented a range of policies, the report says. Including simplifying and reducing permitting timelines, improving auction designs, and improving the visibility of auction schedules. As well as improving incentive plans for rooftop solar support.
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Boost from large nations
Beyond Europe, the upward revision in global renewables growth over the next five years is also driven by China, the US and India. These countries are implementing policies and introducing regulatory reforms. And market reforms sooner than expected to combat the energy crisis. With its 14th Five-Year Plan, China is expected to account for nearly half of new renewable capacity additions in the cited timeframe.
Meanwhile, the US Inflation Reduction Act has provided new support and long-term visibility for the expansion of renewables in the US.
Large-scale solar PV and onshore wind are the cheapest options for new electricity generation. In a large majority of countries around the world. Global solar PV capacity will nearly triple during the period 2022-2027. Overtaking coal and becoming the world’s largest source of power capacity.
The report also forecasts an acceleration of solar panel installations. On residential and commercial rooftops, which help consumers reduce energy bills. Global wind capacity nearly doubles over the forecast period, with offshore projects accounting for one-fifth of the growth. Together, wind and solar will account for more than 90% of the renewable energy capacity to be added in the next five years.
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China the dominant player
The report further sees emerging signs of diversification in global PV supply chains. It estimates that new policies in the US and India will drive investment in solar manufacturing. By as much as $25 billion over five years. While China remains the dominant player, its share of global manufacturing capacity could decline from 90% today to 75% by 2027.
Total global demand for biofuels is also expected to expand by 22% during that period. The United States, Canada, Brazil, Indonesia and India account for 80% of the expected global expansion in biofuel use. And all five countries have comprehensive policies in place to support growth.
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Across the world, the accelerating case requires efforts to address supply chain issues. Expand grids and deploy more flexibility resources to safely manage variable renewables. Faster growth of these energies would bring the world closer to achieving zero net emissions by 2050. This, of course, offers a fair chance of limiting global warming to 1.5°C.
