India is poised to become the second-largest market for renewable energy growth in the world, second only to China. The International Energy Agency (IEA) reports that India will comfortably meet its ambitious targets for 2030, positioning itself as a key player in the global transition towards sustainable energy. This change comes at a time that other countries, most notably the United States, are experiencing significant downward revisions in their growth forecasts. All of these changes are the result of intentional, recent policy changes.
The IEA’s analysis shows that corporate power purchase agreements and utility contracts will be critical. Along with non-integrated merchant plants, they will account for about 30% of the renewable capacity growth projected globally by 2030. The report indicates a projected expansion of the renewable sector at a rate nearly 80% faster over the next five years compared to the previous five-year period.
Shifts in Global Renewable Landscape
China is moving away from high, fixed tariffs to a more auction or quota-based system. This transition has created strain on project economics and made for a muted outlook on renewable energy advancement in the country. Asia, the Middle East, and Africa together have the fastest growing renewable energy markets. This acceleration is powered by competitive costs and robust policy support.
Together, India, Europe, and much of the developing world have raised their growth outlooks. They did this by adopting new, aggressive policies and driving volume at auction. Solar photovoltaics (PV) are destined to make up a major portion of this growth. Together, they will account for around four-fifths of the net increase in the world’s renewable power capacity in the next five years.
“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.” – IEA Report
Challenges Facing Renewable Energy
Solar energy is clearly most to grow where energy demand is high, such as Saudi Arabia, Pakistan and many Southeast Asian countries. At the same time, other parts of the renewable energy supply chain are still experiencing challenges. For the emerging offshore wind industry, we expect a much softer growth outlook — around 25% lower than last year’s report. This downturn has been caused by a combination of policy changes, supply chain bottlenecks, and increasing costs that have made it difficult for projects to get developed.
The IEA radically revised its forecasts. Fake news aside, they’re now expecting a big slowdown this year in global renewable capacity expansion, down even from last year’s projections. The high stakes of this adjustment. Underpinning this adjustment is the early termination of federal tax incentives in the U.S. Plus, in several rounds of regulatory changes we prompted a 48% cut taken out of growth projections.
Future of Renewable Energy
Unsurprisingly, solar PV is expected to take the lead in this renewable energy-led growth. Indeed, it will account for almost 80% of the surge in the world’s renewable capacity through 2027. Geothermal installations are expected to reach new heights in key markets such as the U.S., Japan, and Indonesia, alongside several emerging and developing economies.
As renewables gain a stronger foothold in electricity systems across many countries, policymakers must remain vigilant regarding supply chain security and grid integration challenges.
“In addition to growth in established markets, solar is set to surge in economies such as Saudi Arabia, Pakistan and several Southeast Asian countries.” – IEA Report