Accelerating Renewable Energy Growth: Achievements and Challenges Ahead

Global annual renewable capacity additions experienced a remarkable increase of nearly 50% in 2023, reaching approximately 510 gigawatts (GW), marking the fastest growth rate in the past two decades. This increase signifies the 22nd consecutive year of record-setting renewable capacity additions. Notably, while Europe, the United States, and Brazil achieved all-time highs in renewable capacity, China's growth was particularly extraordinary. In 2023, China commissioned as much solar photovoltaic (PV) capacity as the entire world did in 2022, with wind additions growing by 66% year-on-year. Globally, solar PV alone accounted for three-quarters of all renewable capacity additions.The target set at the COP28 climate conference in Dubai aims to triple global renewable capacity by 2030. The International Energy Agency (IEA) urged governments to support five key action pillars to achieve this goal, including tripling renewable power capacity and doubling annual energy efficiency improvements by 2030. To meet this target, global renewable capacity must exceed 11,000 GW, aligning with the IEA’s Net Zero Emissions by 2050 (NZE) Scenario.Under current policies and market conditions, global renewable capacity is projected to reach 7,300 GW by 2028. This trajectory would result in a 2.5 times increase from current levels but would fall short of the tripling goal. To close this gap and achieve over 11,000 GW by 2030, governments must address several challenges: policy uncertainties that lead to delayed responses to new macroeconomic conditions; insufficient investment in grid infrastructure that limits the expansion of renewables; cumbersome administrative barriers and social acceptance issues that slow down deployment; and financing challenges faced by emerging and developing economies that often lack adequate funding for renewable projects. Addressing these challenges could lead to a potential growth increase of nearly 21%, putting the world on track to meet the tripling pledge.The requirements to meet the collective target vary significantly across countries and regions. G20 nations currently account for almost 90% of global renewable power capacity. In an accelerated scenario—assuming enhanced implementation of existing policies—G20 countries could triple their collective installed capacity by 2030. However, many emerging economies outside the G20 lack supportive policies or renewable targets, necessitating increased installation rates in these regions as well. By 2028, the world is set to add more renewable capacity than has been installed since the first commercial renewable energy power plant was built over a century ago. The forecast indicates that nearly 3,700 GW of new renewable capacity will come online from 2023 to 2028, primarily driven by supportive policies in over 130 countries. Solar PV and wind are expected to account for 95% of this expansion due to their lower generation costs compared to fossil fuels.Several milestones are anticipated over the next five years: in 2024, wind and solar PV will generate more electricity than hydropower; by 2025, renewables will surpass coal as the largest source of electricity generation; wind and solar PV will each exceed nuclear generation in 2025 and 2026 respectively; and by 2028, renewables will account for over 42% of global electricity generation, with wind and solar PV doubling their share to 25%.China is expected to contribute nearly 60% of new global renewable capacity operational by 2028. Despite phasing out national subsidies in recent years, China's deployment of onshore wind and solar PV is accelerating due to economic attractiveness and supportive policy environments providing long-term contracts. Forecasts suggest that China will achieve its national targets for wind and solar installations six years ahead of schedule. By the end of this forecast period, almost half of China's electricity generation will come from renewable sources. In 2023, spot prices for solar PV modules declined by almost 50%, with manufacturing capacity reaching three times that of 2021 levels. The current manufacturing capacity under construction indicates that global supply will reach 1,100 GW by the end of 2024, with potential output expected to be three times current demand forecasts. Despite unprecedented PV manufacturing expansion in the U.S. and India driven by policy support, China is expected to maintain its substantial share of global supply chains across different manufacturing segments.In terms of economic factors affecting renewables, an estimated 96% of newly installed utility-scale solar PV and onshore wind capacity had lower generation costs than new coal and natural gas plants in 2023. Additionally, three-quarters of new wind and solar plants offered cheaper power than existing fossil fuel facilities. However, rising interest rates have begun affecting financing costs for capital-intensive variable renewable technologies.The implications of this new macroeconomic environment are multifaceted: inflation has increased equipment costs for onshore and offshore wind projects; higher interest rates are raising financing costs for renewable technologies; and slow policy responses have led to undersubscribed auctions in advanced economies. The wind industry has experienced a significant decline in market value as manufacturers face negative net margins due to volatile demand and economic challenges.Looking ahead, the share of solar PV and wind in global electricity generation is forecasted to double to?25%?by?2028. This rapid expansion will have significant implications for power systems worldwide: annual variable renewables penetration is expected to exceed?50%?in several European Union countries by?2028, with Denmark potentially achieving around?90%?reliance on wind and solar PV for its electricity system.Renewable power capacity dedicated to hydrogen production is expected to grow only modestly between?2023?and?2028, representing just about?7%?of announced project capacities during this period. China, Saudi Arabia, and the U.S. are projected to account for over?75%?of this growth by?2028. However, progress has been slow due to challenges such as a lack of off-takers and rising production costs influenced by higher prices.Emerging economies are leading a significant expansion in biofuels production projected to grow at nearly?30%?faster than previous years due to robust policies supporting biofuel use in transport fuels—primarily road transport—accounting for nearly?90%?of new supply growth.Modern renewable heat consumption is set to expand globally by about?40%, driven largely by increased reliance on electricity for process heat through heat pumps in non-energy-intensive industries. However, this growth remains insufficient without stronger policy actions to meet Paris Agreement targets.The global landscape for renewable energy continues its rapid transformation driven largely by technological advancements and supportive policies across various regions—especially China’s dominant role in solar PV and wind installations. Achieving ambitious targets such as tripling global renewable capacity by?2030?requires overcoming significant challenges related to policy implementation, investment infrastructure, financing barriers, and market dynamics while ensuring sustainable growth across all sectors involved in energy transition efforts.

?CFOs are integral to the successful integration of renewable energy into existing power plants through strategic financial planning, risk management, capital raising, stakeholder engagement, and promoting operational efficiency. Their leadership not only facilitates compliance with regulatory requirements but also positions the organization to capitalize on the growing demand for sustainable energy solutions. More about CFO role in Integratimg renewables with conventional sources of Energy.