#AMRG Presents: Summary of the International Energy Agency's Renewables 2024 Report

What?

The IEA's Renewables 2024 report predicts renewable energy deployment in electricity, transport, and heat by 2030, highlighting challenges and barriers to growth. The report also includes a special chapter on renewable fuels, including bioenergy, biogases, hydrogen, and e-fuels. It examines key developments in the sector, including policy trends, renewable technology costs, hydrogen production, and prospects for renewable energy companies.

Who?

International Energy Agency

Where?

The full report can be found HERE.

Summary

Global renewable capacity is expected to grow by 2.7 times by 2030, surpassing countries' current ambitions by nearly 25%. Climate and energy security policies in nearly 140 countries have played a crucial role in making renewables cost-competitive with fossil-fired power plants, unlocking new demand from the private sector and households. Industrial policies encouraging local manufacturing of solar panels and wind turbines foster domestic markets. However, this is not enough to reach the goal of tripling renewable energy capacity worldwide established by nearly 200 countries at the COP28 climate summit.

Considering existing policies and market conditions, the leading case sees 5,500 gigawatts (GW) of new renewable capacity becoming operational by 2030. This implies that global renewable capacity additions will continue to increase yearly, reaching almost 940 GW annually by 2030, 70% more than last year's record level. Solar PV and wind together account for 95% of all renewable capacity growth through the end of this decade due to their growing economic attractiveness in almost all countries.

China is set to cement its position as the global renewables leader, accounting for 60% of the expansion in global capacity to 2030. The European Union and the United States are forecast to double the pace of renewable capacity growth between 2024 and 2030, while India sees the fastest growth rate among large economies through 2030. New solar capacity added between now and 2030 will account for 80% of the growth in renewable power globally by the end of this decade.

China is addressing grid integration challenges and companies installing distributed solar PV systems faster, while governments in Europe and the United States reduce long permitting timelines and stimulate investment in new grid capacity and flexible assets to unlock additional deployment. In India, policies addressing challenges such as land procurement, grid connection wait times, and the weak financial health of power distribution companies deliver additional growth.

Large untapped renewables potential in emerging and developing economies can be realized if policies improve. High financing costs reduce the economic attractiveness of renewables in most emerging and developing economies. Other key challenges include weak grid infrastructure and a lack of visibility over auction volumes. Measures to reduce risks, including by creating stable policy environments with clear long-term targets, can help unlock additional capacity. In countries with fossil fuel overcapacity and long-term contracts, policymakers could consider renegotiating inflexible power and fuel contracts and accelerating the phasedown of fossil fuel plants.

Grid infrastructure and system integration of renewables need increasing policy attention. Renewables will account for almost half of global electricity generation by 2030, with the share of wind and solar PV doubling to 30%. Solar PV is set to become the largest renewable source, surpassing both wind and hydropower, currently the largest renewable generation source.

Investment in grid infrastructure is lagging, with more advanced projects waiting to be connected. At least 1,650 GW of renewable capacity is currently in advanced stages of development and waiting for a grid connection, 150 GW higher than last year. Queues to integrate energy storage are also significant as deployment rises.

The solar PV and wind manufacturing race continues, but dynamics are changing. Global solar manufacturing capacity is expected to reach over 1,100 GW by the end of 2024, more than double the projected PV demand. This oversupply has caused module prices to more than halve since early 2023, leading to negative net margins for integrated solar PV manufacturers in 2024. Policymakers should consider striking a fine balance between the additional costs and benefits of local manufacturing, weighing key priorities such as job creation and energy security.

The rapid expansion of renewable electricity is driving the decarbonization of industries, transport, and buildings, with renewable electricity accounting for over three-quarters of the global renewable energy demand. This increase boosts the share of renewables in final energy consumption to nearly 20% by 2030, up from 13% in 2023. However, fossil fuels will still meet almost 80% of global energy demand. Renewable fuels, including liquid, gaseous, solid bioenergy, hydrogen, and e-fuels, account for 15% of the forecasted growth. Other renewable energy sources, such as ambient heat, solar thermal, and geothermal, account for the remaining share.

The pace of renewables growth in transport, industry, and buildings will double by 2030 compared with the rate from 2017 to 2023. Renewable electricity accounts for half of this growth for transport, led by electric vehicle adoption and followed by biofuels, with small contributions from biogases, hydrogen, and e-fuels. However, renewables' share in transport only increases by two percentage points to 6% in 2030.

For heat, renewables consumption expands by more than 50%, driven by renewable electricity use for heat in non-energy-intensive industries and buildings, followed by bioenergy. However, global heat demand outpaces renewables expansion, leading to increasing use of fossil fuels and a 5% increase in annual carbon dioxide (CO2) emissions from the sector from 2024 to 2030.

The share of renewable fuels in total energy demand remains below 6% in 2030 despite accelerating growth. Demand is poised to expand in all regions. Still, it is concentrated in Brazil, China, Europe, India, and the United States, which collectively support two-thirds of the growth due to dedicated policies to support the uptake of several – and in some cases, all – renewable fuels.

Global annual renewable capacity additions are expected to rise from 666 GW in 2024 to 935 GW in 2030, with solar PV and wind accounting for 95% of all renewable capacity additions due to lower generation costs. Hydroelectricity contributes 20-30 GW annually over 2024-2030, with bioenergy and other renewables expected to reach around 12 GW by 2030. Utility-scale and distributed solar PV growth is expected to triple, accounting for almost 80% of global renewable electricity expansion. Distributed applications make up almost 40% of the overall PV expansion.

Onshore wind cumulative additions are expected to almost double by 2030, reaching 846 GW. However, the pace of policy changes, higher project risk, and longer timelines due to social acceptance challenges can limit expansion. International developers and investors have channeled capital from wind to solar PV projects in the past five years. Annual additions are expected to rise in Africa, the Middle East, ASEAN countries, Latin America, Eurasia, Europe, the United States, and India.

Offshore wind capacity growth is expected to reach 212 GW by 2030, almost quadrupling the previous six-year period. The annual offshore wind market is expected to expand from 9.5 GW in 2023 to over 45 GW in 2030, with China alone responsible for half of this growth. Europe's annual market will reach almost 18 GW by 2030, and the United States, Japan, and Korea will emerge as new gigawatt-level annual markets.

Macroeconomic and supply chain challenges impact offshore wind more than other renewable technologies due to large projects, long lead times, and high investment requirements.

Comments

For the most part, the world is doing a much better job of responsible energy production and consumption; however, there are wide variations at the regional / country level. While there is the possibility that emissions will decline overall, the largest consumers of emission-generating energy sources are not slowing down.

Compiled by #AMRG

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