Global Renewable Expansion: 20% Short of 2030 Target

Recently, I had the privilege of attending a dinner hosted by the Cathay Innovation team in Berlin, bringing together startups from the energy sector. During one of the partner's speeches, they elaborated on the visionary path they are pursuing and emphasised the crucial need for investment in the energy field. They pointed out that, historically, venture capitalists have often been hesitant to fully embrace the energy sector due to its long-term nature, which doesn't offer quick returns.

Furthermore, they highlighted the alarming pace at which we are currently progressing, indicating that we might fall short of our 2030 targets.

Was I taken aback by this insight? Not at all.

The reality is that time is running out, and our understanding of climate change remains limited, particularly when considering the restricted access to data, exemplified by the closed doors in Russia. We find ourselves navigating towards our goals with limited visibility, striving to achieve them while governments often focus more on setting ambitious objectives than implementing concrete actions. The question arises: who bears the responsibility for holding everyone accountable—public or private sectors?

However, in 2023, global renewable energy capacity saw a remarkable 50% growth, surging to nearly 510 gigawatts (GW). Solar photovoltaics (PV) constituted a significant chunk, accounting for three-quarters of the additions worldwide, as reported in Renewables 2023, the latest annual market report by the International Energy Agency (IEA). The most substantial expansion occurred in China, where the solar PV installations in 2023 equaled the global total for 2022. Additionally, China's wind power capacity increased by an impressive 66% year-on-year. Notably, Europe, the United States, and Brazil also achieved record-breaking highs in their renewable energy capacity additions.

Renewable energy is surging, with solar and wind leading the charge, comprising a whopping 95% of the expansion. This revelation comes from the latest analysis, marking the first comprehensive assessment of global renewable energy trends since the conclusion of COP28 in Dubai last December. According to the report, within the 2023-2028 period, global renewable power capacity is projected to soar to 7,300 GW under current policies and market conditions.

Solar photovoltaics (PV) and wind power are at the forefront of this growth, and renewables are set to surpass coal as the largest global electricity source by early 2025. Despite this remarkable progress in the past year, we must push even further to triple capacity by 2030, as agreed upon by countries at COP28.

In addition to the report, the IEA has introduced a groundbreaking tool, the Renewable Energy Progress Tracker. This innovative tool empowers users to delve into historical data and future projections on a regional and country-specific basis, enabling the tracking of progress toward the ambitious tripling goal.

Current policies and market dynamics, global renewable capacity is already on a trajectory to increase by two-and-a-half times by 2030. While this progress falls short of the COP28 target to triple renewable energy capacity, we are moving closer.

Onshore wind and solar photovoltaic (PV) technologies are also now more cost-effective than newly proposed fossil fuel power plants in nearly all regions and are also cheaper than existing fossil fuel plants in most countries. Nonetheless, significant challenges remain, including the complex global economic landscape. The most critical challenge for the international community is the rapid scaling up of financing and deployment of renewable energy in emerging and developing economies, many of which are lagging behind in the transition to the new energy paradigm. The successful achievement of the tripling goal hinges on addressing this pivotal challenge.

Tripling renewable energy capacity by 2030 is a complex endeavor that varies significantly based on country, region, and technology but lets be real that we are not short on tech just it's implementation.

In advanced and large emerging economies, achieving this goal requires addressing challenges such as policy uncertainty in a fragile economic environment, inadequate investment in grid infrastructure to accommodate higher levels of renewables, and overcoming administrative barriers and permitting delays.

In contrast, in other emerging and developing economies, key factors include access to finance, strong governance, and the establishment of robust regulatory frameworks to reduce risk and attract investment. This also involves introducing new targets and policies in countries where they are not yet in place.

While the deployment of solar photovoltaic (PV) and onshore wind energy is projected to more than double in the United States, the European Union, India, and Brazil by 2028 compared to the past five years, there are distinct challenges facing the wind industry that solar does not encounter.

In the case of solar PV, prices for modules experienced a remarkable decline of nearly 50% year-on-year in 2023, and this trend of cost reduction and rapid deployment is expected to persist. This is driven by the anticipation of global manufacturing capacity reaching 1,100 GW by the end of 2024, which significantly surpasses the demand.

Conversely, the wind industry (outside of China) is grappling with a more complex landscape. It is characterised by ongoing supply chain disruptions, elevated costs, and lengthy permitting timelines, which necessitate stronger policy interventions to address these issues effectively.

Indeed, while there is much to celebrate in the progress of renewable energy, we must acknowledge the gaps and recognize the urgency of faster implementation. Time is not on our side, and the clock is ticking. It's imperative that we accelerate our efforts, bridge those gaps, and move forward with unwavering determination. The challenges are real, but so is our commitment to a sustainable future.