The global energy crisis is driving a surge in renewable energy installations, with total capacity growth worldwide expected to nearly double over the next five years, overtaking coal as the main source of electricity generation along the way and helping to maintain the possibility of limiting global warming to 1.5°C, indicates the IEA in a new report.
Energy security concerns caused by Russia’s invasion of Ukraine have prompted countries to increasingly turn to renewable energy such as solar and wind power to reduce dependence on imported fossil fuels, the prices of which have risen considerably. Global renewable energy capacity is now expected to increase by 2,400 gigawatts (GW) over the period 2022-2027, an amount equal to all of China’s power capacity today, according to Renewable energies 2022the latest edition of the IEA’s annual report on the sector.
This expected massive increase is 30% higher than the growth predicted just a year ago, showing how quickly governments have given additional political weight to renewables. The report reveals that renewables are expected to 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.
“Renewables were already growing rapidly, but the global energy crisis has propelled them into an extraordinary new phase of even faster growth as countries seek to leverage their energy security advantages. The world should 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 safer energy system. The continued acceleration of renewable energy is essential to help keep the door open to limiting global warming to 1.5°C.
The war in Ukraine is a watershed moment for renewables in Europe where governments and companies seek to quickly replace Russian gas with alternatives. The amount of renewable energy capacity added in Europe in the 2022-27 period is expected to be twice as high as in the previous five-year period, due to a combination of energy security concerns and environmental concerns. climate ambitions. Even faster deployment of wind and solar PV could be achieved if EU Member States quickly implement a number of policies, including streamlining and reducing permit times, improving auction design and better visibility on auction schedules, as well as improved incentive systems to support rooftop solar.
Beyond Europe, the upward revision to renewable energy growth for the next five years is also driven by China, the United States and India, all of which are implementing policies and are introducing regulatory and market reforms faster than expected to tackle the energy crisis. Following its recent 14th five-year plan, China is expected to account for nearly half of the world’s new renewable energy capacity additions during the 2022-2027 period. Meanwhile, the US Inflation Reduction Act has provided new support and long-term visibility for the expansion of renewable energy in the United States.
Utility-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 is expected to nearly triple over the 2022-2027 period, overtaking coal and becoming the world’s largest source of power capacity. The report also predicts an acceleration in solar panel installations on residential and commercial rooftops, which help consumers lower their energy bills. Global wind capacity nearly doubled over the forecast period, with offshore projects accounting for a fifth of the growth. Together, wind and solar will account for more than 90% of the renewable energy capacity that will be added over the next five years.
The report sees emerging signs of diversification in global PV supply chains, with new policies in the United States and India expected to boost solar manufacturing investment by up to $25 billion over the 2022- 2027. While China remains the dominant player, its share of global manufacturing capacity could increase from 90% today to 75% by 2027.
Total global demand for biofuels is expected to increase by 22% over the period 2022-2027. The United States, Canada, Brazil, Indonesia and India account for 80% of the projected global expansion in biofuel use, with all five countries having comprehensive policies to support growth.
The report also presents an accelerated case in which renewable energy capacity increases by an additional 25% compared to the main forecast. In advanced economies, this faster growth would require addressing various regulatory and licensing challenges and faster penetration of renewable electricity in the heating and transportation sectors. In emerging and developing economies, this would mean tackling policy and regulatory uncertainties, weak grid infrastructure, and lack of access to affordable finance that hinder new projects.
Worldwide, the accelerated case requires efforts to address supply chain issues, expand networks, and deploy more flexibility resources to safely manage larger shares of variable renewables. Accelerated growth of renewables in the accelerated case would bring the world closer to a trajectory consistent with achieving net zero emissions by 2050, which offers an equal chance of limiting global warming to 1.5°C.
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