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New Delhi: India will be the fastest-growing Renewable Energy (RE) market among large economies through 2030, while China will account for 60 percent of the expansion in global RE capacity by 2030, says a new report by the International Energy Agency (IEA). “China is set to cement its position as the global renewables leader, accounting for 60 percent of the expansion in global capacity to 2030. The country is forecast to be home to every other megawatt of all renewable energy capacity installed worldwide in 2030, after surpassing its end-of-the-decade 1 200 GW target for solar PV and wind six years early,” says IEA’s Renewables 2024 report.
“Since ending feed-in tariffs in 2020, China’s cumulative solar PV capacity has almost quadrupled and wind capacity has doubled, driven by cost-competitiveness and supportive policies. China’s success stems from comprehensive support for both large-scale and distributed renewables across all renewable technologies,” says the report.
The European Union and the United States are both forecast to double the pace of renewable capacity growth between 2024 and 2030, while India sees the fastest rate of growth among large economies, according to the IEA. “In India, the rapid expansion of auctions, the introduction of a new support scheme for rooftop PV and stronger financial indicators for many utility companies make the country the fastest growing renewable energy market among large economies through 2030,” says the report.
Global renewable capacity is expected to grow by 2.7 times by 2030, surpassing countries’ current ambitions by nearly 25 percent, but it still falls short of tripling. Climate and energy security policies in nearly 140 countries have played a crucial role in making renewables cost-competitive with fossil-fired power plants. This is unlocking new demand from the private sector and households, while industrial policies that encourage local manufacturing of solar panels and wind turbines are fostering domestic markets. However, this is not quite sufficient to reach the goal of tripling renewable energy capacity worldwide established by nearly 200 countries at the COP28 climate summit, says the report.
Considering existing policies and market conditions, our main 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 every year, reaching almost 940 GW annually by 2030 – 70 percent more than the record level achieved last year. Solar PV and wind together account for 95 percent of all renewable capacity growth through the end of this decade due their growing economic attractiveness in almost all countries.
The strong pace of global progress on renewables expansion signals an opportunity for countries to announce enhanced ambitions in the next round of Nationally Determined Contributions (NDCs) due in 2025. Only 14 countries had explicit renewable capacity targets in the NDCs they had designed before COP28. In our main case, nearly 70 countries, which collectively account for 80 percent of global capacity, reach or surpass their current ambitions for 2030. China drastically dominates among these overachievers, but other major economies, such as Brazil, India and the United States, also contribute, says the report.
Despite recent supply chain and macroeconomic challenges, the wind sector is expected to recover. Policy changes concerning auction design, permitting and grid connection in Europe, the United States, India and other emerging and developing economies are expected to enhance project bankability and help the wind sector recover from recent financial difficulties. The forecast sees the rate of global wind capacity expansion doubling between 2024 and 2030 compared with 2017-23. Hydropower capacity growth remains stable, driven by China, India, the ASEAN region and Africa. The role of other renewables, including bioenergy, geothermal, concentrated solar power and ocean, is expected to decline due to a lack of policy support.
Hydrogen remains a negligible driver for new renewable capacity growth, says the report. Despite increased policy support, hydrogen produced from renewable energy is set to account for just 4 percent of total hydrogen production in 2030, mainly due to insufficient demand creation. While global installed electrolyser capacity is expected to increase fifty-fold by the end of the decade, only part of it will be supplied by new renewable power plants, as half of the electrolysers are estimated to use abundant low-cost renewables generation from existing plants. Overall, hydrogen is forecast to drive only 43 GW of new renewable capacity by 2030, or less than 1 percent of the total global renewable capacity expansion.
Our accelerated case sees global renewable capacity reaching almost 11 000 GW in 2030, laying out a pathway for meeting the tripling goal. In this case, China, Europe, India and the United States collectively provide 80 percent of total installed capacity worldwide. The case sees China addressing grid integration challenges and companies installing distributed solar PV systems at a faster pace, while in Europe and the United States, governments 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.
In our main case, renewables will account for almost half of global electricity generation by 2030, with the share of wind and solar PV doubling to 30 percent. At the end of this decade, solar PV is set to become the largest renewable source, surpassing both wind and hydropower, which is currently the largest renewable generation source by far.
Solar PV manufacturers are scaling back investment plans due to a deepening supply glut and record-low prices. Global solar manufacturing capacity is expected to reach over 1 100 GW by the end of 2024, more than double 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. The challenging market conditions have resulted in the cancellation of about 300 GW of polysilicon and 200 GW of wafer manufacturing capacity projects, valued at approximately USD 25 billion.
Limited prospects of global demand catching up with supply exposes smaller manufacturers to bankruptcy risks. We estimate that 17 percent of global polysilicon and 10 percent of wafer manufacturing capacity could be considered at risk due to age and suboptimal production processes. Despite slower growth in supply chain capacity, it is still expected to significantly exceed installations in 2030.
China’s leadership in solar PV manufacturing will continue while industrial policies and trade measures stimulate diversification. By 2030, China is expected to maintain more than 80 percent of global manufacturing capacity for all PV manufacturing segments. Meanwhile, solar cell and module manufacturing capacity almost triples in the United States and India. However, manufacturing PV modules in the United States and India currently costs two to three times more than in China. This gap is set to remain in place for the foreseeable future. Policy makers 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.
In contrast, the wind turbine manufacturing sector needs more investment to avoid supply chain bottlenecks by 2030. Global onshore wind manufacturing capacity could reach 145 GW, barely above expected installations in 2030 despite the incentives available in Europe, the United States and Southeast Asia. For offshore wind, the situation is even more severe. Without new manufacturing projects, supply chain bottlenecks could delay the rollout of offshore wind in EU member states, which are pursuing ambitious 2030 offshore wind goals.
Establishing criteria for awarding renewable power capacity beyond just prices is emerging as a new tool to avoid direct trade measures while pursuing multiple policy goals. In the first half of 2024, almost 60 percent of all capacity awarded in auctions worldwide included non-price criteria, such as sustainability, supply chain security or energy system integration – double the level seen five years ago. While this approach may lead to higher awarded prices in the short term, it can support energy system optimisation and various socio-economic goals at the domestic level.
The share of renewable fuels in total energy demand remains below 6 percent in 2030 despite accelerating growth. Demand is poised to expand in all regions, but 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.
Bioenergy accounts for almost all renewable fuel growth through 2030. Bioenergy use expands the most in industry, followed by transport and then buildings. Modern bioenergy is less expensive than hydrogen and e-fuels, and strong policy support is already in place in many regions. For instance, more than 60 countries have liquid biofuel policies, whereas only the European Union and the United Kingdom have e-fuel requirements.
Road biofuels remain dominant, but aviation and maritime consumption is accelerating. New policies for aviation and maritime biofuels spur over 30 percent of new demand in the transport sector overall. Biofuels in the aviation sector are forecast to climb to near 2 percent of total aviation supply by 2030, up from near zero in 2023, supported by mandates in the European Union and the United Kingdom and incentives in the United States. In the maritime sector, EU legislation drives growth, bringing biofuels to nearly 0.5 percent of international shipping demand.
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