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Renewable Powerhouses: Solar PV and Wind Set to Drive 7.3 TW Global Growth by 2028; China Surges Ahead, Aiming for 1.2 TW by 2024

published: 2024-01-16 17:51

Solar photovoltaic (PV) energy took the lead in contributing to 75% of the 507 GW increase in global renewable energy capacity in 2023, as reported by the International Energy Agency (IEA). Projections from the IEA anticipate that solar PV and wind power combined will make up 95% of the expected 3.7 TW capacity to be added between 2023 and 2028, based on existing policies and market conditions. This surge is anticipated to elevate the cumulative global renewable capacity to 7.3 TW by 2028. However, the IEA warns that this growth falls short of achieving the COP28 target, which aims to triple renewables to 11 TW by 2030.
In its latest report, "Renewables 2023," the IEA highlights that China has single-handedly commissioned as much solar PV capacity as the entire world did in 2022. Remarkably, China is poised to achieve its 2030 national target of 1.2 TW for solar and wind capacity six years ahead of schedule, reaching this milestone in 2024. This accomplishment comes a year earlier than forecasted by the Global Energy Monitor.
Expansion in Geographic Reach
In 2023, an oversupply of solar modules led to a significant accumulation of stock, driven by plummeting prices. The International Energy Agency (IEA) estimates that the European Union amassed approximately 90 GW, while the United States stockpiled 45 GW by the end of the previous year, nearly doubling the anticipated installations for 2024.
In the European Union, the stockpiling was influenced by high expectations of photovoltaic (PV) capacity growth and the potential for short-term import restrictions. In the United States, the motivation stemmed from the looming June 2024 deadline for the circumvention tariff moratorium. However, ROTH MKM suggests that as much as $10 billion worth of solar modules, already imported, unliquidated, and even installed in the U.S., may face the risk of retroactive tariffs. Auxin Solar has taken the matter to court, challenging the anti-circumvention tariffs.
Nevertheless, the IEA anticipates a reduction in this stockpile throughout the current year as distributors aim to cut down on storage costs. This move is projected to diminish the demand for new modules in 2024.
Looking ahead, China is poised to maintain its status as the global renewables powerhouse, contributing to almost 60% of the new renewable capacity set to go operational worldwide by 2028, as per IEA estimates. The report emphasizes China's crucial role in achieving the global objective of tripling renewables, as the country is expected to install over half of the necessary new capacity globally by 2030. This projection is attributed to the economic appeal of solar photovoltaic (PV) and wind energy, coupled with a supportive policy environment fostering anticipated growth in the country. 
Beyond China, the United States, the European Union (EU), India, and Brazil are poised for substantial growth in the renewable energy sector, with projections indicating that they will more than double their solar photovoltaic (PV) and onshore wind installations by 2028. The EU and Brazil are expected to experience growth primarily in residential and commercial rooftop PV, surpassing the expansion of large-scale plants. Meanwhile, in India, the acceleration of utility-scale solar PV and onshore wind installations will be fueled by a streamlined auction schedule. The enhanced financial well-being of distribution companies (discoms) will also contribute to this growth.
Solar PV Production Surges
In 2023, solar PV manufacturing soared to three times the levels seen in 2021, setting a trajectory to reach 1,100 GW by the close of 2024, surpassing the current demand forecasts.
However, the global average utilization rate for solar PV manufacturing likely dipped to approximately 60% in 2023, primarily affecting Chinese manufacturers due to the persistent oversupply in the industry. The competitive landscape triggered a nearly 50% drop in module spot prices between January and December 2023. According to the report, non-Chinese manufacturers outside of China, benefiting from various support policies and trade measures, are expected to maintain higher utilization rates. Meanwhile, manufacturers are prioritizing cost-cutting and innovation as module prices continue to decrease throughout the forecast period. China is expected to maintain its dominant position, holding between 80% and 95% of the global solar PV supply chains, as per the estimates in the report. Despite other markets developing domestic capacity, analysts suggest that replacing imports with more costly production in the US, India, and the EU would elevate the overall cost of PV deployment in these regions.
The IEA outlines several milestones to be achieved by 2028, including:
- In 2024, the combined electricity generation from wind and solar PV exceeds that of hydropower.
- By 2025, renewables surpass coal, becoming the primary source of electricity generation.
- Wind and solar PV individually surpass nuclear electricity generation in 2025 and 2026, respectively.
- In 2028, renewable energy sources contribute to over 42% of global electricity generation, with the combined share of wind and solar PV doubling to 25%.
Hurdles Ahead
IEA Executive Director Fatih Birol highlighted several challenges in achieving the 11 TW target by 2030, with the foremost obstacle being the need to enhance the financing and deployment of renewables in emerging and developing economies. In these regions, renewable energy developers have grappled with elevated interest rates since 2021, leading to increased costs and consequently impeding their expansion.
Birol emphasized, "The most crucial challenge for the international community, in my view, is rapidly boosting the financing and deployment of renewables in many emerging and developing economies. A significant number of these nations are lagging in the transition to the new energy economy, and the success of achieving the tripling goal hinges on addressing this challenge."
Economic Challenges Affecting the Renewable Sector
The report notes that elevated inflation and interest rates have been impacting the overall macroeconomic landscape. Compounded by delayed policy responses and uncertainties, these factors have posed additional challenges for the sector.
Insufficient investment in grid infrastructure emerges as a significant barrier, hindering the rapid expansion of renewables. The report predicts that grid bottlenecks will become more pronounced in the future, leading to increased curtailment in numerous countries.
The list of challenges also includes cumbersome administrative barriers, complex permitting procedures, and issues related to social acceptance.-
Tackling these challenges, as highlighted in the IEA report, has the potential to propel renewable growth by nearly 21%. This improvement is crucial for steering the world towards achieving the ambitious 11 TW target by 2030.
In the realm of hydrogen, IEA analysts project that only 7% of the proposed renewable hydrogen capacity will come online by 2030, experiencing a growth of 45 GW between 2023 and 2028. China, Saudi Arabia, and the US collectively contribute to over 75% of this capacity. The analysts attribute the sluggish growth of green hydrogen to a lack of off-takers and the impact of higher prices on production costs.

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