The International Energy Agency predicts that in 2023, the capacity of renewable energy will increase by approximately 33%, primarily due to China’s significant investment in solar and wind power.
According to the International Energy Agency (IEA), the expansion of renewable energy capacity in 2023 is projected to be the largest to date. The IEA estimates that there will be an increase of 107GW, bringing the total capacity to 440GW. This increase is equivalent to the combined installed power capacity of Germany and Spain.
The IEA stated that the forecasted surge in renewable energy capacity is driven by a combination of factors. These include government support, concerns about energy security, and the growing competitiveness of renewables compared to fossil fuels. These factors outweigh the challenges posed by rising interest rates, increased investment costs, and supply chain issues.
While renewable energy expansion is happening in major markets worldwide, China is projected to solidify its position as a leader in renewable energy. In 2024, China is expected to contribute to 55% of the global annual capacity additions, further establishing itself as a key player in the renewable energy sector.
China has been actively promoting the development of large-scale solar projects with the aim of providing cheaper energy compared to benchmark coal electricity prices. In addition to these large-scale projects, China has also been focusing on smaller-scale installations, particularly for public institutions and state-owned businesses, as part of their efforts to increase the adoption of solar energy across various sectors.
In 2023, China is anticipated to play a significant role in driving a global rebound in wind power capacity, accounting for nearly 70% of the increase. This comes after a lower-than-expected deployment of wind power in 2022, with China deploying approximately one-third less capacity than initially projected.
The Covid-19 restrictions resulted in the delay of several onshore and offshore wind projects in China. However, these projects are now anticipated to become operational in 2023 and 2024. As a result, China’s share of global wind capacity expansion is expected to surpass 60% over the next two years. The delayed projects, once completed, will significantly contribute to China’s overall wind power capacity and reinforce its position as a major player in the global wind energy sector.
Wind projects originally scheduled for 2022 in the US and Europe were postponed to 2023 due to supply chain challenges.
Two-thirds of the projected rise in renewable capacity for 2023, encompassing both large-scale solar plants and smaller systems such as rooftop installations, can be attributed to solar photovoltaic panels or solar electricity panels.
By 2024, the manufacturing capacity for solar photovoltaic (PV) panels is projected to surpass 1,000GW, which is more than double the current capacity. Leading this expansion are China, the US, India, and Europe. With this growth, the world is expected to have sufficient solar manufacturing capacity to fulfill the International Energy Agency’s (IEA) vision of achieving net zero greenhouse gas emissions by 2050, based on the prevailing trends.
Nevertheless, the agency cautioned that additional policy support for renewable energy sources is crucial, along with enhancements to grid infrastructure, in order to adequately meet the growing demand for clean energy.
According to Fatih Birol, the executive director of the International Energy Agency (IEA), it is imperative for policies to adapt to evolving market conditions. Additionally, upgrading and expanding power grids is essential to fully capitalize on the immense potential of solar and wind energy.
Since the full-scale invasion of Ukraine by Russia, many European countries have significantly heightened their solar and wind capabilities in an effort to reduce dependence on Russian natural gas. As a result, forecasts for renewable energy capacity in Europe have been raised by 40 percent. The surge in energy prices has made rooftop solar installations more economically attractive, leading to increased policy support in markets like Germany, Italy, and the Netherlands.
The International Energy Agency (IEA) estimates that the newly added solar and wind capacity has resulted in cost savings of €100 billion for electricity consumers in the European Union during the period from 2021 to 2023.
In 2022, biofuels played a significant role in reducing the reliance on fossil fuels, as stated by the International Energy Agency (IEA). Countries like Argentina, India, and Indonesia, which possess feedstock and surplus capacity, increased their biofuel production to decrease imports of fossil fuels. This collective effort resulted in the avoidance of the consumption of 2 million barrels of oil.
The revised biofuel forecast takes into account an expected 11 percent increase in new demand by 2024, with a significant portion—almost two-thirds—of this demand originating from emerging markets. However, in advanced markets, the impact of new policies on biofuel production is not anticipated until after 2024. Factors such as high prices, feedstock supply challenges, and technical limitations are constraining the growth of biofuel in these advanced markets.
According to the IEA, although the magnitude of new biofuel projects is noteworthy, it has not reached a level that would prevent a potential shortage of feedstock supply. Furthermore, the feasibility of the majority of these new biofuel projects remains uncertain, raising concerns about their viability.