Energy Transition

The global energy crisis is causing hardships for many, but it’s also driving growth in renewables, says the IEA. Here’s how

Renewables’ continued acceleration is critical to help keep the door open to limiting global warming to 1.5°C.

Renewables’ continued acceleration is critical to help keep the door open to limiting global warming to 1.5°C. Image: Unsplash/Nicholas Doherty

Stefan Ellerbeck
Senior Writer, Forum Agenda
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Energy Transition

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  • The International Energy Agency (IEA) says global renewable energy capacity is set to almost double over the next five years.
  • It says the energy crisis has forced governments to accelerate already existing renewable energy targets.
  • Solar and wind power are leading the surge, with China expected to invest three times as much in solar power over this period than the rest of the world combined.

The global energy crisis is causing hardship for hundreds of millions of people around the world, but it may bring benefits in the longer term, according to the International Energy Agency (IEA).

In its Renewables 2022 report, the intergovernmental organization says there has been a significant acceleration in green energy capacity since Russia’s invasion of Ukraine in February. Total renewable capacity growth is set to almost double worldwide in the next five years, overtaking coal as the biggest source of electricity generation.

Renewables were already expanding quickly, but the global energy crisis has kicked them into an extraordinary new phase of even faster growth as countries seek to capitalize on their energy security benefits,” says 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 more secure energy system. Renewables’ continued acceleration is critical to help keep the door open to limiting global warming to 1.5°C.”

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How is the World Economic Forum facilitating the transition to clean energy?

Renewables are expected to account for over 90% of global electricity capacity in the next five years.
Renewables are expected to account for over 90% of global electricity capacity in the next five years. Image: IEA

What’s behind the renewables drive?

A major driver of growth in renewable power over the next five years will be countries implementing policies more quickly in order to combat the energy crisis, the IEA says.

China is expected to account for almost half of additional renewable capacity globally in 2022-2027. While, in the US, the Biden Administration’s Inflation Reduction Act has extended tax credits for renewables until 2032. And new renewable installations in India are set to double in the next five years, led by solar power.

The European Union (EU) was already weighing up ambitious renewable targets before the energy crisis hit. However, Russia’s invasion of Ukraine has made the bloc’s energy security more important than ever, which has led to an acceleration of its green energy plans.

The REPowerEU plan aims to end European reliance on Russian fossil fuels by 2027 and increase the share of renewables in final energy consumption to 45% by 2030.

EU member states could achieve faster deployment of wind and solar power by rapidly implementing policies such as streamlining permitting guidelines, and improving incentives to support rooftop solar installation, the report suggests.

The IEA also warns that emergency regulations passed by the European Council to protect consumers from high energy prices – including windfall profits on electricity generators, could create uncertainty for renewable energy investment if they are not well designed and coordinated across countries.

The REPowerEU plan aims to end European reliance on Russian fossil fuels by 2027 and increase the share of renewables in final energy consumption to 45% by 2030.
The REPowerEU plan aims to end European reliance on Russian fossil fuels by 2027 and increase the share of renewables in final energy consumption to 45% by 2030. Image: IEA

How rapid will the rise of renewables be?

The IEA says renewable capacity expansion through to 2027 will be much faster than previously thought, even just a year ago. “Renewables are seen growing by almost 2,400 Gigawatts in our main forecast, equal to the entire installed power capacity of China today. That’s an 85% acceleration from the previous five years, and almost 30% higher than what was forecast in last year’s report, making it our largest ever upward revision.”

Renewables’ share of the energy mix will rise by 10 percentage points over the next five years, reaching 38% by 2027, the IEA predicts. Meanwhile, electricity produced from wind and solar power is forecast to double by 2027 and contribute almost 20% of total energy generation by then.

However, it adds that “the growth of dispatchable renewables, including hydropower, bioenergy, geothermal and concentrated solar power, remains limited despite their critical role in integrating wind and solar PV into global electricity systems”.

Renewables are the only electricity generation source expected to grow in the next five years.
Renewables are the only electricity generation source expected to grow in the next five years. Image: IEA

Solar and wind power lead the way

Cumulative solar PV capacity is forecast to almost triple, exceeding natural gas by 2026 and coal by 2027. The report says utility-scale solar power is the cheapest option for new electricity generation in a majority of countries around the world.

And “distributed solar PV, such as rooftop solar on buildings, is also set for faster growth as a result of higher retail electricity prices and growing policy support to help consumers save money on their energy bills”, it adds.

Global wind capacity is set to double over the next five years, with offshore projects making up a fifth of that growth. Put together, wind and solar power will account for more than 90% of additional renewable power capacity between 2022 and 2027.

A graph showing share of cumulative power capacity by technology, 2010-2027.
Installed Solar power capacity is forecast to surpass that of coal by 2027. Image: IEA

A special report on the state of the global energy transition by the World Economic Forum argues that urgent action is required by both private and public sectors to ensure a resilient green energy transition. Fostering Effective Energy Transition 2022, launched in collaboration with Accenture earlier this year, details key recommendations for governments, companies, consumers and other stakeholders on how to progress the energy transition.

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Energy TransitionElectricityClimate Crisis
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