Solar power is booming as the post-war energy crisis in Ukraine spurs a shift to renewable energy and is expected to overtake coal power by 2027, according to the International Energy Agency.
Overall, renewable energy will become the largest source of global electricity generation by early 2025, the IEA said, with the world adding twice as much renewable energy from 2022 to 2027 as it did in the previous five years.
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IEA executive director Fatih Birol said in an interview that not only were countries managing the “expansion of new renewable energy sources” to meet climate goals, but energy security and the need to “diversify” renewable energy supply chains away from China became increasingly important.
Whether it’s solar, wind power, batteries or electric vehicles, “there is intense competition between the world’s largest economies to have the pole position when it comes to the next chapter of the industrial sector,” he said.
A rush to replace the oil and gas no longer coming from Russia and build local renewable energy sectors has spurred industry incentives and subsidies.
The US is moving forward with its landmark climate package, the $369 billion Inflation Relief Act. In total, the law includes incentives for solar generation through $10 billion in clean energy tax credits and $27 billion in a “green bank” to support clean energy. projects in communities.
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Global renewable energy capacity will grow by 2,400 gigawatts between 2022 and 2027, equivalent to China’s power capacity today, the IEA’s latest annual renewable energy report said. This is 30 percent more than the IEA predicted a year ago.
The U.S. and India are expected to lead the diversification of the solar generation supply chain, which the BEA says will reduce China’s dominance. The two countries’ investment in solar energy is expected to reach almost $25 billion between 2022 and 2027, seven times more than the previous five years.
However, the IEA said China would remain the “dominant player” with a market share estimated at around 75 percent in 2027, compared with 90 percent today.
The IEA warned in June that China’s hold on the solar panel supply chain could slow the global clean energy transition. With the help of policies included in China’s latest five-year plan, the country will account for almost half of the newly added renewable energy by 2027, the agency said this week.
The solar boom is expected to accelerate in the next two years. Iberdrola, Europe’s leading renewable energy company, plans to more than double our global solar capacity to 10.6 gigawatts by the end of 2025, said Xabier Viteri Solaun, director of sustainable energy business.
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Solar projects can be designed and built more quickly than other renewables, he added, and the company is “seeing an increase in solar capacity being added to new and existing wind farms.”
Even faster growth could occur if European countries eased permits for new projects, improved incentives for rooftop solar installations and offered better terms in renewable energy auctions, the IEA noted.
Despite encouraging overall trends, the European wind industry “faces a big challenge,” Birol said. The combination of Chinese and US competition and rising raw material and supply costs is creating financial stress.
Birol also repeated the warnings about replacing fossil fuels from Russia with new oil and gas projects. According to him, supply should come from existing fields, while steps should be taken to reduce demand.
“Russia’s intervention in Ukraine should not be a justification for large-scale fossil fuel investments,” he said, as it would not only “put climate goals at risk” but also become stranded assets.
However, even under the IEA’s “accelerated” scenario—where renewable power grows faster than the baseline because of policies and other measures not currently in place—the world will fall short of what is needed to limit global warming.
Temperatures have already risen by at least 1.1C since the late 1800s. Under the Paris Agreement, almost 200 countries have agreed to reduce emissions well below 2C and ideally to 1.5C.
According to the IEA, renewable energy growth will “significantly close the gap”, bringing total capacity to 2,950 GW by 2027. But that would still leave an 800 GW gap to reach net zero greenhouse gas emissions by 2050.
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