In a warming world, the transition from fossil fuels to renewable energy is heating up. Global capacity for renewable power generation is expanding more quickly than at any time in the last thirty years, according to the International Energy Agency (IEA). The agency predicts that by 2025, renewable energy will surpass coal to become the world’s top source of electricity. Wind and solar photovoltaic (PV) power generation are forecast to exceed nuclear power generation in 2025 and 2026, respectively. And by 2028, 68 countries will boast renewables as their main source of power.
The acceleration in clean, renewable energy power generation comes not a moment too soon for policymakers and advocates concerned with climate change caused by greenhouse gas emissions.
Policies driving development
At 2023’s United Nation’s Climate Change Conference (COP28), governments set a goal to triple global renewables power capacity by 2030. This will ideally help advance decarbonization, mitigate climate change and achieve net-zero emissions, according to the IEA.
To develop renewable energy technology, governments are turning to various public policy measures. The European Union’s Green Deal Industrial Plan, India’s Production Linked Incentives (PLI) and the Inflation Reduction Act (IRA) in the US are all policies designed to further stimulate the integration of sustainable energy. Supportive economic policies in China have accelerated onshore wind and solar photovoltaic energy projects there, helping the country surpass national 2030 targets years ahead of schedule. (This is crucial to the goal of tripling worldwide renewables as China accounts for almost 60% of all new global renewable energy capacity expected to come online by 2028.) In addition, evolving regulations on corporate environmental, social and governance (ESG) initiatives around the world are increasing demand for renewable energy in the private sector, encouraging further growth.
Renewable energy growth by type
Broad policy measures notwithstanding, policy support often varies depending on the type of renewable energy in question. Let’s take a closer look at several types of renewable energy resources and the trends taking shape in each category.
Solar power
In 2023, solar photovoltaic energy made up three-quarters of renewable capacity additions around the world, according to the IEA. Capacity growth stemmed from both utility-scale plants and consumer adoption of distributed PV systems—on-site solar power generation at homes and businesses—accounted for the other half.
Continued policy support from governments around the world remains the primary driver of this growth. For example, some policymakers incentivize renewable power generation by individuals and businesses through net-metering programs that allow utility customers to send excess energy generated back to their utilities for credits. Other incentives encouraging the production and use of solar power include feed-in-tariffs, tax credits and auctions in which solar power providers compete on energy market price to win contracts.
The expansion of the solar PV supply chain is enabling the manufacturing necessary to meet the demands of the growing industry. More manufacturing capacity in the US, India and the EU is expected to help diversify the solar PV supply chain, but China continues to dominate the space. (The country was home to 95% of new solar technology manufacturing facilities in 2022.) And advancements in solar photovoltaic technology are producing lighter, less expensive, more efficient solar panels that will continue to increase generation capacity over time.
Based on the IEA’s Net Zero Emissions by 2050 Scenario (NZE), if current growth rates are maintained through 2030, solar PV is “on track” to meet annual generation capacity of approximately 8,300 terawatt hours (TWh) by the end of the decade. In addition, solar PV is expected to be the dominant source of energy in the production of low-emissions or green hydrogen. Low-emissions hydrogen (in contrast to hydrogen produced with fossil fuel power) can potentially drive greater decarbonization efforts in businesses ranging from steelmaking to ammonia production, where hydrogen is used for industrial purposes.
Wind power
As with solar power, public policies have been key to driving wind energy expansion, but growth projections vary by region. China saw a 66% increase in wind power capacity in 2023 and is on track for more additions in the coming years. Project development, however, has been slower than initially expected in Europe and North America. Offshore wind projects have been especially vulnerable: In 2023, in the US and UK alone, developers canceled offshore projects with total capacity of 15 gigawatts (GW).
Recent public policies may help support the industry during this challenging period. In 2023, the European Union announced its Wind Power Action Plan, with measures to improve permitting, auction processes and financing access as well as expand workforce training. In the same year, nine European countries announced plans to increase offshore wind power capacity to over 120 GW by 2030 and over 300 GW by 2050. Meanwhile, in the US, the government is investing in the development of floating wind farms. The deployment of floating wind farms with a capacity of 15 GW is expected by 2035.
For wind power to meet the goals of the IEA’s NZE, average annual growth would need to reach or surpass 17% per year until 2030.
Hydropower
Currently, hydropower generates more power—reaching 4,300 TWh in 2022— than all other clean energy sources combined and will remain the largest source through 2030, according to the IEA. Despite small but steady growth and proven reliability, new hydropower additions are forecast to decrease 23% over the next decade due to development slowdowns in Europe, China and Latin America.
Over the past 20 years, energy industry focus has shifted from hydropower, with most countries focusing policies and incentives on expanding solar and wind power. Today, less than 30 countries offer policies to support new hydropower development and refurbishment of existing plants versus over 100 countries with policies to support wind and solar PV.
To meet the NZE Scenario, hydropower would need to grow at an annual rate of at least 4%.
Biofuel
Global biofuel expansion is underway, thanks largely to supportive government policies in emerging economies such as Brazil, India and Indonesia. Demand is largely driven by the transportation sector in those countries, while supply is enabled by the availability of biomass feedstock. Brazil leads the way in biofuel expansion, accounting for a projected 40% of growth by 2028.
Biofuel expansion is more limited in the EU, US, Canada and Japan due in part to high costs and the growing popularity of electric vehicles. The main areas of growth for biofuels in these countries are the renewable diesel and biojet fuel segments. Overall, biofuels such as bioethanol and biodiesel, in combination with electric vehicles (EVs), have the potential to offset the oil equivalent of four million barrels by 2028. Such milestones notwithstanding, the IEA predicts that biofuel expansion will still fall short of 2030 NZE goals.
Biogas: While the growth of the biogas industry began in the 1990s, the last two years have seen an increase in policy support for the natural gas alternative. Currently, almost half of all global biogas production comes from Europe, with 20% of that from Germany alone.
Historically, biogas has been used at heat and power plants. More recently, however, governments have encouraged industrial and transportation uses for biomethane, a biogas which, as its name suggests, contains a substantial concentration of methane. With 13 countries implementing strong new policies supporting biogas since 2022, the IEA projects that biogas production growth will accelerate through 2028.
Geothermal energy
Technological developments are creating opportunities to bring geothermal energy to more places. For example, through Enhanced Geothermal Energy Systems, fluid is injected underground in areas without naturally occurring hot water sources. The fluid heats up underground and then is pumped to the surface, where it generates electricity. Various geothermal projects are planned or underway around the word, including in North America, Europe and Asia.
Such advancements notwithstanding, advocates for geothermal energy say policies are needed to take advantage of its untapped potential. The capital-intensive nature and financing costs of geothermal projects can be prohibitive. The evolution of economies of scale and continued technological advancements could help drive down costs, but for now, the IEA forecasts that only about 1% of renewable energy will be sourced from geothermal energy production by 2030.23
Technology to support evolving renewable energy
As more renewable energy is added to energy systems, technology will play a crucial role in keeping the energy supply flowing while ensuring energy security and the stability of power grids.
Because renewable energy sources, especially wind and solar, are vulnerable to environmental conditions, ensuring optimal production and distribution is crucial to providing a stable, resilient power supply. Renewables forecasting is rapidly becoming an important tool in the energy transition. For example, solutions such as the IBM Renewables Forecasting Platform within the IBM Environmental Intelligence Suite can provide day-ahead wind and solar forecasts with 92% accuracy.
Better storage will also help make power systems more resilient. Solar, wind and hydropower all require energy storage systems (ESS) to provide a consistent energy supply. As grid-scale battery technology evolves, utility companies will be able to store electricity long-term to better manage load during periods of low- or non-production. For instance, flow batteries are a low-cost and scalable form of long-term grid-scale energy storage currently being developed.
From batteries to solar arrays, effective asset management is an important component in supporting a clean energy transition; intelligent asset management and predictive maintenance can monitor asset health and prolong its lifespan. For instance, the New York Power Authority (NYPA) is streamlining its asset management with the IBM Maximo® Application Suite. The goal is to digitalize the state’s energy infrastructure and transform it into a clean, reliable, resilient and affordable system over the next decade.
Expand your sustainability journey and make the most of your energy investments by connecting your strategic roadmap with day-to-day operations.
Explore the IBM Environmental Intelligence Suite for Energy and Utilities and see the IBM Maximo Application Suite for Energy and Utilities.
Get started with ESG and your sustainability journey
Was this article helpful?
YesNo
![Bitcoin [BTC], Gold, S&P 500 and a case of the widening correlation](https://www.blocpress.com/wp-content/uploads/2023/03/chart-1905225_1920-1000x600-120x86.jpg)
