India set to become second-largest renewables growth market globally, says IEA

New Delhi: Renewable sources of electricity generation are continuing to grow strongly around the world, with India on course to become the second-largest renewables growth market globally, after China, and is expected to comfortably reach its ambitious target by 2030, the IEA’s medium-term forecast said on Tuesday.

Led by the rapid rise of solar PV, renewables’ expansion is taking place in a context of supply chain strains, grid integration challenges, financial pressures and policy shifts, and it is expected to more than double by 2030.

“Renewables 2025”, the IEA’s main annual report on the sector, sees global renewable power capacity increasing by 4,600 gigawatts (GW) by 2030 — roughly the equivalent of adding China, the European Union and Japan’s total power generation capacity combined.

Solar PV will account for around 80 per cent of the global increase in renewable power capacity over the next five years — driven by low costs and faster permitting timeframes — followed by wind, hydro, bioenergy and geothermal.

Geothermal installations are on course to hit historic highs in key markets, including the US, Japan, Indonesia and a host of emerging and developing economies.

Rising grid integration challenges are renewing interest in pumped-storage hydropower, whose growth is expected to be almost 80 per cent faster over the next five years compared with the previous five.

In emerging economies across Asia, the Middle East and Africa, cost competitiveness and stronger policy support are spurring faster growth of renewables, with many governments introducing new auction programmes and raising their targets.

At the company level, confidence in renewables remains strong. Most major developers have either maintained or raised their 2030 deployment targets compared with last year, reflecting resilience and optimism in the sector.

Offshore wind stands apart, however, with a weaker growth outlook — around a quarter lower than in last year’s report — resulting from policy changes in key markets, supply chain bottlenecks and rising costs.

“The growth in global renewable capacity in the coming years will be dominated by solar PV — but with wind, hydropower, bioenergy and geothermal all contributing, too,” said IEA Executive Director Fatih Birol.

“Solar PV is on course to account for some 80 per cent of the increase in the world’s renewable capacity over the next five years. In addition to growth in established markets, solar is set to surge in economies such as Saudi Arabia, Pakistan and several Southeast Asian countries. As renewables’ role in electricity systems rises in many countries, policymakers need to play close attention to supply chain security and grid integration challenges.”

The report’s outlook for global renewable capacity growth is revised downward slightly compared with last year, mainly due to policy changes in the US and in China.

The early phase-out of federal tax incentives, along with other regulatory changes in the US, lowered growth expectations for renewables in the US market by almost 50 per cent compared with last year’s forecast.

China’s shift from fixed tariffs to auctions is impacting project economics, resulting in a reduction in IEA’s forecast for renewables’ growth in the Chinese market. These adjustments are partly offset by buoyancy in other regions — particularly India, Europe, and most emerging and developing economies — where growth prospects have been revised upward due to ambitious new policies, expanded auction volumes, faster permitting and rising deployment of rooftop solar.

Corporate purchase power agreements, utility contracts and merchant plants are also a major driver, together accounting for 30 per cent of global renewable capacity expansion to 2030 — doubling their share compared with last year’s forecast. Solar PV is expected to dominate renewables’ growth between now and 2030, remaining the lowest-cost option for new generation in most countries, while wind power, despite its near-term challenges, is still set for considerable expansion as supply bottlenecks ease and projects move forward, notably in China, Europe and India. Hydropower and other renewable technologies will continue to play important roles in supporting electricity systems and enhancing flexibility.

Global supply chains for solar PV and rare earth elements used in wind turbines remain heavily concentrated in China, underscoring ongoing risks to supply chain security. While new investment to diversify supply chains is taking place in countries around the world, concentration in China for key production segments is set to remain above 90 per cent through 2030.

At the same time, the rapid rise of variable renewables is placing increasing pressure on electricity systems. Curtailment and negative price events are already appearing in more markets, signalling the need for urgent investment in grids, storage and flexible generation.

Several countries are beginning to respond with new capacity and storage auctions, but much more will be needed to ensure that variable renewables are integrated in a cost-efficient and secure way.

The role of renewables in transport and heating is expected to rise in the coming years, but only slightly. In the transport sector, their share of energy use is forecast to increase from four today to six per cent in 2030, driven mainly by renewable electricity for EVs in China and Europe, with biofuels adding growth in Brazil, Indonesia, India and other key markets.

Renewables’ share of energy used globally to provide heat for buildings and industry is set to increase from 14 to 18 per cent over the forecast period.

IANS