Renewable Energy Market Update June 2023
Executive Summary
The International Energy Agency (IEA) examines the full spectrum of energy issues, focusing on renewable energy technologies, electricity markets, energy efficiency, and more. This update covers the latest data and analysis on renewable power capacity additions globally and for major markets, with forecasts for 2023 and 2024.
Key Areas Examined
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Renewable Power Capacity Additions
- 2022 Data: Solar photovoltaic (PV) was the only technology to set a record for annual capacity additions.
- 2023 Forecast: Solar PV will dominate growth, with onshore wind additions rebounding to surpass the 2020 record.
- 2024 Forecast: Another record year for global capacity additions, driven primarily by solar PV.
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Impact of the Energy Crisis
- EU: The energy crisis has led to higher electricity prices, prompting increased investment in renewable energy. New PV and wind capacity is expected to save the European Union EUR 100 billion since the start of the energy crisis.
- Hydropower: Hydropower in Europe may recover in 2023 after a severe drought in 2022.
- Gas Displacement: Renewable energy use could displace gas consumption in EU buildings, particularly in 2023 and 2024.
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Global Markets
- China: China's contribution to global renewable capacity additions is expected to increase in 2023 and 2024 due to distributed solar PV and wind.
- India: Higher prices, lower auction volumes, and trade policies have weighed on short-term PV deployment, but large-scale PV manufacturing is emerging.
- US: The Inflation Reduction Act will likely have a significant impact on wind and PV deployment in the long term, though its effects will be seen in 2025.
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Policy and Market Dynamics
- Permitting Challenges: Permitting has become a key policy focus in Europe, with rapid distributed solar PV growth driving upward revisions in forecasts.
- Competitive Auctions: Participation in European auctions has been negatively affected by the energy crisis, while economic attractiveness and consumer demand are driving PPA growth in the United States.
- Market Forces vs. Policy: Market forces are increasingly driving the expansion of wind and solar PV plants in Europe, although policy responses to volatile wholesale prices and rising costs remain crucial.
Acknowledgements and Contributors
The report was prepared by the Renewable Energy Division within the Directorate of Energy Markets and Security. Key contributors include Yasmina Abdelilah, Heymi Bahar, Trevor Criswell, Piotr Bojek, François Briens, Jeremy Moorhouse, and Laura Mari Martinez. The report also benefited from contributions from other colleagues and external experts, including Keisuke Sadamori and others at the IEA.
Table of Contents
- Executive Summary
- Introduction
- Did All Renewable Electricity Technologies Break Deployment Records in 2022?
- Solar PV was the only technology to break a record for annual capacity additions.
- Wind power capacity additions decreased over the past two consecutive years.
- Will Renewable Electricity Capacity Additions Continue to Break New Records in 2023 and 2024?
- 2023: Solar PV will dominate growth, with onshore wind additions rebounding to break the 2020 record.
- 2024: Another record year for global capacity additions, led by solar PV.
- How Will the Energy Crisis Affect EU Renewable Energy Deployment in 2023 and 2024?
- Rapid distributed solar PV growth is the main reason for the upward forecast revision.
- Permitting challenges and limited participation in competitive auctions prevent faster growth of utility-scale wind and solar PV.
- How Are European Countries Addressing Permitting Challenges to Accelerate Renewable Energy Development?
- Permitting has become a key policy focus in Europe.
- How Much Less Money Is the European Union Spending on Expensive Electricity Thanks to Additional Renewable Energy Capacity?
- Reduced Russian natural gas supplies and multi-year lows in hydro and nuclear output led to an unprecedented increase in EU wholesale electricity spot prices.
- New PV and wind capacity is expected to save the EU EUR 100 billion since the start of the energy crisis.
- To What Extent Can Renewable Energy Use Displace Gas Consumption in EU Buildings in 2023 and 2024?
- Will China’s Role in Global Renewable Energy Deployment Decline in 2023 and 2024?
- China’s contribution to global renewable capacity additions is expected to increase in 202