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In January, the International Energy Agency (IEA) released its annual Renewable Energy outlook for 2023, “Renewables 2023: Analysis and Forecasts to 2028” [1], noting that new green hydrogen renewable energy capacity is forecast to reach 45 gigawatts (GW) by the end of 2028, only 7% of what developers have announced. The report predicts that by the end of 2027, the installed capacity of hydrogen-related renewable energy will reach 50 GW. Even under the accelerated scenario, it is expected to reach 85 GW by the end of 2028. The report’s key findings are as follows:

1. In 2023, driven by China’s solar PV market, the growth of global renewable energy installed capacity will reach a new level. By 2023, global installed renewable energy capacity will increase by nearly 50% annually to nearly 510 gigawatts, the fastest rate of growth in the past 20 years. While Europe, the United States and Brazil are growing renewable capacity at record levels, the pace of growth in China is extraordinary.

Meeting the COP28 target of tripling global installed renewable energy capacity by 2030 depends on policy implementation. Ahead of the 28th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP28), the IEA urged governments to support five major actions by 2030, including the goal of tripling global installed renewable energy capacity.

3. By 2028, the global electricity mix will be transformed. In the next five years, the world will add more renewable energy capacity than it has installed since the first commercial renewable power plant was built more than 100 years ago. The study predicts that nearly 3,700 GW of new renewable energy capacity will come online between 2023 and 2028, driven by supportive policies in more than 130 countries.

4. China is a major renewable energy country in the world. By 2028, China is expected to account for nearly 60% of the world’s new installed renewable energy capacity. IEA forecasts show that China is on track to meet its national target of 2030 wind and solar PV installations by 2024, six years ahead of schedule.

5, the United States, the European Union, India and Brazil remain the bright spots for onshore wind and solar PV growth. Solar PV and onshore wind capacity installed in the US, EU, India and Brazil is expected to more than double by 2028 compared to the past five years. In the European Union and Brazil, rooftop solar PV is expected to grow faster than large power plants. In the United States, the Inflation Reduction Act has been a catalyst for the accelerated growth of renewable energy.

6. Solar PV prices have plummeted due to a growing oversupply. In 2023, the spot price of solar photovoltaic modules fell by nearly 50% year-on-year, and the production capacity reached three times that of 2021. Despite the unprecedented expansion of PV manufacturing in the US and India, driven by policy support, China is expected to maintain its 80-95% share of the global supply chain.

7. Onshore wind and solar photovoltaics are cheaper than both new and existing fossil fuel plants. By 2023, an estimated 96% of newly installed utility solar PV and onshore wind farms will generate electricity at a lower cost than new coal and gas plants. In addition, three-quarters of new wind and solar photovoltaic plants provide electricity cheaper than existing fossil fuel facilities. Over the visible forecast period, wind and solar PV systems will become more cost competitive.

8. The new macroeconomic environment presents further challenges for policymakers to address. In 2023, for the first time, financing new renewable energy capacity in advanced economies will face higher benchmark interest rates than the Chinese and global averages. Since 2022, central bank base rates in advanced economies have risen from less than 1% to nearly 5%. Until 2021, in emerging and developing economies, renewable energy developers face higher interest rates, leading to higher costs and impeding faster expansion of renewables.

9. Forecasts for wind capacity growth outside of China are not promising, especially for offshore wind. The wind industry in Europe and North America is facing challenges due to ongoing supply chain disruptions, higher costs and longer permit times. Offshore wind has been hit hardest by the new macroeconomic environment, with offshore wind expansion outside China revised down by 15 per cent to 2028.

10. The rapid deployment of variable renewable energy increases system integration and infrastructure challenges. In the main case studied in the report, the share of solar PV and wind power in global electricity generation is expected to double to 25% by 2028. While interconnection in EU countries will help integrate solar PV and wind power generation, grid bottlenecks will pose major challenges, with grid expansion unable to keep pace with the accelerated deployment of variable renewables, leading to increased curtailment in many countries.

11. The current hydrogen plan does not match its implementation. By 2028, China, Saudi Arabia and the United States will account for more than 75 percent of renewable hydrogen production capacity. Despite the announcement of new projects and transportation pipeline plans, progress on planned projects has been slow. Translating planned projects into final investment decisions has been slow due to a lack of offtakers and the impact of rising oil prices on production costs.

12. The deployment of biofuels is accelerating and diversifying further into renewable diesel and bio-jet fuels. Emerging economies, led by Brazil, dominate the global expansion of biofuels, which will grow 30 per cent faster than in the past five years. Supported by strong biofuel policies, growing transport fuel demand and abundant feedstock potential, emerging economies are expected to drive 70% of global biofuel demand growth over the forecast period. Brazil alone will account for 40% of the expansion of biofuels by 2028.

13. Combining biofuels with net zero emissions targets will require a significant acceleration in the pace of biofuel deployment. While the gap has narrowed by nearly 40 percent in the report’s main case, biofuel deployment is accelerating, but it is still not in line with the International Energy Agency’s expectation that biofuel demand will nearly triple by 2030.

14. Renewable heat has accelerated, driven by high energy prices and policy incentives, but not enough to curb emissions. Over the outlook period, global modern renewable heat consumption will expand by 40%, from 13% to 17% of total heat consumption. However, trends through 2028 are still largely insufficient to address the still-dominant use of fossil fuels for heating and put the world on track to meet the goals of the Paris Agreement. (Wang Liwei)