To stay on track for a 1.5°C pathway, an annual deployment of approximately 1,000 GW of renewable power is necessary, according to a recent report by the International Renewable Energy Agency (IRENA).

In 2022, only around 300 GW of renewable energy capacity was installed worldwide, accounting for 83% of the new capacity.

In its ‘World Energy Transitions Outlook 2023: 1.5°C Pathway’ report, IRENA emphasizes that both the quantity and proportion of renewable energy must increase significantly.

While there were record renewable power capacity additions in 2022, the year also saw the highest levels of fossil fuel subsidies, as many governments sought to cushion the blow of high energy prices for consumers and businesses.

Global investments across all energy transition technologies reached a record high of $ 1.3 trillion in 2022, yet fossil fuel capital investments were almost twice those of renewable energy investments.

With renewables and energy efficiency best placed to meet climate commitments and energy security and affordability objectives, governments must redouble their efforts to ensure investments are on the right track.

The report highlights a list of barriers to achieving a successful energy transition, which are listed below:

• Insufficient infrastructure: Inadequate energy storage and grid integration infrastructure hinder the connection of renewable energy to markets.
• Readiness of distribution infrastructure: The existing infrastructure for electricity, gases, and fuels is often unprepared to accommodate the transition to renewables.
• Unpreparedness of end-use sectors: Many facilities and industries are not ready to switch to renewable energy sources, posing a challenge to their adoption.
• Fossil fuel-oriented policies: Policy and regulatory frameworks still largely revolve around fossil fuels, which limits the progress of renewable energy initiatives. Inadequate public funding further hampers the energy transition.
• Lack of integrated planning: Insufficient attention to coordinated planning between energy production and consumption leads to inefficiencies and suboptimal outcomes.
• Socio-economic dimension: The socio-economic aspects of the transition receive inadequate consideration, including the lack of industrial policies to support viable supply chains.
• Misalignments in job transitions: The shift from fossil fuel industries to renewable energy may result in job losses that are not adequately matched by job gains in the renewable sector, leading to skills gaps and employment challenges.
• Skills gaps and limited opportunities: Inadequate education and training opportunities, particularly for women, youth, and minorities, contribute to skills gaps. Reskilling and upskilling needs are often unmet, and there is a lack of awareness regarding renewable energy opportunities.
• Job quality issues: Concerns related to wages, occupational health and safety, and overall workplace conditions can affect the attractiveness and stability of renewable energy jobs.

Need for a Considerable Increase in Investments

The report suggests a cumulative $150 trillion is required to realize the 1.5°C target by 2050, averaging over $5 trillion annually. Although global investment across all energy transition technologies reached a record high of $1.3 trillion in 2022, the annual investment must more than quadruple to remain on the 1.5°C pathway.

IRENA highlights that the challenge behind the lack of investments in the renewable energy sector is that investment remains concentrated in a limited number of countries and is focused on only a few technologies.

Investment in renewable energy (including power and end-uses) reached $0.5 trillion in 2022; however, this is around one-third of the average investment needed yearly in renewables under the 1.5°C Scenario.

Also, 85% of global renewable energy investment benefitted less than 50% of the world’s population, and Africa accounted for only 1% of additional capacity in 2022.

Investments in off-grid renewable energy solutions in 2021 amounted to $5 million – far below the $15 billion needed annually to 2030.

While many technology choices exist, most investments were in solar photovoltaic and wind power, with 95% channeled toward these technologies.

The report recommends that greater volumes of funding need to flow to other energy transition technologies such as biofuels, hydropower, and geothermal energy, as well as to sectors beyond the power that have lower shares of renewables in total final energy consumption (e.g., heating and transport).

Approximately 75% of global investment in renewables from 2013 to 2020 came from the private sector. However, private capital tends to flow to the technologies and countries with the least associated risks, whether real or perceived.

In 2020, 83% of commitments in solar photovoltaic came from private finance. In contrast, geothermal and hydropower relied primarily on public finance – only 32% and 3% of investments in these technologies came from private investors in 2020.

The report suggests stronger public sector intervention is required to channel investments towards countries and technologies more equitably. Public finance and policy should crowd in private capital, but greater geographical and technological diversity of investment requires targeted and scaled-up public contributions.

For many years, policy has focused on mobilizing private capital. According to IRENA, public funding is urgently needed to invest in basic energy infrastructure in the developing world, as well as to drive deployment in less mature technologies (especially in the end uses such as heating and transport or synthetic fuel production) and in areas where private investors seldom venture.

The power sector has seen good progress in installed renewable capacity and generation. Renewables represented 83% of capacity additions, and installed power generation capacity reached 40% globally in 2022, with the addition of 295 GW of renewables, the largest-ever annual increase in renewable energy capacity.

The strong business case for renewables, combined with policy support, has sustained an upward trend in its share of the global energy mix.

However, overall deployment remains centered on a few countries and regions, with China, the European Union, and the United States accounting for 75% of capacity additions.

Installation Targets

Under IRENA’s 1.5°C Scenario, global installed solar capacity needs to increase nearly eight-fold by 2030, surpassing 5,400 GW, and expand to over 18,200 GW by 2050.

To achieve these targets, annual solar capacity additions must increase from 191 GW in 2022 to an average of 615 GW by 2050. The G20 countries are expected to dominate the global solar photovoltaic market, growing seven-fold by 2030 and twenty-fold by 2050. This expansion would require a net average annual capacity addition of almost 450 GW from 2023 to 2050.

According to IRENA, wind energy will become one of the largest sources of electricity globally, with installed capacity expanding to almost 10,300 GW by 2050.

Over the past decade, an average of 55 GW of wind capacity was added annually, reaching 75 GW in 2022. To meet the targets, onshore wind capacity must expand significantly, with nearly 280 GW of annual capacity deployment on average to reach 3,040 GW by 2030 and about 7,820 GW by 2050. G20 countries and China, the United States, Canada, Brazil, and many European countries possess high onshore wind potential and will be expected to deliver on these targets.

Offshore wind also presents immense opportunities, with global installed capacity reaching almost 500 GW by 2030 and approximately 2,500 GW by 2050 under the 1.5°C Scenario. Meeting these targets requires a substantial increase in annual capacity additions, with G20 countries accounting for the largest shares. China, the EU-27, the United States, and India are expected to contribute significantly, comprising over 60% of the market by 2030.

Battery storage is crucial in offering flexibility to the power system, with a projected capacity of almost 360 TW by 2030 and 4,100 GW by 2050. Two-thirds of this capacity would be found in the G20 countries. While pumped hydro remains an essential source of short- and long-term system flexibility, long-term hydrogen storage is expected to have limited applications due to lower efficiency, primarily reserved for scenarios with scarce alternatives.

In March, IRENA stated that the lack of adequate progress in the global energy transition would require even more investment, and a systematic change in the volume and type of investments is necessary to prioritize the transition.

Last November, IRENA said at the U.N. Climate Change Conference COP27  that the collective effort to switch to renewables and make the energy transition is not enough despite the Glasglow Climate Pact.