Achieving the target set at COP28 in Dubai last year of tripling renewable energy capacity by 2030 is contingent on global determination, policy support, and investment at scale, a report by the International Renewable Energy Agency (IRENA) has said.

In the World Energy Transitions Outlook presented at the Berlin Energy Transitions Dialogue, IRENA said that while evolving policies, geopolitical shifts, and declining costs have accelerated renewables expansion, there is a need for concerted efforts to triple the renewable power capacity.

Renewables Growth

IRENA is monitoring the progress towards the 11 terawatts (TW) of renewable power required by 2030. Renewable power additions saw unprecedented growth in 2023, accounting for 87% of newly installed capacity. The growth is still far from the target of an average of 1,100 GW of renewables capacity required to be deployed annually, which is nearly double the 2023 capacity (473 GW). Of the 473 GW deployed in 2023, 73% was from solar

Inadequate progress has been seen in the development of electric vehicles, electrolyzer capacity for green hydrogen production, and the scaling up of investments in renewables, grids, and flexibility.

The annual investments in renewable power generation must increase from $570 billion in 2023 to an average of $1,200 billion between 2024 and 2030, as per IRENA estimates.

New renewable capacity additions in 2023 were concentrated in China, the European Union (EU), and the United States, which together accounted for 83% of additions. In a new milestone, 85% of the new power capacity in China was from renewable sources.

“In the wake of the historic UAE Consensus on tripling renewables at COP28, these capacity additions – despite setting a new record – indicate that achieving the target is far from guaranteed. Our data confirms that progress continues to fall short, and the energy transition remains off track,” said Francesco La Camera, Director-General of IRENA.

Staggered investments

G20 nations have a vital role in meeting the 2030 goal as they must grow their renewable capacity from under 3 TW in 2022 to 9.4 TW by 2030.

Despite energy transition-related investments having reached a record high, the report noted that developing countries disproportionately received lower levels of investments. In 2023, renewable energy-related investments touched $2 trillion, but emerging markets and developing economies accounted for just over half of global investments. Even though it is the home to the highest share of energy-deprived populations, Sub-Saharan Africa received less than 1.5% of the global renewable investment.

Project developers from these countries are also burdened by high capital costs, as renewable energy projects in Brazil, India, Indonesia, Mexico, and South Africa had a weighted, post-tax average cost of capital of 3.6-7.2% in 2021-22. This is up to five times higher than in China or advanced economies.

Further, policy interventions and improved access to public finance can help alleviate the rising commodity and financing costs that have disproportionately impacted long-lead-time projects.

At the same time, fossil fuels received $1.3 trillion in subsidies in 2022, which is equivalent to the annual investment required in renewable generation capacity to achieve a threefold increase by 2030.

In comparison, 28 countries that made up the advanced economies received nearly five times more per capita investment than 154 emerging market and developing economies (China being the exception).

According to the report, multilateral finance mechanisms need to be altered to increase the flow of international public funds and low-cost finance.

Battery Storage

The report mentions that tripling of renewables capacity must be simultaneously accompanied by significant investments in battery storage systems, which is crucial to achieving flexible and resilient power systems.

Some major economies are promoting the deployment of battery storage through financial incentives, subsidies, targets, and funds for research and development. Pumped hydro storage is also a well-established, economically feasible, and validated technology; as of 2023, the global total installed pumped hydro storage capacity reached 140 GW.

By anticipating labor market disruptions, the report recommends the upskilling of new market entrants and allocating a greater share of resources and training.

IRENA said there is a need for accelerated investments in infrastructure and system operations such as power grids and storage, revised policies and regulations and measures to fortify supply chains, cultivate requisite skills, and substantial increases in investments, including public funds facilitated through international collaboration.

1.5 Degree Celsius Scenario  

In the 1.5 C scenario, renewables would account for 77% of the primary energy supply. As of 2023, their share stands at 34%. For this to increase, there is an urgent need for improved energy efficiency and structural and behavioral changes.

The report said that power demand would need to grow three-fold by 2050 through extensive electrification of end-use sectors, i.e., 37% supplied by solar and 36% provided by wind.

Installed renewable capacity by 2030 would need to expand nearly four times to set the world on course for the transition.

“A key requirement under IRENA’s 1.5 degree C scenario is that increased renewable energy use must be coupled with a corresponding decline in fossil fuel reliance. Both aspects are lagging,” the report claimed. This is almost equal to the influx of investment into the fossil fuel sector, with the planned new oil and gas capacity having increased by 13% in 2022. G20 countries alone provided a record $1.4 trillion in public funds in support of the sector that year.

At the COP28 summit last December, India refused to pledge to triple renewable capacity and phase down coal by 2030, citing the need for coal to meet burgeoning power demand.

Even as countries agreed to the tripled target, the summit settled for a milder transition away from fossil fuels instead of their ‘phase-out.’