Despite global renewable power capacity reaching a record 536 GW in 2023, geopolitical conflicts, protectionism, and rising greenhouse gas emissions continue to pose significant risks for the energy transition, according to the Renewables 2024 Global Status Report published by REN21.

In 2023, the global investment in renewable power reached a record $622.5 billion, an 8.1% increase from the previous year​​. Wind and solar power have been at the forefront of this growth. Solar added 407 GW of new capacity, while wind power contributed 117 GW​​. Growth was driven by solar investment in China, significant additions in India and the U.S., and the EU’s push for offshore wind development.

Solar

In 2023, a record 407 GW of solar photovoltaic (PV) capacity was installed globally, bringing the total installed capacity to 1.58 TW. Low manufacturing costs, increased consumer demand, and policy incentives drove this growth. China led with 235 GW installed, accounting for 58% of the global total, followed by the US and India.

Source: REN21

China led the world in new solar PV installations, contributing 235 GW, which accounted for 58% of the global total. This massive addition brought China’s cumulative solar PV capacity to at least 662 GW, representing 42% of the global total. The country’s solar PV capacity grew by a record-breaking 60% in 2023, more than doubling the previous five-year average growth rate of 26%.

The U.S. also saw significant growth in solar PV capacity in 2023, with 33.2 GW added, marking a 57% increase from 2022. This brought the country’s total installed capacity to 177 GW. The surge in installations was attributed mainly to the 2022 Inflation Reduction Act, which provided financial incentives for renewable energy projects of all scales.

In 2023, solar PV generation in the US reached 235 GWh, contributing 5.6% to the overall energy mix.

In India, solar installations dropped 44.1% in the calendar year 2023, , according to Mercom India’s Q4 & Annual 2023 India Solar Market Update. Large-scale solar installations saw a year-over-year drop of 50.8%.

Wind

In 2023, the world witnessed a remarkable addition of 117 GW of wind power capacity, marking a 12.8% increase and bringing the total operational capacity to approximately 1,021 GW.

Source: REN21

China’s wind power capacity saw a significant boost in 2023, doubling the previous year’s installations to exceed 75.6 GW. This included 69.3 GW of onshore and 6.3 GW of offshore capacity, making China responsible for 65% of the global wind power market, up from 48.5% in 2022.

The U.S. maintained its position as the second-largest market for wind power additions and cumulative capacity, adding 6.9 GW (net 6.6 GW) in 2023, bringing the total to 150.9 GW, almost entirely onshore.

According to the report, India climbed three spots to fifth place for new wind capacity additions in 2023, surpassing Germany. The country added 2.8 GW of wind power, a 52% increase from the previous year, bringing its cumulative capacity to 44.7 GW, all onshore. This was the strongest year for additions since India transitioned from a feed-in tariff system to reverse auctions in 2017. However, the focus on minimizing costs continued to strain investors and the domestic supply chain. Wind energy contributed approximately 4.8% to India’s total annual electricity generation.

Investments

Solar and wind power continued to dominate new investments in renewables in 2023. Solar accounted for 63% of the total investment, while wind power represented 35%, closely mirroring their shares from 2022. Solar investment grew by 12.5% to reach $392.7 billion, indicating a much slower growth rate than in 2021 (39%) and 2022 (44%). Nearly half of this investment occurred in China.

Wind power investment increased by 2.3% to $216.6 billion, a slowdown from the more robust growth seen in 2021 (11%) and 2022 (7%). However, investment in offshore wind power surged by 79% to $76.7 billion, offsetting a 17% decline in onshore wind power investment. China, the U.S., and the UK together accounted for 66.5% of global wind power investment in 2023.

Source: REN21

Despite these advancements, the overall impact of reducing fossil fuel use has been limited. The incremental additions of renewable capacity have primarily addressed the increasing energy demand, leaving fossil fuel consumption largely unchanged.

Rising Energy Demand

According to the report, the relentless rise in global energy demand is one of the most significant challenges to the energy transition. From 2011 to 2021, the global energy demand increased by 39 exajoules, highlighting the enormity of the task.

Unfortunately, the growth in demand has been predominantly met by fossil fuels and traditional biomass, which accounted for 53% of the increase, while modern renewables contributed only 45%​​. This dynamic has maintained the world’s reliance on conventional energy sources, undermining efforts to reduce greenhouse gas emissions.

Source: REN21

Electricity now constitutes 23% of the global energy supply, up from 19% a decade ago, reflecting a broader shift towards electrification in various sectors​​. Despite this increase, the renewable share of electricity has risen only modestly, from 29.4% in 2022 to 30.3% in 2023. This slight increase primarily covered the growing electricity demand rather than significantly reducing fossil fuel dependence​​.

Regional Disparities

A significant barrier to a uniform global energy transition is the disparity in renewable energy investments across different regions. In 2023, China led global renewable energy investments, accounting for 44% of the total, followed by Europe at 20.9% and the U.S. at 15%​​. In stark contrast, Africa and the Middle East collectively accounted for just 3.6% of global renewable energy investments​​.

According to an International Energy Agency report, investment in fossil fuels continues to remain significant. Upstream oil and gas investment in 2024 is projected to return to 2017 levels, with Middle Eastern and Asian companies representing a significantly larger portion of this total.

Stagnation in Renewable Heat and Fuels

According to the report, the renewable heat sector has seen significantly slower progress than the electricity sector. From 2011 to 2021, the share of modern renewables in global heat supply increased only marginally from 8.9% to 11.6%​​. Modern bioenergy remains the primary source of renewable heat, accounting for 7.9%, while solar thermal and geothermal direct heat each contributed 1.4%​​. The rest is supplied by renewable electricity.

Similarly, the fuels sector has not seen the necessary advancements. Biofuels, nearly the sole renewable fuel source, have had limited growth. Although renewable hydrogen holds significant potential, its current impact is minimal. In 2023, the global capacity of electrolysis plants, essential for producing hydrogen from renewable electricity, grew to around 1.1 GW from 700 MW in 2022. However, more than 99% of hydrogen production is still based on fossil fuels​​.

Investment in Renewables Manufacturing

According to the report, investment in global manufacturing of renewable energy and enabling technologies surged by 70% in 2023, reaching nearly $200 billion. Solar and battery manufacturing installations dominated this growth, accounting for 95% of the total investment.

China contributed to three-quarters of the global investment in renewable and enabling technologies, down from 85% in 2022, due to significant increases in investments in the U.S. and Europe, particularly in battery manufacturing.

Investments in other clean energy technologies, including wind, heat pumps, and electrolyzers, represented a much smaller share, comprising around 7% in 2022 and dropping to 4% in 2023.

Investment in wind energy manufacturing, such as nacelle, blade, and tower production facilities, slightly declined in absolute terms in 2023, with China accounting for nearly all the investment in wind manufacturing facilities.

For electrolyzer and heat pump manufacturing, the EU and the U.S. collectively accounted for a larger share of the investment than China, with virtually no investments in these manufacturing technologies occurring elsewhere during the year.

The Path Forward

Energy transition requires more coordinated global efforts, according to the report. There is an urgent need for increased investments in renewable technologies and a more equitable distribution of resources to ensure that all regions can participate in and benefit from the energy transition. Robust policy measures and international cooperation will be crucial in overcoming economic and geopolitical barriers.

Innovations in bioenergy, solar thermal, geothermal, and renewable hydrogen technologies must be accelerated. Moreover, the global community must focus on reducing the cost of capital and creating favorable investment conditions in developing countries to enable a more balanced and inclusive energy transition.

According to IEA, the lack of adequate progress in the global energy transition will require even more investment, and a systematic change in the volume and type of investments is necessary to prioritize the transition. The agency found that global investment in energy transition technologies must quadruple to over $5 trillion annually to stay on the 1.5°C pathway.