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Renewables

Energy system overview
More efforts needed
Renewables

About this report

Renewables play a critical role in clean energy transitions. They are responsible for over one-third of the CO2 emission reductions between 2020 and 2030 under the Net Zero Emissions by 2050 Scenario. The deployment of renewables in the power, heat and transport sectors is one of the main enablers of keeping the rise in average global temperatures below 1.5°C. Modern bioenergy is the largest source of renewable energy globally, with a 55% share of global production in 2021. Bioenergy is discussed separately, and this page is dedicated to the other renewable technologies.  

Recent progress has been promising, and initial estimates suggest that 2022 is a record year for renewable capacity additions, with annual capacity expected to amount to about 340 GW. Key policies announced this year, especially REPowerEU and the US Inflation Reduction Act, will lend further support to accelerate renewable electricity deployment in the coming years. 

Still, solar, wind, hydro, geothermal and ocean energy use needs to expand significantly faster to get on track with the Net Zero Scenario. These sources need to increase their share of total energy supply from just over 5% today to approximately 17% by 2030. To achieve this, annual renewable energy use (not including bioenergy) has to increase at an average rate of about 13% during 2022-2030, twice as much as over 2019-2021. 

CO2 emissions

Renewables, in particular wind and solar technologies, are responsible for one of the largest shares of global CO2 emission reductions between 2020 and 2030 in the Net Zero Scenario. Renewable energy technology deployment allows the mitigation of investment in new fossil fuel power generation plants and the displacement of generation from existing coal, gas and oil plants.  

Energy

In 2021 renewable energy supply from solar, wind, hydro, geothermal and ocean  rose by close to 7%. However, the share of these technologies in the total global energy supply increased by just 0.1 percentage points, reaching 5.2%. Modern bioenergy's share reached 6.7% in 2021 after a similar, modest increase. The slow growth of renewables’ share was due to the world experiencing its highest absolute increase in global energy demand in history, as economic activity rebounded after the Covid-19-related slowdown.

Renewables share of total energy supply in the Net Zero Scenario, 2010-2030

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The supply of renewable energy needs to continue expanding by about 13% annually over 2022-2030 to align with the Net Zero Scenario. Despite record renewable power capacity additions, supply growth was still significantly below the milestone level in 2021. Much faster deployment of all renewable technologies in all regions of the world will be needed to put the world on track with the Net Zero Scenario. 

Technology deployment

Electricity generation from renewables accounts for about 40% of the total renewable energy supply. For non-bioenergy sources, this share is as high as 80% with the remainder in the form of heat produced in solar and geothermal installations. Wind accounted for about half of 2021’s record growth in renewable electricity generation of 522 TWh, while solar PV represented one-third. In contrast, hydropower generation decreased in 2021 by about 0.4%, the first decline in 20 years, due to droughts in key markets. Electricity and heat generation growth in geothermal, concentrated solar power (CSP) and ocean technologies remained stalled in 2021 due to limited capacity additions.  

Renewable energy supply by technology in the Net Zero Scenario, 2010-2030

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Solar PV has been the fastest growing technology by capacity additions in recent years; however, even the record 150 GW added in 2021 is just one-third of the average annual additions during 2022-2030 under the Net Zero Scenario. In the case of wind, average annual installations need to be close to double those seen in 2021, while for hydropower and bioenergy, growth needs to be about double the average of the last five years. Overall, much greater endeavours are needed to put these mainstream technologies firmly on the Net Zero Scenario trajectory, while CSP, geothermal and ocean power are still well below the growth rates necessary to get on track with the scenario milestones.  

Policy

Renewable power is a subject to policy support and national targets in the majority of countries around the world. Various types of support have been implemented, including technology-specific measures. The following important changes have been implemented in 2021-2022: 

  • China published its 14th Five-Year Plan in June 2022, which includes an ambitious target of 33% of electricity generation to come from renewables by 2025 (up from about 29% in 2021) and, for the first time, a target for renewable heat use. 
  • In August 2022 the federal government of the United States introduced the Inflation Reduction Act, a law significantly expanding support for renewable energy in the next 10 years through tax credits and other measures.
  • In July 2021 the European Commission proposed increasing the bloc’s renewable energy target for 2030 from 32% to 40%. The proposed target was further increased by the REPowerEU Plan to 45% in May 2022 (which would require 1 236 GW of total installed renewable capacity). Many European countries have already expanded their renewables support mechanisms in order to accelerate renewable power and heat use with a view to the 2030 targets and in response to the energy crisis resulting from Russia’s invasion of Ukraine.  
  • During COP26, held in November 2021 in Glasgow, India announced new targets for 2030, comprising 500 GW of total non-fossil generating capacity and a 50% renewable electricity generation share (more than double the 22% share in 2020), as well as net zero emissions by 2070.


Recommendations for policy makers

For all renewable power and heat technologies, long-term target and policy stability is essential to ensure investor confidence and continued growth. At the same time, policies need to adapt continuously to changing market conditions to achieve greater cost-competitiveness and improve the integration of renewables into the energy system. 

Achieving a high penetration of renewable power and heat technologies is a necessary condition to decarbonise many carbon-intensive sectors of the economy, including heavy industry, construction and transport. The expansion of green hydrogen use, emissions-free heating in buildings and electric vehicles requires an integrated approach, connecting the utilisation of all renewable energy technologies. Policy makers should focus on implementing long-term plans for whole-economy decarbonisation and implement incentives reflecting the requirements of all economic sectors.  

Policy instruments used to support renewable power include administratively set feed-in tariffs or premiums, renewable portfolio standards, quotas and tradeable green certificate schemes, net metering, tax rebates and capital grants. Recently, auctions for the centralised competitive procurement of renewables have become increasingly widespread and have been instrumental in discovering renewable energy prices and containing policy costs in many countries, especially for solar PV and wind. However, the success of such policies in achieving deployment and development objectives relies on their design and consequent ability to attract investment and competition. 

Increasingly competitive, renewables – especially solar PV and wind – are rapidly transforming power systems worldwide. However, reforms to power market design and policy frameworks will be needed to ensure investment at scale both in new renewable capacity and in power system flexibility to integrate high shares of variable renewables in a reliable and cost-effective manner. The share of variable renewable energy increases, policies ensuring investment in all forms of flexibility become crucial. Solutions include enhancing power plant flexibility, unlocking demand-side management, supporting energy storage and improving grid infrastructure. 

Some renewable technologies are still relatively expensive and/or face specific technology and market challenges, so they require more targeted policies. Better remuneration of the market value of storage is necessary to accelerate deployment of CSP, pumped-hydro storage and reservoir hydropower technologies. Timely grid connection and continued implementation of policies that spur competition are needed to achieve further cost reductions in offshore wind. Improving the competitiveness of renewable heating technologies through support policies is necessary to accelerate their deployment.  

Lengthy and complicated permitting processes are hampering deployment of new renewable capacity, especially in Europe. Due to complicated requirements, responsibility split between multiple government agencies and understaffing, the development of renewable energy projects can take up to 10 years. Establishing one-stop shops, providing clear guidance for developers and increasing support of public agencies in site identification should be considered by policy makers to remove the permitting bottlenecks. 

Analysis