Solar boom still understates technology's true potential: IEA

Renewables are set to contribute 80% of new global power generation capacity to 2030, with solar accounting for more than half of the projected expansion, the International Energy Agency said Oct. 24.

The scenario, based on stated policies, captured only a fraction of solar's potential, the IEA said in its annual World Energy Outlook report.

"By the end of the decade, the world is set to have manufacturing capacity for more than 1,200 GW of solar panels per year, but it is projected to actually deploy only 500 GW in 2030," it said.

If the world deployed 800 GW of new solar in 2030, it would lead to a further 20% reduction in coal-fired power generation in China, while electricity generation from coal and natural gas across Latin America, Africa, Southeast Asia and the Middle East would fall by 25%.

"The scope to make fuller use of solar manufacturing capacity represents an enormous opportunity to ... accelerate energy transitions," the IEA said.

While India, the US and Europe all planned to support domestic solar manufacturing, however, China's plans to add another 500 GW of solar module manufacturing capacity in the coming years meant it was likely to maintain its 80% share of the global market.

"We calculate that the IEA has upgraded the estimated renewables growth by 62% from last year's WEO," said climate think tank Ember.

IN 2022's World Energy Outlook the IEA estimated there would be 6,707 GW of renewable capacity worldwide by 2030 based on government targets -- an addition of 3,078 GW over the period.

This year the IEA sees governments planning 8,611 GW, an increase of 4,982 GW compared to 2022.

Bending the curve

While the potential to ramp up renewables was encouraging, the report said global temperatures were set to rise by around 2.4 C by the end of the century versus the Paris Agreement's target of "well below" 2 C.

Nevertheless solar, wind and EVs were beginning to "bend the curve" on global warming, together contributing a 6 billion mtCO2 cut in emissions in 2030 and keeping the door open on limiting warming to 1.5 C, it said.

The agency said key climate actions were "widely known and in most cases very cost effective."

In line with a recent pledge by G20 leaders, the IEA called for a tripling of renewable energy capacity and a doubling of energy efficiency improvements to 4%/year this decade.

Together this would provide over 80% of the emissions reductions needed by 2030 to get on track with a 1.5 C target.

"This package of global measures provides crucial ingredients for any successful outcome from the COP28 climate change conference in Dubai in December," it said.

For coal, the IEA said, global demand was now set to fall by 15% to 2030 under a stated policies scenario.

"This projected trend reflects declines in recent years of capacity additions of both coal-fired power and coal-fired iron and steel production – the two largest consumers of coal today – which account for 65% and 16% respectively of overall coal consumption," it said.

In China – the world's largest coal consumer – the impressive growth of renewables and nuclear alongside macroeconomic shifts pointed to a decrease in coal use by the mid-2020s.

LNG surge mid-decade

For natural gas, Russia's invasion of Ukraine had fueled Europe's efforts to diversify supply, boosting near-term prospects for LNG investment, but there was also a tangible shift away from gas amid "more upbeat" projections for renewables.

In all scenarios the IEA saw gas demand growth peaking by 2030, with both pipeline and LNG exhibiting little room for growth. While gas plant offered flexibility to power systems, gas demand in advanced economies was seen falling by 40% by 2050.

However, an unprecedented surge in new LNG projects coming online from 2025 would add more than 250 Bcm of new capacity by 2030, equivalent to around 45% of total global LNG supply today.

Bolstered capacity from the US and the Middle East could limit price rises and cool supply concerns, according to the IEA, while running the risk of supply gluts.

For Russia, this meant limited opportunities to expand its customer base. The country's share of internationally traded gas stood at 30% in 2021, but was seen falling to half of that by 2030.

"Buyers might instead be comfortable with a high reliance on spot markets; the crisis has revealed Europe's willingness to pay a premium for LNG and the market's ability to respond by sourcing the supplies necessary to fill storage and meet demand," the IEA said.