The International Energy Agency (IEA) has released a new recent market report update regarding the outlook for renewable energy in 2023 and 2024.
Global renewable capacity additions are set to soar by 107 GW to more than 440 GW in 2023 – the largest absolute increase ever, according to IEA’s report. Solar will remain the primary driver of global renewable capacity expansion in 2023, accounting for 65% of growth or 286 GW, with distributed generation applications accounting for almost half of the expansion.
“Lower module prices, greater distributed PV system uptake and a policy push for large-scale deployment trigger higher annual additions in all major markets including China, the European Union, the United States, and India,” said the IEA.
However, the IEA said that capacity additions will decrease in Brazil from 2023 to 2024, due to Law 14.300 entering into force in early 2022, altering remuneration rates for the distributed generation market. Nevertheless, the IEA revised its forecast for renewable capacity additions for 2023 and 2024 upwards by 38% compared to its predictions in December 2021.
“In the European Union, residential and commercial solar PV systems account for 74% of the increase to our forecast, with the majority (82%) of the rise coming from six key markets: Germany, Spain, the Netherlands, France, Italy, and Sweden,” it added.
The rationale behind the two main trends driving the revised forecast is the increasingly attractive business case for self-consumption since January 2021 and the market conditions driven influenced by Russia’s invasion of Ukraine, according to the IEA.
The agency said that it raised its forecast for large-scale renewable energy growth, but not as much lesser extent as expected due to difficulties with permits, unsold auctions, and extended development timelines.
Competitive auctions are expected to remain the primary mechanism for procuring renewable energy in Europe, representing at least 65% of new renewable capacity additions expected to come from this method between 2022 and 2024.
“Almost half of this growth will be from auctions for two-way fixed contracts for difference, led by Poland, the United Kingdom, France, Italy, and Spain,” said the IEA.
Power purchase agreements (PPAs) and merchant plants are predicted to contribute around 22% to Europe's capacity expansion until 2024. Corporate PPAs, particularly in Spain, Sweden, Germany, the Netherlands, and Denmark, will be responsible account for a significant portion of unused projects.
Additionally, the United Kingdom, Italy, and Poland are likely to see the IEA suggest that there may be the emergence of some unsubsidized projects, IEA said. in the United Kingdom, Italy, and Poland.
