The latest Renewables 2025 report from the International Energy Agency (IEA) forecasts that the world will add 4,600 gigawatts (GW) of renewable energy capacity by 2030. This amount is roughly equivalent to the total current power capacity of China, the European Union, and Japan combined, enabling a doubling of global renewable electricity generation.
Solar Dominates, Multiple Energy Sources Develop Synergistically
Solar PV is set to dominate global renewable capacity growth over the next five years, accounting for around 80% of the expansion, thanks to its low-cost advantage and faster permitting processes. Wind power ranks as the second-largest contributor to growth; despite facing short-term challenges, it is expected to achieve significant expansion as supply bottlenecks ease and project pipelines advance.
Hydropower, bioenergy, and geothermal power will continue to play important roles. Geothermal installations are expected to reach record highs in the United States, Japan, Indonesia, and several other emerging and developing economies. Meanwhile, increasingly severe grid integration challenges are reigniting interest in pumped-storage hydropower, whose growth rate in the next five years is projected to be nearly 80% faster than in the previous five-year period.
Markets Diverge, Emerging Nations Become New Growth Drivers
In emerging economies across Asia, the Middle East, and Africa, low costs and policy support are accelerating renewable energy growth, with a growing number of countries launching new auction programs and raising their deployment targets. India, in particular, is poised to become the world’s second-largest renewable energy market after China and is expected to comfortably meet its 2030 targets.
Conversely, renewable growth forecasts for the United States have been downgraded by nearly 50%, primarily due to policy changes including the premature cessation of tax incentives. In China, growth projections have also been trimmed, influenced by mechanisms affecting project revenues from feed-in tariffs. In contrast, India, Europe, and most emerging nations are seeing strong growth, with their prospects significantly raised due to new policies, expanded pipeline volumes, and accelerated permitting.
Strong Corporate Confidence, Supply Chain and Grid Challenges Persist
Corporate confidence in renewables remains strong, with most developers maintaining or even increasing their 2030 deployment targets. Power Purchase Agreements (PPAs), utility contracts, and merchant plants are becoming significant growth drivers, projected to account for 30% of global renewable capacity expansion by 2030 – doubling last year’s forecast.
However, supply chain security and grid integration remain prominent challenges. The global supply chain for solar PV and rare earth elements for wind turbines remains concentrated in China. Although countries are investing in diversifying supply chains, China’s share in key manufacturing segments is still projected to remain above 90% by 2030. As renewables rapidly expand, pressure on power systems is intensifying, with negative electricity prices already occurring in some regions. This underscores the urgent need for significant investment in grid upgrades, energy storage, and flexible generation. While some countries have launched new capacity and storage auctions to alleviate grid pressure, more work is needed.
Steady Penetration of Renewables in Transport and Heating
The role of renewable energy in transport and heating is set to increase modestly in the coming years. In transport, its share of energy use will rise from 4% currently to 6% by 2030, largely supported by renewable electricity for electric vehicles in China and Europe. Biofuels are also expected to see growth in markets like Brazil, Indonesia, and India. In the heating sector, renewables’ share of global thermal energy supply for buildings and industry is projected to increase from 14% to 18%.
