US and China Trigger Sharp Fall in Global Renewable Power Outlook
The International Energy Agency (IEA) has recently revised down its global forecast for renewable power capacity growth by 2030 due to significant policy shifts in the United States and China. The new outlook projects that global renewable power capacity will increase by 4,600 gigawatts (GW) by 2030, which is 900 GW lower than the previous estimate from 2024. This downward revision highlights the substantial impact of geopolitical and regulatory changes in the world's two largest economies on the renewable energy sector.
Key Factors Behind the Revised Forecast
United States Policy Changes: The US forecast for renewable energy growth has been cut by nearly 50% compared to last year. The reduction is largely attributed to the early phase-out of federal tax incentives for renewable projects, import restrictions on renewable energy components, and suspension of new offshore wind leasing along with restrictions on permitting for onshore wind and solar projects on federal lands. These measures have created heightened uncertainty and slowed investment and project approvals in the US renewable energy sector.
China’s Market Reforms: China, despite being the biggest contributor to global renewable capacity growth—accounting for nearly 60%—has seen a downward revision of its forecast by 5%. The move to shift from fixed tariffs to auction-based pricing for wind and solar projects has affected project economics, making growth more uncertain and slightly slower than earlier anticipated. Nevertheless, China remains on track to meet its 2035 wind and solar capacity target approximately five years ahead of schedule.
Global Renewable Energy Trends
Solar photovoltaic (PV) technology continues to be the dominant driver of renewable installations worldwide, expected to account for about 80% of renewable capacity growth over the next five years.
The IEA projects that renewables will constitute nearly 45% of global electricity generation by 2030, becoming the largest source of electricity worldwide by late 2025 or mid-2026, surpassing coal.
Despite the slowdown due to geopolitical factors, global renewable capacity is expected to more than double by 2030 relative to 2022, but it will likely fall short of the COP28 summit goal to triple capacity by that time.
Positive outlooks remain for other regions like India, Europe, and many emerging economies, where supportive policies and faster permitting processes are boosting renewable investments. India's renewable capacity is expected to increase 2.5 times within five years, supported by rooftop solar and hydropower projects.
The Implications of Policy and Market Dynamics
The downward revisions underscore the critical role of stable and supportive policies in accelerating renewable energy deployment. The IEA emphasizes the need for countries to reduce permitting delays, minimize policy uncertainties, increase investment in grid infrastructure, and de-risk financing mechanisms to achieve higher renewable capacity growth. The disruptions in the US and China have ripple effects on global supply chains and investment flows, underscoring the interconnected nature of the renewable energy market.
Conclusion
While the renewable energy sector continues to grow rapidly and has achieved historic milestones like surpassing coal as the largest source of electricity generation, policy and regulatory developments in key markets like the US and China are posing new challenges. These factors have led to a sharper fall in the global outlook for renewable power capacity expansion, recalibrating expectations for 2030. However, robust growth in other major economies like India and Europe provides some optimism for the global clean energy transition.