IEA reduces renewables forecast as US policy changes and China auction reforms weigh

The International Energy Agency cut its forecast of renewable power growth in 2030 by 900 Gigawatts compared to last year, citing weaker prospects for the United States and China. Solar power, however, continues to lead record additions.

The data shows that the global renewable power capacity will now rise by 4,600GW by 2030, down from the forecast of 5,500GW in 2024. Solar accounts for about 80%.

The IEA's U.S. Growth Expectations have been lowered by almost half, largely due to the early phase out of federal tax incentives in the U.S. and other regulatory changes. China's move from fixed tariffs towards competitive auctions has also impacted project economics.

The downgrade has been partially offset by better outlooks elsewhere. India will become the world's second largest growth market, after China, and is well on its way to reaching its 2030 target. This is due to expanded auctions and faster permits, as well as a rooftop solar surge.

The report stated that Europe's prospects had also improved due to ambitious policies, increased auction volumes, and streamlined approvals. Many emerging economies in Asia, the Middle East, and Africa have accelerated their build-outs because costs are falling and targets are increasing.

The agency's growth forecast for offshore wind is about a quarter less than it was last year, due to policy changes, supply-chain bottlenecks, and higher costs.

The growth of pumped-storage is expected to be 80% higher over the next 5 years than the previous 5, as grid integration challenges increase and geothermal installation are on course to reach historic highs in emerging markets such as the United States, Japan and Indonesia.

Fatih Birol, IEA's Executive Director, said that solar would dominate the growth of global renewable capacity over the next few years. He urged policymakers to address grid constraints and supply-chain security.

The agency warned of the high concentration in China's solar and rare earth supply chains, which will remain at 90% or more through 2030. (Reporting and editing by Matthew Lewis in Paris, Forrest Crellin)

(source: Reuters)