Disproportionate renewable growth puts spotlight on global financing inequalities

LONDON

Renewables across the world are expected to grow exponentially but also disproportionately, with the increase concentrated in just a handful of countries as developing and least developed countries lag behind in terms of access to financing.

Data from the latest International Energy Agency (IEA) report on renewables shows the world is on track to add more renewable capacity by 2028 than has been installed since the first commercial renewable energy power plant was built more than a century ago.

Global renewable energy capacity is forecast to increase by 3,700 gigawatts over the 2023-2028 period, reaching 7,300 gigawatts in the main case scenario.

Solar is expected to account for 75% of the growth in renewables, as the share of wind and solar in the forecast growth reaches 95%, driven by supportive policies and lower costs.

Around 42% of the increase in solar power is estimated to come online with rooftop solar plants as one of the fastest growing sectors.

According to IEA calculations, the share of renewables in the world’s electricity generation will reach 42% by 2028, up from its 29% share in 2022.

However, this exponential growth is disproportionate as 85% of the capacity increase is concentrated in only 31 out of the world’s over 200 countries, Heymi Bahar, senior analyst at the IEA, told Anadolu.

China accounts for 56% of the growth, followed by EU nations at 12%, US 9%, India 5%, and Brazil with 3%, he said.

These countries are home to around 3.8 billion people, almost half of the global population.

The remaining 15% of the growth in renewables is forecast to come online in about 175 countries around the world, a majority of them being developing and least developed nations.

“These countries have great potential in renewables and are in great need of decarbonization in ASEAN, Latin America, Eurasia and Africa. However, financing costs in these countries are very high compared to developed countries, almost eight times higher compared to China,” said Bahar.

As an example, he cited the fact that the Netherlands has more solar power capacity than the whole of Africa.

Developing countries need investment of $1.7 trillion in renewables per year, but received only $544 billion in 2022, according to the World Investment Report 2023 by the United Nations Conference on Trade and Development (UNCTAD).

The report called for the “de-risking of energy transition investment in developing countries through loans, guarantees, insurance treatments and equity participation” of public sector and multilateral development banks.

Lion’s share with China

If the world adds the expected 3,700 gigawatts by 2028, China will account for 46% of the total global renewables capacity.

The EU is estimated to account for 14%, US 10%, India 5% and Brazil 3% of the world’s renewable energy capacity.

The 31 countries will have 77% of the total clean energy power by 2028, while the remaining nations will account for 23%.

Bahar said the world can reach 9,130 gigawatts of renewables capacity by 2030 with current policies, short of the goal to triple renewables to 11,000 gigawatts by 2030.

That leaves the tripling gap at 1,870 gigawatts, he said.

At the COP28 UN Climate Conference, over 100 countries agreed to triple renewable energy capacity by 2030, but the world’s major renewable powers, China and India, were not on the list.

However, the countries did not provide much details on how they plan to achieve this goal.

“Addressing the challenge of financing renewables in developing countries is where the answer lies to the question of how the world will triple renewables by 2030,” said Bahar.

“Renewable deployments need to be distributed from 31 countries to 200 countries, and this is the biggest issue for reaching the tripling renewables target agreed at COP28 … It is very important which country will do what as part of this goal.”

As many emerging and developing countries rely primarily on hydropower in clean energy, solar and wind deployments need to grow significantly more than threefold by 2030 to meet the tripling goal, according to the IEA report.

Achieving this will require new policies tailored to the unique circumstances in emerging and developing nations, it added.

Türkiye’s renewable growth forecast

Türkiye is expected to see a growth of 34.8 gigawatts in renewables over the 2023-2028 period.

Solar and wind power account for 85% of this growth in Türkiye.

Distributed solar power capacity, including rooftop, is forecast to stand at 12.3 gigawatts out of the total growth.

Bahar noted that the IEA revised up by 15% its forecast for solar rooftop growth in Türkiye by 2028.

Earlier on Monday, Alparslan Bayraktar, Türkiye’s energy and natural resources minister, said the country’s installed electricity capacity last year increased by 2,858 megawatts, with 99.5% of the growth attributed to renewable energy sources.