Renewable energies such as solar photovoltaic power and wind are on track to meet about half of the world’s electricity demand by 2030. Yet renewable fuels are falling behind. That is the conclusion of the latest Renewable Energy Market Report from the International Energy Agency, the energy arm of the Organisation for Economic Co operation and Development. The OECD group calls for targeted political support for green fuels if net zero emissions in the energy sector by 2050 are to become a credible goal.
The agency defines renewable fuels as a basket of products that includes fuels produced from organic matter like used oil or waste, but also synthetic fuels derived from carbon dioxide, renewable hydrogen or biogas. These products are projected to remain under 6 percent of total energy demand in 2030. As a result, if the aim is to reach net zero emissions in the energy sector by 2050, the adoption of renewable fuels must almost double by 2030.
In current market conditions, growth is forecast at just around 20 percent. The main barriers cited include a high cost structure that pushes prices higher than those of fossil alternatives. The IEA recommends governments close the price gap with fossil fuels, spur innovation, build resilient supply chains, implement sustainability criteria, and phase out fossil fuel subsidies.
By contrast, electricity generation from renewables such as wind and solar is expected to expand rapidly. Global capacity for solar and wind is set to grow by more than 5,500 gigawatts between 2024 and 2030, nearly triple the growth seen in the previous six years. To grasp the scale, the added capacity would roughly equal the current energy capacities of China, the European Union, India, and the United States combined. This expansion would push nearly half of all electricity to come from renewables by 2030, with solar and wind contributing about 30 percent of total generation.
Nevertheless, the agency stresses that governments must step up efforts to safely integrate these energy sources into power systems through grid flexibility measures, faster permitting, and the construction of extensive transmission networks and storage capacity by 2030.
Fabrication solar and wind
Another major challenge for the sector in the coming months is manufacturing capacity. In solar energy, manufacturers are trimming investment plans amid oversupply and record prices. Capacity is expected to exceed 1,100 gigawatts by the end of 2024, but this is more than double the projected demand.
Small manufacturers face elevated risk as demand does not keep pace with supply. The report estimates that about 17 percent of global polysilicon capacity and 10 percent of wafer manufacturing capacity could be vulnerable due to aging facilities and production processes.
In wind turbine manufacturing, bottlenecks in the supply chain are anticipated to persist through 2030. Global onshore wind capacity could reach about 145 gigawatts, barely surpassing the amount needed by 2030. Offshore wind faces even sharper bottlenecks, potentially delaying deployment across European Union member states.
Beyond price, auctions are beginning to value additional criteria. Nonprice factors such as sustainability, supply chain reliability, and system integration are increasingly considered. In the first half of 2024, nearly 60 percent of global capacity awarded through auctions included nonprice criteria, twice the share of five years earlier. While this approach may raise short term prices, it supports system optimization and broader socio economic aims at the national level, including in Canada and the United States where grid reliability and domestic industry development are priorities.