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1、Renewable Energy Market UpdateOutlook for 2023 and 2024The IEA examines the full spectrum of energy issues including oil,gas and coal supply and demand,renewable energy technologies,electricity markets,energy efficiency,access to energy,demand side management and much more.Through its work,the IEA a
2、dvocates policies that will enhance the reliability,affordability and sustainability of energy in its 31 member countries,11 association countries and beyond.Please note that this publication is subject to specific restrictions that limit its use and distribution.The terms and conditions are availab
3、le online at www.iea.org/t&c/This publication and any map included herein are without prejudice to the status of or sovereignty over any territory,to the delimitation of international frontiers and boundaries and to the name of any territory,city or area.Source:IEA.All rights reserved.International
4、Energy Agency Website:www.iea.orgIEA member countries:Australia Austria Belgium CanadaCzech Republic Denmark EstoniaFinland France Germany Greece HungaryIreland ItalyJapanKoreaLithuania Luxembourg Mexico Netherlands New Zealand NorwayPoland Portugal Slovak Republic Spain Sweden Switzerland Republic
5、of TrkiyeUnited Kingdom United StatesThe European Commission also participates in the work of the IEAIEA association countries:INTERNATIONAL ENERGYAGENCYArgentinaBrazilChinaEgyptIndiaIndonesiaMoroccoSingaporeSouth AfricaThailandUkraineRenewable Energy Market Update June 2023 PAGE|3 I EA.CC BY 4.0.Ab
6、stract The key areas examined by the report include the latest data and analysis on renewable power capacity additions in 2022 globally and for major markets as well as forecasts for 2023 and 2024.The update will look at key topics for renewables this year and next,including how the energy crisis wi
7、ll affect their deployment in the EU,their impact on energy affordability,and the latest trends in the United States,China and India.It will also explore the implications of developments affecting major technologies like solar,wind and biofuels including market dynamics,financing,energy security pri
8、orities,manufacturing and power system integration.The report provides the IEAs latest assessment of the state of play in renewables markets since the publication of our Renewables 2022 report in December.In exploring the most recent market and policy developments as of April 2022,our Renewable Ener
9、gy Market Update forecasts new global renewable power capacity additions and biofuel demand for 2023 and 2024.It also discusses key uncertainties and policy-related implications that may affect projections for 2024 and beyond.Renewable Energy Market Update June 2023 PAGE|4 I EA.CC BY 4.0.Acknowledge
10、ments,contributors and credits This study was prepared by the Renewable Energy Division in the Directorate of Energy Markets and Security.It was designed and directed by Heymi Bahar,Senior Analyst.The report benefited from analysis,drafting and input from multiple colleagues.The lead authors of the
11、report were,Yasmina Abdelilah,Heymi Bahar,Trevor Criswell,Piotr Bojek,Franois Briens,Jeremy Moorhouse and Laura Mari Martinez,who was also responsible for data management.The report also benefited from analysis and drafting from Kazuhiro Kurumi and Kartik Veerakumar.Paolo Frankl,Head of the Renewabl
12、e Energy Division,provided strategic guidance and input to this work.Valuable comments,feedback and guidance were provided by other senior management and numerous other colleagues within the IEA,in particular,Keisuke Sadamori.The authors would also like to thank Kristine Douaud for skilfully editing
13、 the manuscript and the IEA Communication and Digital Office,in particular Poeli Bojorquez,Jon Custer,Astrid Dumond,Jad Mouawad,Barbara Moure,Jethro Mullen,Isabelle Nonain-Semelin,Julie Puech,Robert Stone,Clara Vallois,Lucile Wall and Therese Walsh for their assistance.In addition,Ivo Letra from the
14、 Office of Management and Administration supported data management.Renewable Energy Market Update June 2023 PAGE|5 I EA.CC BY 4.0.Table of contents Executive summary.8 Introduction.13 Did all renewable electricity technologies break deployment records in 2022?.16 Solar PV was the only technology to
15、break a record for annual capacity additions.16 Wind power capacity additions decreased the past two consecutive years.17 Will renewable electricity capacity additions continue to break new records in 2023 and 2024?.18 2023:Solar PV dominates growth,and onshore wind additions rebound to break the 20
16、20 record.18 2024:Another record year for global capacity additions,led by solar PV.19 How will the energy crisis affect EU renewable energy deployment in 2023 and 2024?21 Rapid distributed solar PV growth is the main reason for the upwards forecast revision.21 Permitting challenges and limited part
17、icipation in competitive auctions prevent faster growth of utility-scale wind and solar PV.23 How are European countries addressing permitting challenges to accelerate renewable energy development?.24 Permitting has finally become a key policy focus in Europe.24 How much less money is the European U
18、nion spending on expensive electricity thanks to additional renewable energy capacity?.28 Reduced Russian natural gas supplies and multi-year lows in hydro and nuclear output led to an unparalleled increase in the EU wholesale electricity spot price.29 New PV and wind capacity is expected to provide
19、 savings of EUR 100 billion since the beginning of the energy crisis.30 Will hydropower in Europe recover in 2023 following a severe drought last year?.32 To what extent can renewable energy use displace gas consumption in EU buildings in 2023 and 2024?.34 Will Chinas role in global renewable energy
20、 deployment decline in 2023 and 2024?.37 Chinas contribution to global renewable capacity additions is expected to increase in 2023 and 2024 thanks to distributed solar PV and wind.37 Chinas increasing solar PV and wind manufacturing capabilities will maintain a strong domestic demand.38 Will the US
21、 inflation Reduction Act impact wind and PV deployment in the short term?.40 Trade and supply chain concerns led to lower capacity additions in 2022,but wind and PV expansion will accelerate this year.40 The Inflation Reduction Acts impact on renewable energy technology deployment will become eviden
22、t in 2025.41 Renewable Energy Market Update June 2023 PAGE|6 I EA.CC BY 4.0.Will Indias renewable energy deployment boom in 2023 and 2024?.42 Higher prices,lower auction volumes and trade policies weigh on short-term PV deployment.42 Large-scale PV manufacturing is emerging,but it creates short-term
23、 demand and supply mismatches.43 Are competitive renewable energy auctions increasingly undersubscribed?.45 The energy crisis has negatively affected participation in European auctions.45 Will market forces now drive the expansion of wind and solar PV plants,or is policy still key?.48 Economic attra
24、ctiveness and consumer demand drive PPA growth in the United States.49 Competitive auctions drive European growth in 2023-2024,but the pace will depend on policy responses to volatile wholesale prices and rising costs.50 Is the renewable energy industrys financial health improving?.53 Multiple chall
25、enges have tested the financial health of renewable energy companies since 2019.53 A bright future for the financial health of the renewable energy industry is on the horizon,but it requires governments and the industry to tackle multiple challenges.55 Will solar PV and wind costs finally begin to f
26、all again in 2023 and 2024?.57 Do higher shares of wind and solar PV generation always imply more curtailment?.60 The importance of grid intrastructure.61 Policy and system planning.62 Market design and operation.62 How are higher shares of wind and solar PV challenging power systems?.64 Will global
27、 solar PV and wind technology manufacturing capacity be adequate to meet Net Zero demand in 2030?.66 With PV manufacturing capacity to more than double by 2024,the industry is rushing headlong into a supply glut.66 Announced new PV manufacturing in India,the United States and Europe reaches 30 GW fo
28、r polysilicon and 100 GW for module assembly,with signs of diversification emerging.66 China leads sluggish growth in wind equipment manufacturing as Western equipment suppliers struggle financially.68 Where were governments able to rely on biofuels to secure energy supplies during the 2022 energy c
29、risis?.70 Some markets increased biofuel production to mitigate high prices and address supply concerns.71 but overall biofuel demand growth declined by 40%during the energy crisis.71 Will energy security concerns drive biofuel growth in 2023-2024?.73 Emerging markets to lead growth in 2023-2024.73
30、Renewable diesel growth remains strong in advanced economies,but overall biofuel demand expansion will not accelerate by 2024.74 Will we see lower biofuel prices in 2023-2024?.77 Advanced biofuel imports drive down biodiesel costs in Europe.78 Renewable diesel growth supports higher vegetable oil pr
31、ices in the United States.78 Renewable Energy Market Update June 2023 PAGE|7 I EA.CC BY 4.0.High Brazilian sugar and soybean production supports domestic and international demand increases.79 What are governments and companies doing to avoid a supply crunch,and is it enough?.81 The feedstock supply
32、crunch.81 Government policies and market reactions are encouraging the largest-ever expansion in new biofuel technologies.82 More efforts are needed to expand feedstock supplies.83 General annex.84 Abbreviations and acronyms.84 Units of measure.85 Renewable Energy Market Update June 2023 PAGE|8 I EA
33、.CC BY 4.0.Executive summary Led by solar PV,renewable power growth is surging driven by the global energy crisis and policy momentum Global renewable capacity additions are set to soar by 107 gigawatts(GW),the largest absolute increase ever,to more than 440 GW in 2023.This is equivalent of more tha
34、n the entire installed power capacity of Germany and Spain combined.This unprecedented growth is being driven by expanding policy support,growing energy security concerns and improving competitiveness against fossil fuel alternatives.These factors are outweighing rising interest rates,higher investm
35、ent costs and persistent supply chain challenges.Solar PV capacity,including both large utility-scale and small distributed systems,accounts for two-thirds of this years projected increase in global renewable capacity.In response to higher electricity prices caused by the global energy crisis,policy
36、 makers in many countries,particularly in Europe,have actively sought alternatives to imported fossil fuels that can improve energy security.This shifting focus created a favourable environment for solar PV,especially for residential and commercial systems that can be rapidly installed to meet growi
37、ng demand for renewable energy.These smaller distributed PV applications are on track to account for half of this years overall deployment of solar PV larger than the total deployment of onshore wind over the same period.Following two consecutive years of decline,onshore wind capacity additions are
38、on course to rebound by 70%in 2023 to 107 GW,an all-time record amount.This is mainly due to the commissioning of delayed projects in China following last years Covid-19 restrictions.Faster expansion is also expected in Europe and the United States as a result of supply chain challenges pushing proj
39、ect commissioning from 2022 into 2023.On the other hand,offshore wind growth is not expected to match the record expansion it achieved two years ago due to the low volume of projects under construction outside of China.Solar PV additions will continue to increase in 2024 while challenges remain for
40、wind expansion.Declining module prices,greater uptake of distributed solar PV systems and a policy push for large-scale deployment are driving higher annual solar additions in all major markets including China,the European Union,the United States and India.In contrast,without rapid policy implementa
41、tion,global onshore wind additions in 2024 are expected to fall by around 5%from 2023 levels.While Chinas wind energy additions will continue to increase in 2024,they are set to be more than offset by undersubscription of auctions and pending permitting delays in Europe.The situation in Europe is ex
42、pected to improve once Renewable Energy Market Update June 2023 PAGE|9 I EA.CC BY 4.0.new legislation is implemented.Overall,cumulative world renewable capacity is forecast to reach over 4 500 GW at the end of 2024,equal to the total power capacity of China and the United States combined.Global rene
43、wable capacity additions could reach 550 GW in 2024 in our accelerated case,almost 20%higher than in the main forecast.This is mainly due to a more rapid deployment of residential and commercial PV installations,assuming a faster implementation of recent policies and incentives.The upside for utilit
44、y-scale onshore wind and solar PV projects mostly depends on the pace of permitting,construction and timely grid connection of projects under development.Renewables are at the forefront of Europes response to the energy crisis The crisis triggered by Russias invasion of Ukraine has accelerated renew
45、able energy deployment in the European Union,driving the bloc to urgently reduce its dependence on Russian natural gas imports.Policy actions in many European countries has led us to revise our forecast for renewable capacity additions in the EU in 2023 and 2024 upwards by 40%compared with before th
46、e war.Rapid growth in distributed solar PV is the main reason for the more positive outlook,accounting for almost three-quarters of the EU forecast revisions.This is driven by high electricity prices that make solar PV more financially attractive and by increasing policy support in key EU markets,es
47、pecially in Germany,Italy and the Netherlands.European countries introduced more policy and regulatory changes to ease permitting in the last 18 months than over the entire previous decade.While permitting has become a key policy focus in Europe to accelerate the deployment of large-scale wind and s
48、olar PV and early benefits are starting to be visible,the proposed policy changes are expected to have limited impact on the deployment of renewables in 2023 and 2024 compared with other drivers,such as installations of small-scale residential and commercial solar PV.EU electricity consumers are set
49、 to save an estimated EUR 100 billion during the 2021-2023 period thanks to newly installed solar PV and wind capacity.Accelerating renewable energy deployment in Europe since 2021 has mitigated the economic impact of the energy crisis.Low-cost wind and solar PV are on course to displace an estimate
50、d 230 terawatt-hours(TWh)of expensive fossil fuel generation over the 2021-2023 period,helping to reduce wholesale electricity prices in all European markets.Without these capacity additions,the average wholesale price of electricity in the EU in 2022 would have been 8%higher,hurting consumers,busin
51、esses and government budgets.Renewable Energy Market Update June 2023 PAGE|10 I EA.CC BY 4.0.Renewables could help Europe displace more natural gas for heating buildings next winter.Last year was the second warmest winter on record in Europe,which helped the EU use less gas for heating buildings.Pro
52、jected growth of renewable energy such as clean electricity,bioenergy boilers,heat pumps,and solar thermal and geothermal technologies could displace almost 8 bcm of EU buildings-related gas consumption annually in 2023 and more than 17 bcm in 2024.This would represent a significant contribution to
53、cover increasing gas demand,should harsher winters and hotter summers occur over the course of 2023-2024.China is poised to outpace the rest of the world in renewable capacity installations in 2023 and 2024 Chinas contribution to global renewable capacity additions is expected to increase in 2023 an
54、d 2024,consolidating its position as the undisputed leader in global deployment.In 2022,China accounted for almost half of all new renewable power capacity worldwide.By 2024,the countrys share is set to have expanded to a record 55%of global annual renewable capacity deployment.By 2024,China will de
55、liver almost 70%of all new offshore wind projects globally,as well as over 60%of onshore wind and 50%of solar PV projects.In the United States,capacity additions will rebound this year after a difficult 2022.The US markets for wind and solar PV contracted last year due to restrictive trade measures
56、and supply chain constraints,but annual additions for both technologies are set to increase by around 40%in 2023,with solar PV setting a new record.The current forecast is underpinned by existing tax incentives,while the Inflation Reduction Act will show its full effect after 2024,providing unpreced
57、ented certainty for renewable energy projects until 2032.Indias renewable capacity additions are expected to increase again in 2023 and 2024,owing to faster onshore wind,hydropower and distributed solar PV deployment.However,utility-scale solar PV projects,Indias largest renewable electricity growth
58、 segment,are expected to slow briefly this year due to supply chain challenges,lower auction volumes and trade policies.While large-scale PV manufacturing is emerging in India,import tariffs are causing short-term demand and supply mismatches.Competitiveness of wind and solar PV has improved,but pol
59、icies need to adapt to changing market conditions Electricity generation costs from new onshore wind and solar PV plants are projected to decline by 2024 but will likely remain 10-15%above their pre-Covid levels in most markets outside China.Regardless,solar PV and onshore wind remain the lowest cos
60、t options for new electricity generation in most countries.Future power contracts for the end of 2023 and into 2024 in the Renewable Energy Market Update June 2023 PAGE|11 I EA.CC BY 4.0.European Union,the United States,Japan,Australia and India indicate wholesale power prices two to three times abo
61、ve 2020 averages.Today,wind and solar PV plants can provide electricity at prices 30-50%lower than those of future power contracts in most key markets,increasing renewables attractiveness for investors.Policy uncertainties and volatile prices left one-sixth of renewable energy auction volumes unallo
62、cated in 2022.Competitive renewable energy auctions resulted in the awarding of a record-breaking 100 GW of capacity.However,20 GW remained unallocated,the highest ever level with Europe accounting for two-thirds of it.Government auction designs need to take into account recent inflation,interest ra
63、te rises and turbulence in commodity prices and to envisage dynamic indexation methods to attract investments.Market-driven procurement is expected to contribute to approximately one-fifth of solar PV and wind capacity expansion in 2023 and 2024,driven by corporate power purchase agreements.The Unit
64、ed States leads expansion in corporate power purchasing agreements,followed by Brazil,Australia,Spain and Sweden.These agreements are motivated by the economic attractiveness of renewables,by the opportunity to hedge against rising and volatile power prices,and by sustainability goals.The financial
65、health of renewable energy value chains is critical for the industrys sustainable growth.Despite challenges from volatile commodity prices,higher interest rates,supply chain constraints and trade measures,the renewable energy industry has shown financial resilience overall.However,there is significa
66、nt variation across sectors and countries.The solar PV manufacturing sector has a positive outlook with increasing capacity additions,but potential supply gluts and declining prices may reduce company profit margins.Western wind manufacturers face challenges from high commodity prices,as well as per
67、mitting and auction designs that do not reflect changing financing environments.While the energy crisis has also hurt the profitability of some specific electricity utilities,these companies overall are maintaining their role as large investors in renewables.Global manufacturing capacity of solar PV
68、 is projected to reach nearly 1 000 GW in 2024,sufficient to meet annual demand in the IEAs Net Zero Emissions by 2050 Scenario.In contrast,wind equipment manufacturing is expanding more slowly and may struggle to keep up with demand growth through 2030.While China will continue to dominate global m
69、anufacturing capacity for solar PV,announcements of solar PV manufacturing projects in the United States and India have doubled since December,indicating that supply chains are diversifying in the medium term.The rapid expansion of wind and solar PV needs to be accompanied by policies and market rul
70、es supporting grid infrastructure and flexibility Renewable Energy Market Update June 2023 PAGE|12 I EA.CC BY 4.0.investments.An increasing amount of electricity generation from wind and solar PV is being curtailed in many markets,particularly where grid infrastructure and system planning lag behind
71、 deployment of these variable renewables.However,curtailed generation remains relatively low,ranging from 1.5%to 4%in most large renewable energy markets.Multiple countries in Europe including Spain,Germany and Ireland will see their annual share of wind and solar PV reach over 40%by 2024,which will
72、 require effective grid management to hold back rising curtailment rates.Biofuels have supported energy security during the recent crisis but are facing challenges of their own Biofuels avoided the consumption of 2 million barrels of oil equivalent per day(mboe/d)in 2022,equivalent to 4%of global tr
73、ansport sector oil demand.Argentina,India and Indonesia all accelerated biofuel use in 2022.However,while biofuels offered energy security benefits,their prices climbed more quickly than those of gasoline and diesel in many countries.To mitigate increases in transport fuel costs,Brazil,Sweden and Fi
74、nland delayed planned increases to biofuel blending obligations in 2022.Biofuel prices are set to decline in 2023 and 2024 while remaining well above pre-Ukraine war levels.Biofuel prices have declined in all major markets from their peaks in 2022.In the first four months of 2023,ethanol prices decl
75、ined 7%-16%from their 2022 average and biodiesel prices dropped 15%-28%across different markets.While below 2022 peaks,prices for major biofuel feedstocks such as corn,sugar and vegetable oils are expected to remain above pre-war price levels,keeping biofuel prices at historically high levels throug
76、h 2024.Biofuel demand is to expand by 11%by 2024,supported by existing policies targeting energy security objectives.Only Indonesia and Brazil are accelerating deployment by 2024.In advanced economies,new policies are not likely to influence production until after 2024 as high prices,feedstock conce
77、rns and technical constraints limit additional growth potential.Renewable Energy Market Update June 2023 PAGE|13 I EA.CC BY 4.0.Introduction The IEA created the Renewable Energy Market Update in March 2020 to evaluate the short-term impact of the unprecedented Covid-19 crisis on renewable energy.As
78、part of the IEAs Renewables Market Report Series,this update concentrates on short-term deployment trends rather than offering a comprehensive five-year forecast for electricity,transport and heat developments.The 2020 and 2021 assessments focused on renewable energy market implications of the Covid
79、-19 pandemic in an increasingly challenging economic environment.In 2022,the Russian Federations(hereafter“Russia”)invasion of Ukraine sent shockwaves through energy and agriculture markets,resulting in the worlds most serious energy crisis to date.Last years edition of this report therefore provide
80、d an early assessment of possible short-term impacts of the war on renewable energy capacity additions and biofuel demand.This year,with geopolitical tensions,a fragile global economy and high energy prices persisting,policy makers and investors as well as industry and civil society members involved
81、 in renewable energy have more questions than answers concerning recent developments.This years Renewable Energy Market Update has thus been redesigned to address 21 key questions that focus on the renewable energy outlook for 2023 and 2024.Despite the global energy crisis,renewable electricity capa
82、city additions broke another record in 2022,prompting us to ask:1.Did all renewable electricity technologies break deployment records in 2022?The answer is no,but this leads naturally to a more pertinent question concerning the short-term outlook:2.Will renewable electricity capacity additions conti
83、nue to break new records in 2023 and 2024?The global energy crisis that followed Russias invasion of Ukraine hit Europes energy systems hard due to their dependence on Russian natural gas imports.This report attempts to answer four questions concerning Europes changing policies and market developmen
84、ts,and their implications for renewable energy in 2023 and 2024:3.How will the energy crisis affect EU renewable energy deployment in 2023 and 2024?4.How much less money is the European Union spending on expensive electricity thanks to additional renewable energy capacity?5.Will hydropower in Europe
85、 recover in 2023?Renewable Energy Market Update June 2023 PAGE|14 I EA.CC BY 4.0.6.How are European countries addressing permitting challenges to accelerate renewable energy development?7.To what extent can renewable energy use displace gas consumption in EU buildings in 2023 and 2024?While the Euro
86、pean Union is accelerating deployment to address energy security concerns,the Peoples Republic of China(hereafter“China”)remains the worlds largest renewable energy market for all renewable energy technologies.The countrys share in global capacity additions depends on policy changes and market condi
87、tions,impacting the global outlook.This reports seventh question is therefore:8.Will Chinas share in global renewable energy deployment decline in 2023 and 2024?In the United States,the Inflation Reduction Act(IRA)has introduced unprecedented policy uncertainty for wind and solar PV developers,beggi
88、ng the question:9.How will the US Inflation Reduction Act impact wind and PV deployment in the short term?Meanwhile,in India,considerable supply chain challenges stemming from the Covid-19 crisis have affected renewable energy development,causing us to wonder:10.Will Indias renewable energy deployme
89、nt boom in 2023 and 2024?The global energy crisis has placed energy and supply chain security at the heart of global policy discussions.Although enlarging renewable energy use could tackle multiple policy challenges at the same time including those related to energy security,climate change and affor
90、dability deployment could be deterred by supply chain challenges,high prices and elevated interest rates.The next four questions therefore address emerging policy and regulatory hurdles and ongoing macroeconomic challenges:11.Are competitive renewable energy auctions increasingly undersubscribed?12.
91、Will market forces now drive the expansion of wind and solar PV plants,or is policy still key?13.Is the renewable energy industrys financial health improving?14.Will solar PV and wind costs finally begin to fall again in 2023 and 2024?While more favourable policies and market conditions can accelera
92、te renewable capacity deployment,system integration and grid expansion implications are bound to arise.Our next two questions therefore address the threats of rising curtailment rates and slow grid expansion,which could impede project application:15.Do higher shares of wind and solar PV generation a
93、lways imply more curtailment?Renewable Energy Market Update June 2023 PAGE|15 I EA.CC BY 4.0.16.How are higher shares of wind and solar PV challenging power systems?Demand for solar PV panels and wind turbines will grow drastically over the next decade to meet the IEA Net Zero Emissions by 2050 Scen
94、ario targets.The race to acquire the capacity to meet this demand is therefore ongoing and clean energy technology manufacturing is expanding rapidly,but we have to wonder:17.Will global solar PV and wind technology manufacturing capacity be adequate to meet Net Zero demand in 2030?Even though elect
95、ricity remains at the core of global energy discussions,the transport sector registers greater final energy consumption than the electricity sector.Because the energy crisis has also affected biofuel supply,demand and prices worldwide,our final section of questions relates to the impact of biofuels
96、on energy security:18.Where were governments able to rely on biofuels to secure energy supplies during the 2022 energy crisis?19.Will energy security concerns drive biofuel growth in 2023-2024?20.Will we see lower biofuel prices in 2023-2024?21.What are governments and companies doing to avoid a sup
97、ply crunch,and is it enough?Renewable Energy Market Update June 2023 PAGE|16 I EA.CC BY 4.0.Did all renewable electricity technologies break deployment records in 2022?Solar PV was the only technology to break a record for annual capacity additions Overall renewable energy capacity additions rose by
98、 almost 13%to nearly 340 GW in 2022.However,solar PV was the only technology that broke a deployment record last year,with net additions of nearly 220 GW a 35%increase from 2021.Expansions in China and the European Union alone accounted for over 85%of the growth in annual PV capacity additions.Annua
99、l PV growth rose in all major markets last year except the United States,where it shrank almost 15%due to supply chain challenges and rising costs.After solar PV,hydropower was the next-largest contributor to record-level renewable energy expansion globally,owing to the commissioning of multiple lar
100、ge projects,mostly in Asia.While global hydropower capacity additions did not break any records,they were the highest they have been since 2016 thanks to continuous expansion in China.Renewable electricity net annual capacity additions,2017-2022 IEA.CC BY 4.0.0 50 100 150 200 250 300 350 40020162017
101、20021Decline Increase2022GWOthersHydropowerWindSolar PVAll renewablesRenewable Energy Market Update June 2023 PAGE|17 I EA.CC BY 4.0.Wind power capacity additions decreased the past two consecutive years Annual wind capacity additions fell 21%from 2021 to 2022,declining for the second yea
102、r in a row following record-level expansion in 2020,when developers in China were rushing to complete projects before subsidies from the central government ended that year.In 2022,Covid-related restrictions delayed the commissioning of multiple wind projects in China,resulting in a drop in annual ad
103、ditions.Like in China,capacity additions in the US market declined for the second consecutive year because of policy uncertainty ahead of promulgation of the Inflation Reduction Act(IRA)and supply chain constraints leading to project delays.In the European Union,however,wind capacity growth was much
104、 stronger thanks to rapid expansion in Germany with the commissioning of previously auctioned capacity,and in Spain owing to its large corporate PPA market.Global additions of bioenergy production for power generation also declined in 2022 due to the phaseout of subsidies in China,the worlds largest
105、 market.For geothermal and concentrated solar power(CSP)technologies,global annual market growth remained small but stable because policy support is concentrated in just a few countries.Renewable Energy Market Update June 2023 PAGE|18 I EA.CC BY 4.0.Will renewable electricity capacity additions cont
106、inue to break new records in 2023 and 2024?The deployment of new renewable electricity installations is expected to break records in both 2023 and 2024 thanks to strong and continuous policy support as well as high electricity prices,which will increase the economic attractiveness of distributed PV
107、systems.Global renewable capacity additions are set to soar by 107 gigawatts(GW),the largest absolute increase ever,to more than 440 GW in 2023.Despite a hike in interest rates,rising system costs and persistent supply chain challenges,faster solar PV and wind expansion underpins this acceleration d
108、ue to continuous policy support and improving competitiveness.Renewables will break another annual deployment record in 2024,driven by solar PV,which will account for the two-thirds of next years entire renewable capacity additions.2023:Solar PV dominates growth,and onshore wind additions rebound to
109、 break the 2020 record Solar PV remains the main source of global renewable capacity expansion in 2023,accounting for 65%of growth with distributed applications,including residential and commercial systems,accounting for almost half of global PV expansion.Since Russias invasion of Ukraine,the global
110、 energy crisis has driven up wholesale and retail electricity prices in many parts of the world,making small solar PV systems more economically attractive for residential and commercial customers.Policy makers in many countries,especially in Europe,have been seeking options for immediate diversifica
111、tion away from imported fossil fuels,improving the policy environment for distributed solar PV systems that can be installed rapidly.Following two consecutive years of decline,annual global onshore wind capacity additions are expected to jump 70%in 2023 to break the 2020 record.This surge is being f
112、uelled mostly by the commissioning of projects in China that were delayed by Covid-related restrictions last year.Supply chain challenges also slowed the pace of construction in the United States and Europe,pushing project commissioning from 2022 to 2023.Offshore wind growth is also expected to reco
113、ver from a major drop in annual additions last year resulting from a policy rush in China in 2021.While annual Renewable Energy Market Update June 2023 PAGE|19 I EA.CC BY 4.0.offshore additions are forecast to increase almost 50%in 2023,this growth is not sufficient to match the record-level expansi
114、on of two years ago.In the accelerated case,renewable capacity additions could reach over 500 GW this year,almost 15%higher compared with the main case.Distributed solar PV accounts for the largest upside.While new policies incentivise residential and commercial PV installations and higher electrici
115、ty prices improve the business case,uncertainty remains over the pace of consumer adaption considering current macroeconomic environment with elevated interest rates.The upside for utility-scale onshore wind and solar PV projects mostly depends on the pace of construction,permitting and timely grid
116、connection of projects under development.Net renewable electricity capacity additions by technology,historical,main and accelerated cases IEA.CC BY 4.0.2024:Another record year for global capacity additions,led by solar PV Annual solar PV market growth is expected to continue,reaching almost 310 GW
117、in 2024,an increase of over 7%from 2023.Lower module prices,greater distributed PV system uptake and a policy push for large-scale deployment trigger higher annual additions in all major markets including China,the European Union,the United States and India.In Brazil,policy changes on net metering r
118、ules reduce remuneration rates for surplus generation and cause additions to decline from 2023 to 2024.For onshore wind,annual additions are expected to fall around 4%from 2023 to 2024.While Chinas wind energy expansion is forecast to continue with the commissioning of large-scale onshore projects i
119、n mega-bases in the northeast as well as provincial incentives that support offshore plants,additions in other major 0 100 200 300 400 500 600200202022420232024HistoricalMain caseAcc.caseGWOthersBioenergyHydropowerOffshore windOnshore windPV-distributedPV-utilityRenewable Energ
120、y Market Update June 2023 PAGE|20 I EA.CC BY 4.0.markets are expected to decline.In Europe,undersubscription in multiple auctions in Germany and Spain,permitting delays in France and turbine placement restrictions in Poland prevent faster wind expansion.In the United States,the pace of adding new ca
121、pacity decelerates in 2024 because production tax credit rates are lower than under the previous federal policy.Net renewable electricity capacity additions by country/region,main case IEA.CC BY 4.0.Meanwhile,higher turbine prices in India due to supply chain challenges reduce the bankability of alr
122、eady-auctioned projects,resulting in delays.Limited auction capacity in the Brazilian market also cuts annual wind additions by half between 2023 and 2024.In the accelerated case,renewable power capacity additions in 2024 could be 17%higher than in the main case forecast,reaching over 540 GW.This wi
123、ll require both faster deployment of distributed PV systems and expedited commissioning of large-scale solar and wind projects in the pipeline,especially in China,Europe,India and the United States.0 10 20 30 40 50 60 70ChinaEuropeanUnionUnitedStatesIndiaBrazilGWOnshore wind2022202320240 20 40 60 80
124、 100 120 140 160 180ChinaEuropeanUnionUnitedStatesIndiaBrazilSolar PV202220232024Renewable Energy Market Update June 2023 PAGE|21 I EA.CC BY 4.0.How will the energy crisis affect EU renewable energy deployment in 2023 and 2024?Russias invasion of Ukraine has pushed the accelerator on renewable energ
125、y deployment in the European Union,impacting short-term deployment especially,as the bloc urgently needs to reduce its dependence on Russian natural gas imports.As a result of policy actions in many European countries,we have revised the forecast for renewable capacity additions for 2023 and 2024 up
126、wards by 38%compared with IEA expectations before the war in December 2021.Rapid distributed solar PV growth is the main reason for the upwards forecast revision In the European Union,residential and commercial solar PV systems account for 74%of the increase to our forecast,with the majority(82%)of
127、the rise coming from six key markets:Germany,Spain,the Netherlands,France,Italy and Sweden.Two main developments are driving this transformation:the first is the increasingly attractive business case for self-consumption since January 2021.EU capacity additions in 2023-2024(left)and average househol
128、d electricity prices for selected capital cities(right)IEA.CC BY 4.0.Notes:Retail prices for households exclude taxes and value-added taxes.Household prices consider new tariff offers.Quarterly data are an average of the months.The price trend in capital cities are considered a proxy for that countr
129、y.Source:(right)Household Energy Price Index(HEPI)by Energie-Control Austria,MEKH and VaasaETT,2023 VaasaETT Ltd.0 100 200 300 400 500 600 700 8001Q20183Q20181Q20193Q20191Q20203Q20201Q20213Q20211Q20223Q20221Q2023EUR/MWhParisBerlinRomeAmsterdamMadridStockholm0 20 40 60 80 100 120 140Renewables2021Rev
130、isionRenewables2023(May)GWDistributed solar PVUtility solar PVWind onshoreWind offshoreRenewable Energy Market Update June 2023 PAGE|22 I EA.CC BY 4.0.Rising gas and coal prices during the economic rebound from Covid-19 caused retail electricity prices in the European Union1 to climb approximately 6
131、0%between January 2021 and January 2022,making self-consumption more economically appealing.This accounts for 32%of the upwards revision for distributed solar PV.The second reason for this transformation is the new market conditions triggered by Russias invasion of Ukraine and the policy response of
132、 some countries to incentivise distributed solar PV deployment.Higher retail prices and concrete policy action in Europe explain almost 60%of the distributed solar PV forecast revision.Following Russias invasion of Ukraine,European electricity prices increased another 40%from February to October 202
133、2 due to gas supply restrictions.Policy makers acted swiftly to accelerate distributed PV deployment to help mitigate the burden of energy cost increases for consumers.Revisions to the distributed solar PV forecast(2023-2024)due to policy and market changes(left)and by major country(right)IEA.CC BY
134、4.0.Note:“Other”refers to the share of remaining EU countries in the revised forecast for net distributed PV(Poland,Italy,Portugal,Greece,Austria,Finland,Denmark,Belgium,Ireland,Lithuania,Romania,Croatia,Hungary,Bulgaria,Estonia,Cyprus,Luxembourg,Slovenia,Slovakia,Latvia,the Czech Republic and Malta
135、.).Note by Trkiye:The information in this document with reference to“Cyprus”relates to the southern part of the Island.There is no single authority representing both Turkish and Greek Cypriot people on the Island.Trkiye recognises the Turkish Republic of Northern Cyprus(TRNC).Until a lasting and equ
136、itable solution is found within the context of the United Nations,Trkiye shall preserve its position concerning the“Cyprus issue”.Note by all the European Union member states of the OECD and the European Union:The Republic of Cyprus is recognised by all members of the United Nations with the excepti
137、on of Trkiye.The information in this document relates to the area under the effective control of the government of the Republic of Cyprus.For instance,Germany offered more direct financial support,raised existing remuneration levels and introduced further incentives(premiums)to sell all generation t
138、o the grid.The prolongation of tax rebates in Italy and net metering in 1 Data for the European Union is from the Household Energy Price Index(HEPI)for Europe by Energie-Control Austria,MEKH and VaasaETT,2022 VaasaETT Ltd.Released March 31,2023.0 1 2 3 4 5 6SpainNether-landsGermany France SwedenItal
139、yGWCommerical PVResidential PVMarket&policy:Pre-January 202232%Other11%Market&policy:Post-January 202257%Renewable Energy Market Update June 2023 PAGE|23 I EA.CC BY 4.0.the Netherlands,which were both due to expire before the war began,are also driving faster distributed solar PV uptake.Meanwhile,Sp
140、ains regulatory reforms to expedite the environmental permitting process and to free up grid capacity for self-consumption are also prompting faster expansion.In France,the government modified auctions to retroactively increase awarded capacity by 40%for large commercial installations.These policy a
141、ctions,combined with higher retail prices,underpin the upwards forecast revisions for these markets.However,even in the absence of concrete policy change,consumer action to reduce electricity bills remains a key driver of accelerated residential solar PV growth in Sweden,France and Spain where retai
142、l prices remain above pre-war levels.While electricity prices have began to fall since January 2023 in most European markets,they remain approximately 80%higher than January 2021.Permitting challenges and limited participation in competitive auctions prevent faster growth of utility-scale wind and s
143、olar PV.Permitting challenges and limited participation in competitive auctions prevent faster growth of utility-scale wind and solar PV Utility-scale growth for 2023 and 2024 has also been revised up,but to a much lesser extent due to permitting challenges,auction undersubscription and long develop
144、ment timelines.While European countries and the European Commission are moving quickly to streamline permitting(see“How are European countries addressing permitting challenges to accelerate renewable energy development?”),the impact on deployment in 2023-2024 is expected to be limited.Developers fac
145、e multiple challenges,including rising equipment costs,inflation,and supply chain constraints,which have made them less eager to participate in competitive auctions.Part of this is due to relatively low ceiling or reference prices,as well as fixed contract prices that are not indexed to inflation.So
146、me governments have taken steps to modify auction designs to better reflect the changing pricing environment:for instance,Germany raised its auction ceiling prices and Portugal has adjusted contract prices for inflation.We have accordingly revised the forecast for utility-scale solar PV upwards for
147、these markets.Meanwhile,Spains corporate PPA market growth is also resulting in revised utility-scale deployment for that country,but the upside potential for other markets is more uncertain(see“Will market forces now drive the expansion of wind and solar PV plants,or is policy still key?”).For onsh
148、ore wind capacity,the upward revision results from delayed projects coming online after supply chain constraints and cumbersome permitting procedures lengthened project lead times.Renewable Energy Market Update June 2023 PAGE|24 I EA.CC BY 4.0.How are European countries addressing permitting challen
149、ges to accelerate renewable energy development?Most countries in Europe have introduced policies to address the challenges posed by slow and complex permitting procedures for renewable energy projects.In fact,more policies and regulatory changes have been instituted in the last 18 months to ease per
150、mitting than over the entire previous decade.The time required to obtain permits can vary significantly from one EU country to the next,ranging from one to five years for ground-mounted solar projects and from three to nine years for onshore wind projects.Delays resulting from complex and slow autho
151、risation procedures are leading to limited participation in renewable energy auctions,increasing project risks and costs and ultimately weakening project economics and the bankability of power plants.Permitting has finally become a key policy focus in Europe Today at least 59 GW of onshore wind capa
152、city(four times the capacity commissioned in 2022)is held up in various permitting procedures in Europe.For solar PV,the average length of permitting procedures is shorter than for wind,but there could be a significant number of projects awaiting permitting.For example,solar PV projects waiting for
153、construction and generation permits in Portugal amount to more than 4 GW,which is almost five times the capacity commissioned in 2022.Although long permitting timelines remain a major challenge in many countries,they became a key policy focus in the European Union following Russias invasion of Ukrai
154、ne.In May 2022,the European Commission released recommendations on permitting in the communication package of its REPowerEU Plan.The European Council also agreed to member states identification of renewable energy“go-to areas”where low environmental risk and suitability for renewable power plants co
155、uld allow shortened and simplified permitting to be applied.Mostly following the EU guidelines,half of the EU member states and the United Kingdom have made important policy changes to streamline permitting procedures.These policies focus on three major areas:simplifying permitting procedures and/or
156、 setting clear permitting timelines(adopted by 10 countries);identifying preferential areas for renewable energy projects to fast-track permitting Renewable Energy Market Update June 2023 PAGE|25 I EA.CC BY 4.0.(adopted by 2 governments);and removing certain permitting requirements for small renewab
157、le power projects or increasing the minimum capacity requirement for environmental impact assessments(adopted by 4 countries).These changes aim to reduce permitting lead times,increase project bankability,and ultimately accelerate the deployment of renewable energy in Europe.Policy changes on renewa
158、ble energy permitting in EU and other countries following Russias invasion of Ukraine Country/Region Month and year Technology Category Description European Union May 2022 All renewables 1)Simplifypermittingprocedures2)Identifypriority areas3)Revisitthreshold forpermittingThe recommendation on permi
159、tting under the REPowerEU Plan identifies best practices and provides guidance to speed up permit-granting procedures for renewable energy projects.Dec 2022 All renewables 1)Simplifypermittingprocedures2)Identifypriority areas3)Revisitthreshold forpermittingThe European Council agreed on targeted am
160、endments to the Renewable Energy Directive.Member states will design dedicated“go-to areas”for renewable energy development,with shortened and simplified permitting processes in areas with lower environmental risks.Member states are also required to ensure public involvement to address social accept
161、ance issues,and to exempt PV equipment on buildings from environmental impact assessments(EIAs).Austria Jan 2023 Solar PV 1)SimplifypermittingproceduresIn Austria,EIAs for solar PV projects will be accelerated given their special public interest status,while projects that receive no complaints will
162、not have to be halted.Czech Republic Apr 2023 Solar PV 1)SimplifypermittingproceduresThe Czech Republic approved an amendment to the construction law to create a simplified permitting procedure for solar panel installation with fixed deadlines.Estonia Feb 2023 Wind 1)SimplifypermittingproceduresTo s
163、peed up permitting procedures in Estonia,wind farm developers have the opportunity to waive the second stage of planning in the case of special planning of the state and local government.Finland Aug 2022 All renewables 1)SimplifypermittingproceduresCertain renewable energy projects in Finland are to
164、 be given temporary priority until the end of 2025 in regional administrative agencies processing of permits.Renewable Energy Market Update June 2023 PAGE|26 I EA.CC BY 4.0.Country/Region Month and year Technology Category Description France Feb 2023 All renewables 2)Identify priority areas France a
165、dopted a law empowering local authorities to create preferred“go-to”and“no-go”areas for renewable energy development.Germany Apr 2022 Offshore wind 1)Simplify permitting procedures As a part of the Easter Package,Germany has prioritised offshore wind in maritime spatial planning and streamlined perm
166、itting procedures.Dec 2022 Onshore wind 1)Simplify permitting procedures Germany relaxed air radio navigation rules to accelerate the permitting process for onshore wind.Ireland Oct 2022 Solar PV 3)Revisit threshold for permitting Irelands revised law on exemptions for rooftop solar panel installati
167、ons removed the requirement for planning permission and extended the exemptions to new building categories.Italy Mar 2022 All renewables 1)Simplify permitting procedures Italy began bypassing regional authorities to permit some renewable energy projects.The government also simplified permitting proc
168、esses to install commercial rooftop PV systems.Feb 2023 Solar PV 1)Simplify permitting procedures A new law simplifies the PV installation process and sets a limit of 150 days on the permitting process.Lithuania Apr 2022 Solar PV Wind 3)Revisit threshold for permitting Lithuania abolished solar PV a
169、nd wind production permits for self-consumption(power plants of up to 30 kW currently do not require them).Luxembourg Jan 2023 Solar PV 1)Simplify permitting procedures Luxembourg adopted a regulation to limit the permit-granting time to less than three months for solar PV installations and co-locat
170、ed energy storage systems.Portugal Apr 2022 All renewables 1)Simplify permitting procedures 2)Identify priority areas Portugals exceptional measures to simplify procedures for renewable energy projects exempt developers from securing an operating licence/certificate,provided that the network operato
171、r confirms conditions for grid connection.They also simplify EIA procedures as long as projects are not located in sensitive areas.Dec 2022 Solar PV Wind 3)Revisit threshold for permitting Portugal scrapped EIA requirements for solar PV installations occupying less than 100 hectares and for wind sta
172、tions located more than 2 km apart.Spain Mar 2023 Solar PV Wind 3)Revisit threshold for permitting Spain has enabled an accelerated temporary procedure until 2024 to grant environmental approvals for wind power plants of less than 75 MW and solar parks not exceeding 150 MW.Renewable Energy Market Up
173、date June 2023 PAGE|27 I EA.CC BY 4.0.Country/Region Month and year Technology Category Description Sweden Nov 2022 All renewables 1)Simplify permitting procedures To strengthen its energy supply,Sweden proposed a list of budgetary investments that includes streamlining permitting processes for grid
174、 connection.United Kingdom Sep 2022 Onshore wind 1)Simplify permitting procedures The United Kingdom has presented measures to relax planning rules for approving onshore wind projects and to streamline EIAs.In last years Renewables 2022 report,we determined that addressing a number of barriers,inclu
175、ding permitting challenges in Europe,could result in 30%more renewable energy deployment than what was detailed in the main forecast for 2022-2027.Renewable Energy Market Update June 2023 PAGE|28 I EA.CC BY 4.0.How much less money is the European Union spending on expensive electricity thanks to add
176、itional renewable energy capacity?EU electricity consumers are expected to save an estimated EUR 100 billion during 2021-2023 thanks to additional electricity generation from newly installed solar PV and wind capacity.Low-cost new wind and solar PV installations have displaced an estimated 230 TWh o
177、f expensive fossil fuel generation since Russias invasion of Ukraine,leading to a reduction in wholesale electricity prices on all European markets.Without these capacity additions,the average wholesale price of electricity in the European Union in 2022 would have been 8%higher.Cumulative electricit
178、y costs decrease due to PV and wind additions,and average EU wholesale spot electricity price,actual and in no-RES-additions scenario,2021-2023 IEA.CC BY 4.0.Notes:RES=renewable energy source.The no-RES-additions scenario assumes no PV or wind capacity additions in 2021-2023.Source:IEA analysis base
179、d on ENTSO-E Transparency Platform(accessed April 2023).005000 20 40 60 80 9 10 11 12 123456789 10 11 12 123456789 10 11 023EUR/MWhbln EURGermanyFranceSpainNetherlandsPolandItalyRest of EUActual av.price(right axis)No-RES-additions av.price(right axis)ScenarioRenewab
180、le Energy Market Update June 2023 PAGE|29 I EA.CC BY 4.0.Reduced Russian natural gas supplies and multi-year lows in hydro and nuclear output led to an unparalleled increase in the EU wholesale electricity spot price Following Russias invasion of Ukraine,Russian natural gas deliveries to the Europea
181、n Union by pipeline decreased by 80%from 2021 to 2022.This sharp drop coincided with multi-year lows in European hydro and nuclear power output.Between January 2021 and August 2022,the average monthly natural gas price increased ten-fold and the price of hard coal quintupled.As a result,the cost of
182、power generation from natural gas,which usually sets the electricity price in most EU wholesale markets,increased to unparalleled levels,reaching almost 800 EUR/MWh for open-cycle gas turbines(OCGTs)and 500 EUR/MWh for combined-cycle gas turbines(CCGTs).EU CO2 emissions allowances,natural gas prices
183、,coal price index,and variable electricity generation costs,2021-2027 IEA.CC BY 4.0.Notes:CCGT=combined-cycle gas turbine.OCGT=open-cycle gas turbine.Natural gas price TTF index;hard coal price API2 index;CO2 price EEC index.Gen:generation Source:Bloomberg LP Terminal(accessed April 2023).In the Eur
184、opean Union,the wholesale electricity spot market is the benchmark for most electricity supply contracts,driving prices up for all consumers.The price is set by the most expensive generator needed to fill demand at any given moment.Due to the steep increases in natural gas and coal prices in 2021-20
185、22,consumers in the wholesale market such as retailers or large companies with limited fixed-contract energy portfolios and without strong hedging positions had to purchase electricity at rates of up to 15-20 times the averages of 2015-2020.005006007008000 200 400 600 8001 0001 2001 4001
186、600 11 10 11 222023Variable costs(EUR/MWh)Index(Jan 2021=100)CO2 priceNatural gas priceCoal priceHard coal gen.costs(right axis)CCGT gen.costs(right axis)OCGT gen.costs(right axis)Renewable Energy Market Update June 2023 PAGE|30 I EA.CC BY 4.0.Germany hourly generati
187、on from hard coal and natural gas,and from PV and wind,and hourly wholesale electricity spot price,actual and in no-RES-additions scenario,8-14 August 2022 IEA.CC BY 4.0.Note:RES=renewable energy source.The no-RES scenario assumes no PV or wind capacity additions in 2021-2023.Source:IEA analysis bas
188、ed on ENTSO-E Transparency Platform(accessed April 2023).New PV and wind capacity is expected to provide savings of EUR 100 billion since the beginning of the energy crisis In 2021 and 2022,the European Union added nearly 90 GW of PV and wind capacity.This capacity has displaced almost 10%of hard co
189、al and natural gas generation,pushing the most expensive power plants out of the market and effectively reducing the price for all consumers.In addition,another 60 GW of solar PV and wind is expected to come online in 2023,increasing displacement to almost 20%this year.Based on the historical relati
190、onship between hourly generation from hard coal and natural gas,and wholesale electricity spot prices for several large EU economies in 2021 and 2022,we modelled a scenario for 2023 to estimate the further savings possible with additional wind and solar PV capacity.The results show that without PV a
191、nd wind capacity growth in 2021-2023,average wholesale electricity prices would be higher by about 3%in 2021,8%in 2022 and 15%in 2023,raising the cost of electricity supply for the entire European Union by roughly EUR 100 billion.For instance,new renewable energy capacity in Spain offers saving of 6
192、0%more than the countrys allocated budget of EUR 6.3 billion for an EC-approved temporary intervention to reduce wholesale electricity prices.For Germany,savings gained through new renewable generation capacity would pay for the governments recent proposal to support electricity prices for energy-in
193、tensive industries until 2030.005006007000 10 20 30 40 50 60891011121314EUR/MWhGWHard coal and gasHard coal and gas displacedPV and windActual price(right axis)No-RES-additions price(right axis)Renewable Energy Market Update June 2023 PAGE|31 I EA.CC BY 4.0.Accelerating annual renewable e
194、nergy deployment since 2021 has provided a cost-effective solution to the energy crisis economic challenges.Long-term contracts secured through policy mechanisms and regulations provide stable prices for most wind and solar PV power generators in Europe,limiting their exposure to volatile electricit
195、y prices.They can also help shelter consumers from rising electricity prices.The total investment cost of deploying PV and wind capacity over 2021-2023 is expected to amount to about EUR 200 billion.Almost 50%of this investment cost will likely be returned in the form of savings on power consumers b
196、ills by as early as the end of 2023,while these power plants will continue to provide benefits for the next 20-25 years.According to the IEA accelerated case forecast,savings could have been about 15%higher if EU capacity had been increased more rapidly,through quicker implementation of policies sup
197、porting the deployment of technologies with short lead times(i.e.distributed solar PV)and a reduction in red tape for projects at the advanced stages of permitting.Renewable Energy Market Update June 2023 PAGE|32 I EA.CC BY 4.0.Will hydropower in Europe recover in 2023 following a severe drought las
198、t year?European hydropower generation declined by 15%(80 TWh)in 2022 to 460 TWh,dropping to its lowest level since 2004.Variations in hydropower output are common due to natural fluctuations in rainfall,but last years drop was the largest annual decline in the region since 1990.Four consecutive belo
199、w-average rainy seasons led to drought conditions and lowered reservoir levels.The reduced hydropower output resulted in an estimated additional 13-14 bcm of natural gas being used to generate electricity last year.This exacerbated the already high electricity prices the region was experiencing due
200、to reduced gas supply caused by Russias invasion of Ukraine and nuclear plant outages in France.Some large hydropower operators in Europe suffered financial losses as they had to buy back power at higher prices to meet their electricity delivery commitments.Annual year-on-year change in hydropower g
201、eneration in Europe(1992-2022)and historical and forecast(2014-2023)IEA.CC BY 4.0.Notes:2023*=forecast.Minimum=the lower bound for the 2023 forecast and Maximum=the upper bound.In 2023,hydropower electricity generation is forecast to increase by 3%year-on-year(16 TWh),based on preliminary data for t
202、he first three months of this year.First quarter data in Europe is up 5%year-on-year compared to 2022,thanks to higher output from the Iberian and Balkan regions.Generation for January through March in Spain and Portugal was up 60%and 140%respectively,as high-100-80-60-40-200 20 40 606199
203、820002002200420062008200022TWhChange in generation0 100 200 300 400 500 600 700 80020000222023*TWhApril-DecemberJanuary-MarchMinimumMaximumRenewable Energy Market Update June 2023 PAGE|33 I EA.CC BY 4.0.precipitation in January helped fill reser
204、voirs to above average levels for the first quarter.Heavier than average rainfall along the Danube also boosted annual output from run-of-river plants in Romania,Croatia,and Slovenia by about 40%.While generation in 2023 is expected to increase to 480 TWh,this is still 9%below the 10-year average(53
205、0 TWh)as drought conditions in key markets continued during the past winter.First quarter generation is down year-on-year in France,Italy,and Greece following low rainfall.In the Alps,warmer winter temperatures and less snowfall are expected to result in below average snowmelt for the remainder of t
206、he year.Output will also depend on whether operators decide to fill reservoirs or generate.However,generation will depend on how much precipitation Europe gets from April to December,a key uncertainty for the forecast.Seasonal precipitation patterns are becoming increasingly unpredictable and can ex
207、hibit different trends compared to the first quarter.For instance,after the three consecutive months of year-on-year growth in January to March 2023,hydropower generation in Spain dropped 15%in April compared to 2022.Lower precipitation levels across several markets could result in Europes hydro gen
208、eration falling to 470 TWh,though this is still above last years levels.Conversely,should some markets receiver higher precipitation,such as Italy where rainfall was heavier in May than previous months,Europes generation could exceed 535 TWh.This upside potential of around 50 TWh could contribute to
209、 displacing around 9-10 bcm of additional natural gas in Europe.Renewable Energy Market Update June 2023 PAGE|34 I EA.CC BY 4.0.To what extent can renewable energy use displace gas consumption in EU buildings in 2023 and 2024?With heating and cooling being the largest energy end-users in the EU buil
210、dings sector,air temperature is the primary short-term determinant of the blocs buildings sector energy demand.Direct and indirect use of renewable energy through electricity,in addition to greater energy efficiency and energy sobriety,can play a key role in reducing EU gas demand in the short term.
211、Annual EU buildings natural gas demand,including indirect consumption,has ranged from 150 bcm to 210 bcm since 2010.The number of heating degree days has largely influenced this demand along with prices and consumer behaviour.The 2022/23 heating season was the second warmest on record for the Europe
212、an Union,with the average air temperature 1C above the previous ten-year average,and 9%fewer heating degree days.Sensitivity of total final electricity consumption to temperature in France,2021-2022(left),correlations between annual heating degree days and final consumption(direct use)of natural gas
213、 in buildings in the EU,2005-2020(centre),and EU long-term average air temperature and variability during the heating season,1980-2022(right)CC BY 4.0.Note:The heating degree days series was calculated based on a reference temperature of 18C with a 15C threshold.Sources:Eurostat(2023),Heating and co
214、oling degree days-statistics;IEA(2022),Energy Balances;Entsoe(2023),Transparency Platform;IEA(2023),Weather for Energy Tracker.0.00.51.01.52.02.5-5051015202530Daily electricity demand(TWh)Average daily temperature(C)0 5001 0001 5002 0002 5003 0003 5004 0000 1 2 3 4 5 6 7 8 9052
215、01020152020Heating degree days(C)CAverage air temperature from October ofthe previous year to MarchAnnual heating degree days(right axis)-20%-15%-10%-5%0%5%10%15%20%7200020032006200920021Change in annual heating degree daysChange in annual gas consumption inbuildingsRenewable E
216、nergy Market Update June 2023 PAGE|35 I EA.CC BY 4.0.All other things being equal,such mild winter conditions alone would entail an estimated 7%drop in gas consumption in buildings from previous winters.This mild weather therefore eased pressure on EU gas markets considerably in the winter of 2022/2
217、3.2 While long-term climate trends point to an overall temperature rise,a harsh winter and a hot summer could intensify EU buildings sector heating and cooling demand in the short term.EU historical gas consumption in the buildings sector,2010-2022 CC BY 4.0.Note:The heating degree days series was c
218、alculated based on a reference temperature of 18C with a 15C threshold.Sources:Eurostat(2023),Heating and cooling degree days-statistics;IEA energy balances(2023);IEA(2023),Weather for Energy Tracker.2022e:2022 estimate The rapid expansion of renewable energy technology use in buildings can ease EU
219、natural gas demand and contribute to the blocs energy security in the short term.Projected cumulative new developments in direct use of renewable heat and expansion of renewable electricity post-2022 would displace almost 8 bcm of EU buildings-related gas consumption annually in 2023 and more than 1
220、7 bcm in 2024.3 This is equivalent to avoided emissions of more than 50 Mt CO2 in 2023-2024.2 In addition to weather,behavioural factors(i.e.a drop in space heating as a result of voluntary efforts or in reaction to high gas prices)also helped reduce gas demand in the EU buildings sector.3 These cal
221、culations take into consideration hourly demand profiles and generation patterns of each renewable electricity technology at the country level.0500025003000350040000 50 100 150 200 25020000022(e)(C)bcmIndirect gas consumption(district heating)In
222、direct gas consumption(electricity)Direct gas consumptionHeating degree days(right axis)Renewable Energy Market Update June 2023 PAGE|36 I EA.CC BY 4.0.Natural gas consumption displaced by projected additional renewable energy supply from 2023 in the European Union in 2023 and 2024 CC BY 4.0.Notes:R
223、E:renewable energy.The largest contribution comes from the use of renewable electricity for heating and cooling purposes.In total,projected power sector renewable energy development for 2023-2024 holds the largest potential for gas displacement in buildings and is expected to displace about 5 bcm of
224、 gas for electricity generation this year and over 10 bcm in 2024.Countries for which growth in electricity generation is projected to displace the most gas cumulatively in 2023-2024 are Spain,Italy,Netherlands,Germany and France.Spain and Italy have important shares of gas in their electricity mixe
225、s and they benefit from well-matched demand-supply profiles with solar PV generation patterns accommodating summer cooling demand.The sustained growth of annual heat pump sales driven by policy incentives in many countries is anticipated to represent another quarter of the gas displaced in buildings
226、(5 bcm cumulatively by 2024).Limited biomass stoves and boilers,solar thermal and geothermal developments in buildings yield only marginal gas savings by 2024(less than 3 bcm cumulatively).While these renewable energy contributions will help ease potential tensions on gas markets,the potential of re
227、newable heat technologies is still largely untapped,both in buildings and industry.Harnessing their potential would,however,require sustained and comprehensive policy action to improve consumer awareness,reduce high upfront costs and split-incentive challenges,alleviate supply chain challenges,exped
228、ite permitting procedures,establish training programmes and support R&D to further improve technologies.0 5 10 15 20 2520232024bcmPotential natural gas displacment by new heat pump deploymentPotential natural gas displacement by new direct uses of RE heatPotential natural gas displacment by addition
229、al RE electricity generationRenewable Energy Market Update June 2023 PAGE|37 I EA.CC BY 4.0.Will Chinas role in global renewable energy deployment decline in 2023 and 2024?Chinas ambitious target of net zero emissions by 2060,its strong and continuous policy support for renewable energy,and the larg
230、e size of its domestic manufacturing industry for all renewable technologies consolidate Chinas position as the undisputed leader in global renewable energy deployment in 2023 and 2024.Chinas contribution to global renewable capacity additions is expected to increase in 2023 and 2024 thanks to distr
231、ibuted solar PV and wind In 2022,China accounted for 49%of global renewable capacity additions,due mostly to acceleration in solar PV growth,particularly for distributed systems.Following the phaseout of solar PV subsidies,the Chinese government has transferred the focus of its renewable energy depl
232、oyment strategy to two principal areas that underpin the forecast for 2023 and 2024.China net renewable capacity additions(2017-2024)and its share in global deployment IEA.CC BY 4.0.Chinas first aim is to develop large-scale mega projects far from demand centres that can provide power at prices equa
233、l to or lower than provincial benchmark coal 0%10%20%30%40%50%60%0 50 100 150 200 250 3002017 2018 2019 2020 2021 2022 2023 2024GWAnnual capacity additionsPV-utilityPV-distributedOnshore windOffshore windHydropowerBioenergyOther technologies%of China0%10%20%30%40%50%60%70%80%90%202020224%
234、of China in global capacity additionsPV-utilityPV-distributedOnshore windOffshore windHydropowerRenewable Energy Market Update June 2023 PAGE|38 I EA.CC BY 4.0.electricity prices.Second,the government is incentivising distributed solar PV projects through capacity targets for public institutions and
235、 large state-owned enterprises for self-consumption,and for smaller residential systems through subsidies to promote rural economic development.Owing to rising industrial electricity prices and government policy support,distributed PV applications are the main source of Chinas renewable capacity exp
236、ansion in 2023 and 2024,with the countrys share in global expansion reaching almost 55%.Higher module prices over the last 12-18 months have affected the competitiveness of distributed applications less than that of utility-scale projects,for which profit margins remain tight and modules account for
237、 a larger share of total system costs.Our forecast expects onshore wind to rebound strongly in 2023 compared with last year,as China deployed almost 30%less wind energy than was anticipated in the IEA Renewables 2022 report.As movement restrictions due to the Covid-19 outbreak in 2022 delayed the co
238、mpletion of multiple onshore and offshore wind projects,we now expect these installations to become operational in 2023 and 2024,pushing Chinas share in global onshore and offshore wind expansion to over 60%.Considering that the central government phased out direct financial incentives in 2021,the s
239、trengthening role of China in global wind growth indicates greater competitiveness and strong provincial support,motivated by the economic benefits of rural deployment.Chinas increasing solar PV and wind manufacturing capabilities will maintain a strong domestic demand Chinas demand and supply polic
240、ies for wind and solar PV technologies are well established,and its industrial policies have been designed holistically to produce competitive clean energy equipment for both domestic demand and exports.In 2022,Chinas annual manufacturing capacity for solar PV equipment continued to expand much more
241、 quickly than global demand.Last year,manufacturing capacity increased 40-50%for wafers,cells and modules and almost doubled for polysilicon.Today,utilisation rates of Chinese solar PV manufacturing facilities range from 20%to 40%,and the country is expected to double its PV manufacturing capacity a
242、gain by the end of 2024,significantly swelling the supply glut.Thus,strong domestic demand in China remains essential to maintain or increase manufacturers utilisation rates in 2023 and 2024.Renewable Energy Market Update June 2023 PAGE|39 I EA.CC BY 4.0.For wind,China is expected to expand onshore
243、and offshore manufacturing facilities almost 20%by 2025,especially for offshore wind.More than 90%of domestic demand is met by Chinese companies and their exports are limited,highlighting the importance of a strong domestic market.Renewable Energy Market Update June 2023 PAGE|40 I EA.CC BY 4.0.Will
244、the US inflation Reduction Act impact wind and PV deployment in the short term?The impact of the IRA on wind and solar PV deployment in 2023 and 2024 will be limited.While federal tax credits under the IRA provide unprecedented investment certainty for renewable energy projects up to 2032,installati
245、ons due to come online within the next two years have already qualified for previous tax incentive schemes.Thus,pre-IRA policies as well as developments concerning supply chain constraints and trade measures affect our short-term capacity forecast.Trade and supply chain concerns led to lower capacit
246、y additions in 2022,but wind and PV expansion will accelerate this year In 2022,the US anti-dumping and circumvention investigation involving solar panels from several Southeast Asian countries in March and the Uyghur Forced Labour Act in June delayed the delivery of PV products.In addition,higher c
247、ommodity prices and continuous supply chain challenges for renewable equipment parts coming from China pushed wind turbine and solar panel prices up.For solar PV,the impact of trade measures on deployment and prices was much larger than for wind.In 2022,the solar PV market contracted 15%due to uncer
248、tainty over trade restrictions,which paused imports and slowed project development.However,an interim order published in June 2022 addressed some trade issues and,as a result,the market is expected to expand in the next two years.In fact,solar PV additions could break new records,reaching more than
249、30 GW in 2024 a 50%increase from 2022 thanks to accelerated utility-scale project deployment.Meanwhile,distributed solar PV additions,which benefit from the Investment Tax Credit(ITC)and local net metering provisions,remain stable at around 8 GW.However,two important policy developments counteract o
250、ne another to prevent higher total annual solar PV additions.While changes to Californias net metering law could slow down deployment in the largest distributed PV market in the United States,commercial solar PV is expected to start benefitting from new IRA incentives such as eligibility for communi
251、ty solar and economic adders in 2023,making commercial solar PV more economically attractive.Renewable Energy Market Update June 2023 PAGE|41 I EA.CC BY 4.0.The US onshore wind market added 8 GW of new capacity in 2022 a 40%fall from 2021 and a 50%drop from record-level expansion in 2020.This declin
252、e was expected with the reduction and eventual expiration of the pre-IRA production tax credit policy,but supply chain constraints and inflationary pressure also caused project commissioning delays last year.As a result,the commissioning of delayed projects will mean 40%higher additions this year th
253、an in 2022.However,due to lower production tax credit rates under the previous tax policy,onshore wind additions are forecast to decelerate again in 2024.Nonetheless,the commissioning of roughly 2 GW of large-scale offshore projects is expected to keep annual US wind capacity additions stable at aro
254、und 12 GW in 2023 and 2024.Net solar PV and wind capacity additions by year,2021-2024 IEA.CC BY 4.0 The Inflation Reduction Acts impact on renewable energy technology deployment will become evident in 2025 For both solar PV and wind projects,long-term tax incentives under the IRA are a game-changer.
255、Considering the deployment timelines for large-scale installations,the IRAs impact will become visible mainly beginning in 2025.Under the act,solar PV projects are once again eligible for the production tax credit if construction begins before 2025,providing an alternative driver for new capacity ad
256、ditions beyond the ITC.After 2025,multiple technologies,including for wind and solar PV,will be eligible for the Clean Energy Production Tax Credit.While the IRAs long-term credit visibility will create steadily increasing demand for renewable energy,it will also place greater pressure on permitting
257、,transmission and distribution grids,and supply chains.0 5 10 15 20 25 30 352022420224WindSolarGWRenewables 2021Renewables 2022Renewables 2023 May UpdateRenewable Energy Market Update June 2023 PAGE|42 I EA.CC BY 4.0.Will Indias renewable energy deployment boom in 2023 and 2024
258、?Indias renewable capacity additions are expected to increase again in 2023 and 2024 owing to faster onshore wind,hydropower and distributed solar PV deployment.However,annual additions for utility-scale projects,Indias largest renewable electricity growth segment,are expected to slow briefly this y
259、ear due to supply chain challenges,preventing renewable energy growth from truly booming in the short term.Higher prices,lower auction volumes and trade policies weigh on short-term PV deployment In 2022,Indias utility-scale solar PV capacity additions(made up mainly of capacity awarded in auctions)
260、reached a record-breaking 14 GW,accounting for over two-thirds of renewable energy growth in the country.For 2023,however,lower auction volumes and supply chain challenges indicate that a slowdown of almost 20%is probable,with a possible recovery in 2024.India net renewable capacity additions by tec
261、hnology,2018-2024 IEA.CC BY 4.0.In 2022,auction volumes dropped by one-third,with only 10 GWAC awarded,the lowest amount since 2017 and significantly below the volumes required to reach the national target of 500 GW of non-fossil capacity by 2030.Average solar PV 0 5 10 15 20 25 302002120
262、2220232024GWHydropowerWindBioenergyPV-utilityPV distributed0 5 10 15 20 25200224GWPV-utilityPV-commercialPV-residentialPV-off-gridRenewable Energy Market Update June 2023 PAGE|43 I EA.CC BY 4.0.tariffs from 2022 auctions were 15%higher than in 2021,which discouraged distributio
263、n companies(DISCOMs)in poor financial health from signing contracts.In addition,some states that had fulfilled their Renewable Purchase Obligations neglected to organise further auctions,and federal agencies were putting more emphasis on hybrid tenders.Lower awarded capacity is expected to translate
264、 into a slowdown in capacity additions in 2023-2024.To improve the situation,in March 2023 the Indian government ordered federal agencies to increase auction capacity to 50 GWAC annually starting in FY 2023-2024,which should lead to higher deployment beyond 2025.India renewable capacity awarded in a
265、uctions,2017-2023(left)and PV module supply and demand,2021-2024 IEA.CC BY 4.0.*Data for January-April only.*Indicates a potential annual supply of over 500 W of modules by producers with over 1 GW of manufacturing capacity.Note:Planned 2024-2028 capacity indicates targeted annual auction awards.Sou
266、rces:(left)Bridge to India(2023),India RE Navigator(accessed April 2023);BNEF(2023),Q1 2023 Global Auction and Tender Results and Calendar.(right)PV InfoLink(2023),Supply and Demand Database(accessed April 2023);Ministry of New and Renewable Energy(February 2023),Approved List of Models and Manufact
267、urers.Large-scale PV manufacturing is emerging,but it creates short-term demand and supply mismatches Indias push to expand domestic manufacturing is triggering a supply-demand mismatch and higher prices in the short term,affecting PV expansion in 2023 and 2024.Historically,India has imported almost
268、 90%of its solar PV modules from China.However,the governments production-linked incentives(PLIs)for PV manufacturing aim to increase Indias domestic manufacturing capabilities to 0.00.51.01.52.02.53.03.50 10 20 30 40 50 60INR/kWhGWACPVWindHybridAv.PV price(right axis)Av.wind price(right axis)0 5 10
269、 15 20 25 30 35 4020224GWTotal capacityCapacity 1 000-MW plantCapacity 500 W modulesPotential supply*Demand-lowDemand-highPlannedRenewable Energy Market Update June 2023 PAGE|44 I EA.CC BY 4.0.reduce or eliminate imports.The two rounds of the PLI subsidy scheme should allow India to becom
270、e fully self-sufficient in terms of solar PV supply in the next four to five years.In the short term,however,demand for high-capacity modules from large-scale top-tier manufacturers exceeds supply.Although the list of government-approved manufacturers(ALMM)in February 2023 implied total manufacturin
271、g capacity of 22 GW,only less than 5 GW were declared by large producers offering modules with over 500 W of power.Developers demand these high-quality top-tier modules for their cost efficiency and to more easily secure low-cost financing.Along with supply-demand mismatches,the introduction of high
272、er import tariffs on PV modules and cells in April 2022 led to a 30-40%increase in module prices in the second half of 2022.This reduced project bankability,forcing developers to either cancel or delay projects while waiting for PV prices to fall.In response,the government postponed ALMM requirement
273、s for all projects commissioned by April 2024 and extended the commissioning deadlines.Although government actions have mitigated some challenges,our forecast nevertheless expects that the temporary supply-demand mismatch for top-tier PV modules will prevent rapid utility-scale PV expansion in 2023
274、and 2024.However,the Indian market should experience a real deployment boom beyond 2025,with higher auction volumes and lower prices.Renewable Energy Market Update June 2023 PAGE|45 I EA.CC BY 4.0.Are competitive renewable energy auctions increasingly undersubscribed?In 2022,competitive renewable en
275、ergy auctions resulted in governments awarding a record-breaking 100 GW of capacity.However,unallocated capacity also reached its highest-ever level last year(20 GW)with only close to 85%of proposed capacity being awarded,the lowest rate ever.The energy crisis has negatively affected participation i
276、n European auctions In 2022,Europe accounted for two-thirds of global unallocated capacity in competitive renewable energy auctions,triple the volume of the previous year.Meanwhile,Indias auction allocation rates have been improving since 2019 thanks to policy changes.However,outside of these two ma
277、rkets in which competitive auctions drive utility-scale renewable energy development,9%of auction volumes remained unallocated in 2022.If China is excluded,unallocated volumes rise to 23%,a more than ten-fold increase from 2021 in absolute value.Global renewable energy auction results(left)and volum
278、es of unawarded auction capacity by region(right)IEA.CC BY 4.0.Indias auction volumes for renewable capacity decreased in 2022,with the country offering as well as awarding less than half of what it had annually during 50%60%70%80%90%100%0 20 40 60 80 100 120 20212022GWCapacity awardedCap
279、acity not awardedSubscription rate(%)0 2 4 6 8 10 12 14 0212022IndiaEuropeRest of worldRenewable Energy Market Update June 2023 PAGE|46 I EA.CC BY 4.0.2019-2021.Auction volumes dropped because state-level tenders prioritise the signing of previously awarded power purchase agreements,and b
280、ecause developers are currently focused on completing construction of a large-scale project pipeline.In 2022,India awarded almost 90%of auctioned capacity thanks to policy improvements to reduce offtaker risks.Contrary to historical trends,last year the central government offered more capacity than
281、the financially challenged state DISCOMs did,and rapid implementation of the solar park programme facilitated land procurement and grid connection.Europe experienced the opposite trend.The reason for record-level undersubscription in European auctions is an increase in investment costs for wind and
282、solar PV compared with previous years,combined with an unchanged auction ceiling and static reference prices.Furthermore,some developers have found corporate power purchase agreements and wholesale market opportunities to be more economically attractive than auctions,allowing them to tap into higher
283、 prices.Price volatility in commodity markets,rising interest rates and inflation have all added to uncertainty over project economics.As most European contract prices from competitive auctions were not indexed to address rising costs,developers were reluctant to participate.Unawarded capacity in re
284、newable energy auctions in Europe,2022 IEA.CC BY 4.0.In Germany,sluggish permitting procedures and rising auction volumes have left record amounts of capacity unallocated.In fact,the country allocated only two-thirds of offered capacity in feed-in-premium auctions,sustaining the trend of rising unde
285、rsubscription that began in 2020.To address these challenges,in 2022 Germany increased the ceiling price of tenders for the first time since 2020.10%20%30%40%50%60%70%80%90%100%0 5 10 15 20 25GermanyFranceSpainItalyPolandRest of EuropeGWCapacity awardedCapacity not awardedUndersubscription rateRenew
286、able Energy Market Update June 2023 PAGE|47 I EA.CC BY 4.0.Meanwhile,Spain introduced multiple regulatory changes to address the energy crisis,including price caps in the wholesale market and bilateral contracts,and windfall-profit taxes on utilities.Following these changes,large developers refraine
287、d from bidding in the latest Spanish auctions,with only 5%of offered capacity(223 MW)awarded in 2022.This was a significant contrast to the previous year when more than 6 GW were allocated in tenders.Similarly,Poland experienced a record-high 75%undersubscription rate in 2022,significantly higher th
288、an the usual rate of less than 10%in previous years.Italy conducts three technology-neutral auction rounds per year under the FER programme,with each round rolling over unallocated capacity from the previous one.In 2022,however,it allocated only half of the capacity initially targeted and rolled ove
289、r capacity from the previous year.For the past two years,all tenders had undersubscription rates of more than 70%,resulting in a large amount of capacity being rolled over and even extension of the FER programme into 2023.In South Africa,grid access challenges in areas of high wind potential resulte
290、d in 3 GW of wind projects remaining unallocated in recent auctions.In Chile,a successful 1-GW auction in 2021 was followed by a 2022 auction of similar size that allocated only 15%of the capacity offered,as the auction prices did not address challenges associated with rising costs and interest rate
291、s.Renewable Energy Market Update June 2023 PAGE|48 I EA.CC BY 4.0.Will market forces now drive the expansion of wind and solar PV plants,or is policy still key?Market-driven procurement is expected to account for one-fifth of utility solar PV and wind capacity expansion between 2023 and 2024,and alm
292、ost twice as much(36%)when China is excluded.Market-driven procurement is a business model that allows for renewable power price discovery between buyers and sellers.Modes include bilateral contracts(PPAs)between IPPs and corporate consumers or utilities;merchant projects;and remuneration from certi
293、ficate schemes.Conversely,policy-driven procurement refers to models in which government decisions affect the price signal for investment.It can take the form of policy support,such as the setting of volumes or controlling of prices,or regulatory measures,which directly affect competition.The two mo
294、st prominent policies have been administratively set tariffs for remuneration(wherein the government decides on a fixed tariff to offer developers)and competitive auctions(wherein the government puts a set amount of capacity up for bid and sets a limit on what it will pay for the power).Utility-owne
295、d projects in regulated markets constitute a third policy-based procurement method,as the price signal is effectively absent by default of the regulatory environment.Solar PV and wind forecast by primary procurement type,2023-2024 IEA.CC BY 4.0.Notes:PPA=power purchase agreement.“other”(left graph)i
296、ncludes renewable certificates and capacity dedicated to renewable hydrogen production.“Rest of world”(right graph)refers to the Middle East and North Africa,Eurasia and sub-Saharan Africa.“Unidentified”refers to countries for which the breakdown by procurement was not applied.Globally,almost 60%of
297、utility-scale solar PV and wind deployment in the next two years will be developed under policies with administratively set remuneration policies such as fixed tariffs,premiums,and utility-owned projects.However,most of this deployment will be in China,where developers receive tariffs set at the 0 5
298、0 100 150 200 250 300 350ChinaNorthAmericaEuropeAsia-PacificLatinAmericaRest ofworldGWFixed tariffs and premiumsUtility-ownedCompetitiveauctionsPPA(corporate)PPA(utility)Merchant and otherUnidentifiedUtility-owned3%Fixed tariffs and premiums 56%Competitive auctions20%Unidentified4%PPA(corporate)13%P
299、PA(utility)3%Merchant and other1%Market-driven17%Renewable Energy Market Update June 2023 PAGE|49 I EA.CC BY 4.0.provincial benchmark electricity price now that renewable energy feed-in tariffs have been phased out.Excluding China,less than 15%of the worlds utility-scale solar PV and wind capacity a
300、dditions are expected to be procured through administratively set tariffs.The largest growth is in the United States,from utility-owned projects in regulated markets,followed by the Asia Pacific region,from feed-in tariffs in Japan,Chinese Taipei and Viet Nam.In Europe,growth in administratively set
301、 procurement is mostly in onshore wind in France,where a feed-in premium exists for small projects,and from feed-in tariffs in the Republic of Trkiye(hereafter“Trkiye”).Competitive auctions are the largest source of policy-driven growth outside of China,accounting for almost half,led by Europe and f
302、ollowed by India,the United States,Korea,the United Arab Emirates and Brazil.The main motivations for auction-based growth are policy actions to meet climate goals(in the European Union),utility choice(in the United States)and economic attractiveness(in the Middle East and North Africa).Market-drive
303、n growth,which accounts for 17%of the worlds utility solar and wind expansion,is dominated mostly by corporate PPAs.The United States leads expansion in corporate PPAs,followed by Brazil,Australia,Spain and Sweden,all motivated by the economic attractiveness of these technologies,the opportunity to
304、hedge against rising and volatile power prices,and sustainability goals.Unsolicited bilateral contracts with utilities(PPAs with utility offtake)are prominent mostly in regulated markets,while some growth is expected from merchant projects in Chile,the United States,Denmark and Spain.Outside of Chin
305、a,Europe leads most of the policy-driven renewable capacity expansion,while market-driven growth remains very important in the United States and North America in general.How each of these markets evolves over the next two years will depend on the wholesale electricity price environment and on regula
306、tory and policy decisions.Economic attractiveness and consumer demand drive PPA growth in the United States Over half of US utility-scale solar and wind growth is expected to come from bilateral contracts for either corporate or utility offtake,spurred by both economic attractiveness and corporate d
307、emand to meet sustainability goals.Corporate PPAs are forecast to account for the largest share(40%),mostly in the form of Renewable Energy Market Update June 2023 PAGE|50 I EA.CC BY 4.0.virtual PPAs4 in deregulated wholesale markets.Over 80%of the virtual PPAs signed between 2021-2023 were in the E
308、RCOT,MISO and PJM service areas.However,rising PPA prices do pose a downside risk.Climbing interest rates,equipment price increases and interconnection queues have driven up costs for developers,while supply chain delays slowed supply amid rising demand.As a result,CPPA prices rose an estimated 11%i
309、n the ERCOT,PJM and MISO service areas between Q4 2022 and Q1 2023.Nonetheless,consumer demand for virtual PPAs is expected to remain strong,in part because of the cost savings they can offer consumers by aggregating demand across multiple locations.For developers,the economics of PPAs are expected
310、to remain appealing with the IRA extending the ITC,and with new opportunities for 10%premiums for projects being developed in energy communities starting in 2023.Additional revenue from renewable energy certificates(RECs)in some markets also strengthens the business case.The remaining 60%of US renew
311、able capacity expansion over 2023-2024 is mostly from utility-owned plants,competitive auctions,and PPAs with utilities.These are the dominant procurement methods in regulated markets in the Southeastern,Southwestern and Northwestern states,but procurement approaches vary across states depending on
312、the regulatory environment and whether utilities have a choice.The main drivers for growth are consumer demand for renewable power(sometimes in the form of green tariffs),the economic attractiveness of PV and wind systems compared with a utilitys existing fleet,and the need to comply with a governme
313、nts renewable energy targets.Competitive auctions drive European growth in 2023-2024,but the pace will depend on policy responses to volatile wholesale prices and rising costs The leading procurement method in Europe is competitive auctions,accounting for at least 60%5 of renewable capacity growth b
314、etween 2022 and 2024.Almost half of this growth will be from auctions for two-way fixed contracts for difference,6 led by Poland,the United Kingdom,France,Italy,and Spain.Trkiye use one-way 4 Virtual PPAs are a financial contract for difference between a wholesale electricity price and the PPA price
315、.As virtual PPAs require access to the wholesale market,the majority of the corporate PPA growth will occur in deregulated markets.5 The value represents deployment in Germany,Spain,France,the United Kingdom,Poland,the Netherlands,Sweden,Italy,Denmark,Belgium,and Trkiye,which account for 85%of Europ
316、es growth.The value would be higher if competitive auctions from the remaining European countries are included.6 In this model,developers receive a subsidy from the government when the wholesale price is below the strike price and will pay back any revenues that exceed the strike price.Renewable Ene
317、rgy Market Update June 2023 PAGE|51 I EA.CC BY 4.0.fixed-tariff auctions with price indexation,wherein the strike price is the contractual price irrespective of the wholesale market price.Meanwhile,Germany,the Netherlands,the Czech Republic and Slovenia use a one-way floor that guarantees developers
318、 the minimum strike price and an uncapped maximum from the wholesale market.7 In September 2022,the European Union agreed to begin taxing wholesale market revenues of more than 180 EUR/MWh in an attempt to reduce the burden on consumers,with some member states implementing even lower thresholds.Euro
319、pe solar and wind forecast(2023-2024)by policy and procurement type(left)and Germany prices for wholesale electricity,PPAs and auction ceilings(right)IEA.CC BY 4.0.Notes:PPA=power purchase agreement.August 2022 data were not published,so the figure is estimated as the average between July and Septem
320、ber 2022.*Refers to Pexaparks index.Sources:(right)Pexapark(monthly reports from 2021,2022,2023),Bloomberg New Energy Finance(accessed May 2023),and Bundesnetzagentur(accessed May 2023).However,uncertainty over future capacity growth in Europes auctions is mounting because they have been increasingl
321、y undersubscribed due to permitting challenges,and more recently due to the rising costs developers are facing from commodity prices,equipment costs,interest rates and inflation.As a result,developers are wondering whether they should turn to wholesale markets and direct PPAs with corporations and u
322、tilities with the prospect of higher remuneration.For instance,auction ceiling prices in Germany at the end of 2022 were just EUR 60/MWh,compared with corporate PPA of almost EUR 100/MWh and wholesale prices over 250 EUR/MWh.7 New regulations to protect consumers have introduced temporary wholesale
323、and gas price caps in multiple European countries.0 100 200 300 400 500Jan-21Mar-21May-21Jul-21Sep-21Nov-21Jan-22Mar-22May-22Jul-22Sep-22Nov-22Jan-23Mar-23EUR/MWhWholesalePPAindex*Auction ceiling(PV)Auction ceiling(onshore wind)05101520BelgiumDenmarkItalySwedenTrkiyeNetherlandsPolandUnited KingdomFr
324、anceSpainGermanyGWAuction(one-way minimum)Auction(two-way fixed)Auction(one-way fixed)PPA(corporate&utility)MerchantOtherRenewable Energy Market Update June 2023 PAGE|52 I EA.CC BY 4.0.Going forward,unsubsidised projects in the form of PPAs and merchant plants are expected to account for 22%of Europ
325、es capacity expansion.The majority of this will be corporate PPAs,led by Spain,Sweden,Germany,the Netherlands,and Denmark,with projects emerging in the United Kingdom,Italy,and Poland.While installations being developed on a fully merchant model are likely to constitute a minority,PPA projects are e
326、xpected to stack revenues by combining a merchant tail.Nonetheless,the pace of growth for unsubsidised projects in the Europe is also somewhat uncertain.Ambiguity over how long high wholesale prices will persist,especially with the share of marginal-cost PV and wind increasing,poses a downside risk
327、to plants relying solely on merchant revenue.In addition,signed PPA volumes in Europe were down 20%in 2022 compared to 2021,as developers raised contract prices to account for rising costs,while buyers were hesitant to lock in higher tariffs.The primary factor affecting procurement methods in Europe
328、 will be countries policy and regulatory responses to the risks developers face.For competitive auctions,some governments have already begun to take action to accelerate growth by adjusting auction designs and contracts to reflect developers cost uncertainties.In 2023,Germany raised its auction pric
329、e ceilings by 90%(to EUR 113/MWh)for onshore wind and by 25%(to EUR 74/MWh)for solar PV.As a result,solar PV auctions were oversubscribed for the first time since 2021.Portugal,meanwhile,will adjust the strike prices of its last three years of projects to account for inflation and rising equipment p
330、rices,and France will allow non-operational auctioned projects to sell electricity on the spot market for 18 months prior to the contract start date.Our forecast also expects corporate PPA growth to resume.PPA prices in March 2023 have fallen around 30%from November 2022,and the European Commissions
331、 draft of electricity market reforms suggests PPAs may play a more prominent role in the future.The March 2023 draft proposes that auctions be changed to two-way contracts and that auction bidders be allowed and encouraged to also enter into bilateral PPAs with other offtakers.While a final proposal
332、 will not be approved until 2025,developers may begin to devise business models in anticipation.Renewable Energy Market Update June 2023 PAGE|53 I EA.CC BY 4.0.Is the renewable energy industrys financial health improving?Despite challenges associated with energy security concerns,volatile commodity
333、prices,supply chain constraints and trade measures,the renewable energy industry has shown financial resilience.This is evident across various segments of the industry,including among major equipment manufacturers,developers and investors.In the short term,strong policy support in major economies,increasing demand and falling commodity prices can improve the financial performance of renewable ener