This is an extract from a recent report “Tripling Global Renewables by 2030” presented by BloombergNEF. In this extract, we specifically focus on China, Japan, India, and Indonesia. 

World leaders have been building momentum to triple global installed renewable energy capacity by 2030, from a 2022 baseline. The proposed pledge puts renewable energy at the forefront of upcoming negotiations and aligns with BloombergNEF’s own analysis on a net-zero pathway. Achieving it will require global commitments to remove bottlenecks, particularly those affecting wind and power grids, that differ by country. 

• It’s the right goal. Tripling renewable energy capacity by 2030, to about 11 terawatts, is an important component of putting the world on track to reach net-zero emissions by 2050. By comparing this goal to BNEF’s long-term scenarios, it can be seen that a tripling of global renewables capacity is consistent with a pathway to global net zero by 2050, and that this increase in renewable power contributes a hefty 62% of total emissions abatement to 2030, against a no-transition scenario. 

• Tripling by 2030 will be hard, but achievable. A tripling of the world’s renewable capacity by 2030 entails a significant acceleration. The last tripling of renewable energy capacity took 12 years, and this next tripling must take eight. Wind and solar are now the cheapest sources of new generation in most countries, making such a goal more feasible than ever. 

• Industry and government must move fast. Meeting the target would require a doubling of the rate of investment in renewable energy to an average of $1,175 billion per year between 2023 and 2030, from $564 billion in 2022. It also requires power grid investment to rise to $777 billion in 2030, nearly three times as much as was spent on grids in 2022, and deploying 720 gigawatts of batteries worldwide by 2030, which is 16.1 times the total deployed at the end of 2022. Supply chain capacity investment for solar, wind and batteries is sufficient, however, with some adjustment necessary for specific issues. 

• The technology mix matters – both solar and wind must scale up. The world could most easily triple renewable capacity by relying primarily on solar. However, this would not generate enough clean energy to align with a net-zero path. BNEF’s forecasts suggest that the required growth in solar is already on track to be achieved, while the required wind build will require concerted action to unlock. A diverse portfolio of renewable energy sources would be better for decarbonizing the global power mix than one that is substantially solar because of wind power’s complementary generation profiles and higher capacity factors. 

• There are barriers that must be removed. Economics is generally not what is holding renewables back, and deploying more can benefit regions with rapidly rising electricity demand. Scaling up the right mix of technologies will require measures that address barriers to access, enable competitive auctions and encourage corporate power purchase agreements. Governments also need to invest in grids, simplify permitting procedures for projects, and ensure that power and ancillary services markets function to incentivize a flexible power system that can make use of the new generation.

China

China has the world’s largest base of installed renewables, with 1.2TW of existing capacity; tripling this would take the country to 3.7TW. This is in line with what is needed for the Net Zero pathway, and less than BNEF’s forecast of 3.9TW – although 2.5TW of that is low-capacity-factor solar that is unlikely to generate enough to align with a net-zero path.

As in many other markets, BNEF expects there to be plenty of solar in China in 2030, but for the country to have less wind capacity additions than the Net Zero Scenario would suggest. The capacity factor of solar in China is typically low (11-14%), because while the western provinces are sunny, much of the capacity will be on rooftops in eastern provinces close to electricity demand. China’s National Energy Administration (NEA) has accelerated rooftop solar deployment through bulk purchasing schemes in 676 counties, where state-owned developers are issued the remit to build solar and share revenue or savings with the rooftop owners. Large-scale solar and wind is being deployed through the ‘energy megabase’ program, but this depends on expansion of the long-distance electricity transmission grid. In addition to constructing ultra-high-voltage transmission lines, China is working to expand its offshore wind framework to national, not just provincial, waters and is looking to develop floating wind. Both measures support additional wind build near China’s coastal population centres. China also mandates storage attachments at utility-scale projects in most provinces – which could help manage the generation output of BNEF’s forecasted capacity mix to better align with net zero. 

Japan

Japan has already had several subsidy-driven solar build booms in the last 30 years, and so already had about 84GW of solar at the end of 2022. Consequently, tripling its renewables capacity by 2030 would take it slightly above the Net Zero Scenario. Japan’s government plans for further decarbonization rely on nuclear restarts and wind, as well as gradually replacing coal and liquefied natural gas fuels for thermal power plants with clean ammonia and hydrogen. However, these plans do not align with a net-zero scenario and BNEF’s forecasted renewables build for the country is also far behind this goal. 

BloombergNEF’s Net Zero Scenario sees 49% of power generation coming from renewable sources by 2030, compared to 21% in 2022. Improving grid connection timelines and permitting processes, arranging auctions that assist developers with land and grid connection risks, a clearer and longer-term auction calendar and more support directed to less-developed technologies like geothermal would all be essential steps to unlocking clean power deployment in the country.

India 

India has 177 GW of renewables installed. BNEF forecasts show a 2.6x growth in installed capacity by 2030, falling short of our modelled net-zero path. BNEF’s Net Zero Scenario also has a large amount of new solar in India, partly because much of the additional power demand will be due to air conditioning and hence have a demand profile matching solar generation profiles quite well.

India’s government is taking substantial measures to accelerate renewables deployment, including innovative auction designs for peak power, round-the-clock power and firm dispatchable power, all of which require different combinations of wind, solar and energy storage.

In April 2023, India’s Ministry of New and Renewable Energy (MNRE) announced that it would hold tenders for 50GW of clean energy capacity every year from financial year (FY) 2024, running April 2023 to March 2024, to FY2028. At least 10GW of this will be for wind power. An average of 15GW of renewables capacity was auctioned annually in the last five fiscal years. The increase in tender volumes is intended to help India realise its ambition of having 500GW of cumulative installed capacity from non-fossil-fuel sources by 2030, which given the government counts solar capacity in MW(AC), which is 20-30% lower than MW(DC), would be roughly a tripling.

Investment in power system flexibility is crucial to back up and enable rapid electrification of new demand sectors in India and to decarbonize the power mix. This includes investment in batteries, pumped hydro and dispatchable clean power capacity – the latter of which the round-the-clock auctions serve to support. Markets to support flexibility, including India’s announced overhaul of ancillary services, are also vital.

Indonesia 

Indonesia, the fourth-largest country in the world by population, has yet to really begin its renewable energy transition. At the end of 2022, it has just 13 GW of renewables, mostly hydro geothermal, and biomass, and tripling this would deliver just 38GW. The BNEF forecast for wind and solar deployment to 2030 is modest, because the government has no firm policies to support these sectors and local coal remains cheap. The Net Zero Scenario, however, calls for 97 GW of renewables by 2030.

Indonesia’s government has identified more than 1,000 projects to be supported by the Just Energy Transition Partnership, or JETP, a $20 billion joint public-private financial package proposed by International Partners’ Group (primarily G-7 countries) and financial institutions signed onto the Glasgow Financial Alliance for Net Zero (GFANZ). The Indonesian government has proposed prioritising the JETP funding for transmission infrastructure, however the final investment plan has not yet been agreed by all stakeholders. Stronger decarbonization targets, reduced subsidies toward coal and the removal of barriers to market participation are also important steps for Indonesia to take – whether to achieve a tripling of capacity or the 7.6-fold increase needed to align with net zero.

Key Solutions

Barriers to access: Tripling renewables by 2030 entails some basic work to make sure that clean power developers can build projects. This includes ensuring renewables compete on an equal footing with fossil fuel-based generation by removing subsidies for coal and gas, removing licensing and regulatory barriers to private sector participation in power plant ownership and development, and clarifying the ownership of land on which projects are to be built.

Auctions and offtakes: Long-term offtake contracts for clean power are an important way to accelerate clean energy deployment, by shifting power price risk from project owners onto utilities and state power firms. These contracts may act as a form of hedge for the buyer as well, for example in the energy crisis of 2022 when the natural gas price rose and drove up power prices around the world, leaving buyers in long-term renewables contracts much better off. Due to the falling costs of solar and wind over the last decade, long-term contracts can often be agreed at prices comparable with fossil fuel-generated power and acceptable to the buyer and the developer. The certainty around revenue allows developers to arrange debt finance at lower interest rates than if the project were exposed to power price risk, which brings down the levelized cost of energy of the project as well.  Often offtake contracts are awarded in auctions, where project developers submit bids on various criteria, usually primarily price. Competition between developers ideally means that the offtakes are awarded in a cost-effective manner, if the auction is well-designed.

Grids and infrastructure: BloombergNEF estimates that to align with a net-zero pathway, grid investment needs to match renewables investment dollar for dollar. That means that for each dollar spent on clean power deployment, a further dollar must be spent on the transmission and distribution grids. Currently, the ratio globally is far below that: a mere 50 cents is spent on grids for every dollar of global renewable energy investment. The lack of grid infrastructure is leading to extremely long queues for grid connection. 

In Europe, it can currently take up to eight years to get a connection permit for the grid. This means that a project proposed in 2023 would not be able to connect in time for the COP28 target. BNEF estimates that nearly 600GW of renewables were in the connection queues of five key European states at the end of 2022 – enough to double capacity on their own. In the US, projects in grid queues are already sufficient to triple the country’s renewable capacity by 2030.

Permitting: Permitting can add years to renewable project development timelines. In Europe, permitting can take 10 or more years for offshore wind, four to nine years for onshore wind and one to four years for solar (which tends to have a lower impact on its surrounding environment). Designating projects as having an ‘overriding public interest’, as introduced by the European Union in 2022, or allowing for automatic approval/exemption if applications are not reviewed or rejected within a certain period of time, is one way to speed up the process. Permitting processes play an important role, filtering out projects that are significantly detrimental to the local environment or communities. Some sites should never be built on for social or ecological reasons. However, every effort should be made to clarify and improve existing processes to identify suitable sites. 

Market design: Effective market design is critical both to ensure that renewable energy can compete with existing fossil fuel fleets and be built on a cost-effective basis. It is also essential to ensuring the power system itself can handle increased renewable penetrations or achieve 24/7 production of low carbon generation.

Access the full report here.