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Context

The International Energy Agency (IEA) has released the "Renewables 2025" report, providing a critical assessment of the global energy transition.

Highlights of the Report

Record Growth, But Short of the Target

Global renewable power capacity is set to double by 2030, adding nearly 4,600 GW. However, this falls short of the COP28 pledge to triple renewable capacity by 2030, which is essential for limiting global warming to 1.5°C.

Dominance of Solar PV

Solar photovoltaic (PV) accounts for nearly 80% of all new renewable capacity. By 2030, solar PV is projected to surpass hydropower to become the world's single largest source of renewable electricity.

A Shift in the Power Mix

Renewables are projected to supply 43% of global electricity by 2030, an increase from 32% in 2024.

The share of variable renewables (VRE) like solar and wind will nearly double to 28%, by 2030.

New Challenge: From Deployment to Integration

The report highlights that the key challenge now lies in integrating variable renewable power into the grid, which requires investments in battery storage, smart grids, and demand-side management for flexibility.

Renewable energy expansion in India

Report positions India as a major bright spot in the global renewable landscape

• Second-Largest Growth Market: The report positions India as the world's second-largest growth market for renewables, predicting its capacity to increase 2.5 times by 2030.

• Drivers of India's Success:

• Record Auction Volumes: India has conducted large-scale, successful auctions for renewable energy projects.
• Improved Rooftop Solar Support: Enhanced policies and incentives are boosting the adoption of rooftop solar.
• Faster Hydropower Permitting: Streamlining the approval process for hydropower projects is helping to unlock their potential.

Challenges Hindering the Transition

Grid Bottlenecks

Lack of adequate transmission infrastructure is the single biggest barrier. Renewable energy is generated in remote areas, and the grid is not yet equipped to carry this power to demand centers.

Financing Gaps

Rising interest rates and financing costs are making renewable projects more expensive.

Transmission Infrastructure

While India is making progress, the expansion of the transmission network is not keeping pace with the rapid generation capacity addition.  

Financial Health of DISCOMs

Poor financial health of state-level electricity distribution companies (DISCOMs) remains a chronic problem. Payment delays from DISCOMs to renewable power producers create financial risk and deter investment.

The Way Forward: IEA Recommendations

Faster Permitting and Policy Certainty: Governments must streamline the approval processes for renewable projects and grid infrastructure, providing clear and stable long-term policies to attract investment.

Investment in Grids: Prioritizing the expansion and modernization of electricity grids to handle the influx of variable renewable energy.

Faster Permitting Processes: Streamlining bureaucratic and regulatory hurdles to accelerate the deployment of new projects.

De-risking Private Capital: Creating financial mechanisms and stable policies that reduce the risk for private investors.

Stronger Coordination: Enhancing collaboration between governments, grid operators, and financiers to ensure a coherent and integrated approach to the energy transition.

Conclusion

The IEA’s “Renewables 2025” highlights rapid energy transition, praising India’s leadership, but warns that resolving grid and financial challenges is crucial for meeting global climate targets in coming years.

Source: DOWNTOEARTH