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A worker checks solar photovoltaic modules used for solar panels at a factory in Suqian in China's eastern Jiangsu province on May 9.STR/AFP/Getty Images

Global additions to renewable energy capacity are on track to surge to a record this year as growing energy-security worries and improving costs drive investments in green power.

The International Energy Agency said on Thursday that the world will add more than 440 gigawatts of renewable electricity in 2023, which is more than the entire installed power capacity of Germany and Spain combined. That addition is 107 GW above that of 2022, and is driven mostly by solar projects.

Solar is also expected to account for two-thirds of additions next year, pushing renewable additions to yet another record.

The forecast follows the Paris-based IEA’s projection last week that well over half of energy investments this year will be directed at clean technologies, including renewables, electric vehicles, nuclear power, energy storage, low-emission fuels and efficiency improvements. It predicted such spending will top US$1.7-trillion, as the race to decarbonize economies in the fight to limit climate change picks up steam.

“This unprecedented growth is being driven by expanding policy support, growing energy security concerns and improving competitiveness against fossil fuel alternatives,” the IEA said in its renewable energy market update. “These factors are outweighing rising interest rates, higher investment costs and persistent supply chain challenges.”

The IEA published its prediction as one of Greece’s top industrial and power companies, Mytilineos SA, said it planned to spend $1.7-billion on solar projects in Alberta, adding to an investment boom in renewables in the province. It aims to have five projects fully operational by 2026.

At the end of 2022, installed renewable electricity capacity worldwide was 3,372 GW, representing about 30 per cent of the total. The IEA has said that share could top 60 per cent by 2030 under a scenario where countries achieve their targets to get to net zero. Additions to capacity in the forms of solar, wind, hydro and bioenergy will have to climb 12 per cent annually to hit that number.

Fears of an energy supply crunch as Russia’s invasion of Ukraine roils oil and gas markets have prompted European Union member states to accelerate deployment of residential and commercial solar systems. The IEA said Germany, Spain, the Netherlands, France, Italy and Sweden account for more than four-fifths of the additions in the EU.

However, China is set to again lead the globe in spending this year and next. Last year, the country accounted for nearly half of the world’s additions to renewable capacity, the IEA said. In 2023 and 2024, that focus is expected to shift to megaprojects located far from demand centres where power can be delivered at prices at or below coal-fired generation. China will also push to develop solar projects along with capacity targets for public institutions and large state-owned enterprises.

The activity is being driven by several factors, including China’s target to get to net-zero emissions by 2060, continuous policy support for renewables and the large scale of its manufacturing industry for green technology.

In North America, the U.S. Inflation Reduction Act, which includes US$360-billion in incentives for renewables and other clean technology, is not expected to start bolstering capacity additions there until 2025.

“While federal tax credits under the IRA provide unprecedented investment certainty for renewable energy projects up to 2032, installations due to come online within the next two years have already qualified for previous tax incentive schemes,” the agency said. “Thus, pre-IRA policies as well as developments concerning supply chain constraints and trade measures affect our short-term capacity forecast.”

Globally, the success of solar comes down to its competitiveness. As the war in Europe has driven up wholesale and retail electricity prices, European policy makers have latched onto distributed solar systems, which can be installed relatively quickly, to diversify away from imported fossil fuels.

After two years of declines, onshore wind-power additions are expected to surge 70 per cent this year to break a record set in 2020. Some of the increase is driven by the commissioning of developments in China that were hit by COVID-related delays last year. Large expansions will also be recorded this year in the U.S. and Europe as projects that had been delayed because of supply chain problems go online.

Meanwhile, gains to offshore wind capacity are expected this year after a large decline last year, the IEA said.

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