Global RE Growth Hits New Highs Amid Falling Costs: IEA Report

Globally, renewable energy shows no signs of slowing down. In the first half of 2024, solar PV additions rose by 36%, electric vehicle sales increased by 25%, and wind power capacity additions kept pace with last year’s deployment, said report.

International Energy Agency (IEA) recent report on Clean Energy Market Monitoring indicated that clean energy equipment prices evolved up to the second quarter of 2024 for solar PV, electric vehicle batteries, stationary storage batteries, and wind power. As per the comparison by the report, Ample manufacturing capacity and in some cases weaker-than-expected demand are putting pressure on the financial performance of some companies, while pushing down clean energy equipment prices and providing opportunities for faster transitions. The report observed a fall in overall, clean energy equipment prices which have overcome the uptick seen in the post-Covid period, as tangled supply chains, rising interest rates, and high commodity prices put pressure on equipment prices. This is despite fall in IEA clean energy technology equipment price index which is down by 22% compared to the post-pandemic peak.

Solar PV continues to be a standout performer: additions increased by one-third in China in the first half of 2024 compared to the same period last year, while additions in the United States grew by nearly 80%. However, heat pump sales fell by around 10%. Several major markets, notably China and the United States, often see a surge in new capacity additions for wind and solar PV toward the end of the calendar year as developers aim to complete projects. Moreover, the report observed a trend where, lower equipment prices have also favoured distributed solar PV systems, helping residential and commercial customer to save on their electricity bills.

Clean energy transitions are showing signs of acceleration in emerging markets and developing economies outside China, while some advanced economies face setbacks in specific sectors. Although progress on clean energy transitions remains concentrated in advanced economies and China, there are signs of change. In the first half of 2024, emerging market and developing economies, excluding China, saw a 100% increase in electric vehicle sales, with EVs accounting for around 5% of total sales, similar to the levels seen in developed Asia. India saw a substantial increase in solar PV capacity additions (+90%). However, some advanced economies, notably in Europe, experienced lower deployment levels of clean energy technology. Heat pump sales in Europe dropped by almost 50% in the first half of the year, and EV sales grew by only 3%. On the other hand, while coal and gas generation combined fell to a record low share of 23%. Wind and solar PV accounted for approximately 30% of total electricity generation in the European Union on a year-to-date basis.

Solar

In the first half of 2024, combined solar PV capacity additions in Brazil, China, Germany, India, and the United States were 36% higher than the same period last year. China installed nearly 130 GW of solar PV from January to June 2024, one-third higher than in 2023. Despite this growth, the rate of new capacity additions has slowed since capacity more than doubled in 2023 compared with 2022.

The rapid rollout of solar PV in China is largely due to a decrease in module prices, which have more than halved over the past year, enhancing the cost competitiveness of large-scale utility projects. Lower equipment prices have also benefited distributed solar PV systems, helping residential and commercial customers save on electricity bills.

In the United States, solar PV capacity additions surged by nearly 80% in H1 2024, adding 20.8 GW, while India posted a 90% increase, adding 15.4 GW in the same period.

Between the post-pandemic peak in 2021 and Q4 2023, solar PV module prices decreased by more than 50%. By Q2 2024, they had fallen an additional 20%, resulting in a total price drop of nearly two-thirds since their post-pandemic peak.