The International Energy Agency (IEA) estimates the world needing to invest above $4 trillion on clean energy investment under Net Zero Emissions (NZS) scenario by 2030 to reduce the risks of future price spikes and volatility, as deployment of solar PV and wind power accelerates in all scenarios envisioned in its flagship report World Energy Outlook (WEO) 2022.
Under Stated Policies Scenario (STEPS), this investment amount currently amounts to $2 trillion. This more than 50% improvement in investment is thanks mainly to the US passing Inflation Reduction Act (IRA). The IRA along with Europe's REPowerEU and similar strong policy push elsewhere provide a boost to cost advantages of mature clean energy technologies and the prospects for new policies.
All fossil fuels, including coal and natural gas, reach a peak under STEPS by the end of this decade. Oil demand too levels off in the mid-2030s thanks to electric vehicles (EV). Clean energy technologies then take the centerstage.
Solar PV deployment over the next 10 years can add up to 370 GW every year for the next 10 years if countries deliver on their current climate pledges. For wind it will be a total of 210 GW. Together these 2 technologies will account for 45% of the global share of electricity mix under STEPS by 2050, that can go to 60% under Announced Pledges Scenario (APS).
Solar in the STEPS scenario has been increased by 470 GW to 3,020 GW, compared to last year's addition's total solar power of 3,020 GW by 2030.
The US and India will be dominated by solar PV technology, while European Union (EU) in contrast will move towards an onshore and offshore wind dominated capacity.
Solar PV additions could expand more than fourfold to 650 GW by 2030 under NZE and wind grows to over 400 GW. Hydro power and other dispatchable renewables triple by 2030 to over 125 GW offering low emissions means of integrating the growing amounts of solar PV and wind.
"The huge rise in the share of solar PV and wind in total generation in all scenarios fundamentally reshapes the power system and significantly increases the demand for power system flexibility to maintain electricity security," reads the report.
The WEO also reflects on having a reliable supply chain for solar PV technology that's not dependent on a single source. Authors of the report believe that if all announced manufacturing plans for solar PV are realized globally, its capacity would exceed the deployment levels in the APS in 2030 by around 75%.
China, which the IEA has in the past credited for investing in economies of scale for solar PV manufacturing that has contributed to bringing down its cost globally, current accounts for a global market share of 80% for all key manufacturing stages of solar panels. It warns this share could rise to more than 95% in the coming years for key elements including polysilicon and wafers (see IEA Calls For Diversified Solar Supply Chains).
"There is a clear need for countries and regions to help diversify clean energy supply chains and make them more resilient," it added.
The report also points at the demand for critical minerals for clean energy technologies that's expected to rise sharply. Copper will top this list, followed by silicon and silver for solar PV, among others.
Authors recommend continued technology innovation and recycling as vital options to ease strain on critical minerals, as well as avoiding high reliance on individual countries as China for clean technology supply chains.
IEA strongly recommends stronger policies to drive the huge increase in energy investment to reduce the risks of future price spikes and volatility.
"It is essential to bring everyone on board, especially at a time when geopolitical fractures on energy and climate are all the more visible," said IEA Executive Director Fatih Birol. "This means redoubling efforts to ensure that a broad coalition of countries has a stake in the new energy economy."
The complete report can be downloaded from the IEA's website for free.