By Fitch Solutions

Key View

  • We expect to see over 1,800 GW of new non-hydropower renewable capacity come online over the coming decade, a significant increase against our previous 10 year forecast of 1,400 GW.
  • Growth is supported by global decarbonisation efforts and declining costs with Asia the leading region accounting for 57% of additions.
  • Solar capacity growth will eclipse all other renewables combined with over 1000GW of additions expected with rooftop solar making a global resurgence.  

Solar Capacity Growth To Outpace Other Renewables While Asia Dominates

Latest Updates And Structural Trends

  • We maintain our view of robust non-hydropower renewables generation growth in Asia, led by solar and wind power. Wind power will experience a greater generation growth than solar over the coming decade, following increasing wind turbine manufacturers in Asia and supported by a higher conversion efficiency. In spite of Asia’s strong renewables growth, coal power generation will remain as the dominant power supply, due to solar and wind power’s intermittent supply nature.
  • The North America and Western Europe region is set to see significant growth in the non-hydro renewables sector over the coming decade, led by the solar sub-sector. Western Europe will see net capacity additions grow more quickly than North America owing to its wide mix of markets with strong growth outlooks. Upside risks are presented to the region’s largest growth markets, Germany and the US, given shifts in energy policy and elevated support by their governments.
  • The non-hydropower renewables sector will drive growth within Latin America’s power sector over the coming decade, with the sector set to account for nearly 75% of all capacity additions through 2031. Robust non-hydro renewables growth outlooks throughout the region support our outlook, with Brazil and Chile standing out as the region’s renewables outperformers. Growth within the solar power sector will outpace the wind power sector due to strong outlooks for utility-scale projects as well as distributed generation solar systems. 
  • Egypt and the UAE will remain the MENA region’s non-hydropower renewables capacity growth leaders over our 10-year forecast period to 2030. Non-hydropower renewables to remain marginal in the region’s overall power generation mix, making up less than 6% of total generation throughout our 10-year forecast period. Solar power will remain the dominant renewables type in the MENA region, attracting continued investment to drive strong growth over the coming decade.
  • Investment in the development of new non-hydroelectric renewables capacity will be one of the primary forces driving power sector growth in the Sub-Saharan Africa (SSA) region. South Africa will be SSA’s solar capacity growth outperformer, accounting for over 40% of the region’s total net growth in solar power capacity between 2022 and 2031. Despite rapid proportional year-on-year growth in the sub-sector, the renewables segment will remain a minority contributor towards the region’s overall power supply.
  • Oceania, North America and Western Europe remain the highest-ranked sub-regions on our Global Renewables RRI, given their strong overall Risks profiles and well-developed non-hydropower renewable power sectors. While South Asia is the highest-ranked market overall in terms of Rewards, the markets within this region all rank below the global average for Risks. The Caucasus and Central Asia sub-regions, as well as the SSA region as a whole, underperform against the rest of the world on our RRI due to poor overall Risks profiles. The markets within the Caucasus and Central Asia also have the lowest share of non-hydropower renewables as part of their overall power mix, limiting Rewards. In terms of Industry Rewards, a sub-region we highlight for strong performance is North Africa, given high levels of growth in non-hydroelectric renewables capacity.
  • The global climate summit, COP26, has G20 members divided on topics such as the future of coal power presenting significant downsides to the sector but leaving room for continued operation. Growth of low carbon power generation will be mixed across world’s leading economies with outperformers such as the UK and Turkey and laggards with Russia and Indonesia. We expect that China will be key in promoting renewable technologies amid new agreements to accelerate development which poses an upside to a faster and more widespread adoption of the energy transition.

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