The Big Picture
The mega-trends shaping the electricity transition in 2024
This section explores four trends that define today’s electricity transition.
The world is entering a new era of falling power sector emissions. This chapter begins by examining why power sector emissions are likely to fall in 2024 – leaving 2023 as the peak of fossil generation – and then examines how fast global power emissions may fall this decade, as policymakers gear up to triple global renewable capacity and expand other clean sources.
Solar energy is leading the energy revolution, unlocking the possibility of achieving the tripling goal, and putting the electricity sector on course towards climate targets. We look at how the rise in new solar capacity in 2023 surpassed expectations and how growth in 2024 will continue.
We then contrast the weak electricity demand growth in 2023 – especially in OECD countries – with the big rise expected in 2024 and beyond. The future expansion of electrification – with China leading on this – and also the growth in data centres and rising use of air conditioning are significantly adding to electricity demand. We highlight just how important it is to avoid wastefulness and inefficiency, which reduce our ability to quickly reduce emissions.
Finally, we look at case studies of policies that have helped three very different countries – China, Brazil and the Netherlands – achieve rapid growth in solar and wind in the last few years.
Through these four trends, we explore the factors behind the rapid and profound changes rippling through the electricity sector, and set out the reasons why these changes will only accelerate in the coming years.
Past the peak: A new era of falling power emissions
2023 was likely the peak of fossil generation, unlocking a new era of falling power sector emissions. Solar and wind have dramatically slowed emissions growth, and many countries are already past peak power emissions. We forecast that power sector emissions will likely fall in 2024 – and would likely have done so already in 2023 had it not been for droughts reducing hydro generation. In last year’s report, Ember estimated that there would be a 0.4% reduction in power sector emissions in 2023, but because of the record fall in hydropower generation emissions instead grew by 1%.
In the years ahead, solar and wind additions are forecast to be sufficient to reduce power emissions, even under scenarios of high electricity demand growth. The fact that solar and wind will continue to increase gives confidence that power sector emissions will not just plateau, but will in fact fall. Tripling global renewable electricity capacity by 2030 could supercharge the transition, and has the potential to help halve power sector emissions by 2030.
Now is the time to look past the peak, and to focus on how clean power could force emissions into a fast decline.
The scene is set for falling emissions
The growth of solar and wind have set the conditions for a peak and decline in power sector emissions. Solar and wind have already dramatically slowed emissions growth and many countries are past the peak.
Solar and wind have slowed the rise in emissions
Clean electricity growth – led by solar and wind – has helped to slow the growth in fossil fuels by almost two-thirds in the last ten years. Fossil fuel generation rose on average by 3.5% per year from 2004 to 2013, slowing to 1.3% per year from 2014 to 2023.
Fossil fuel electricity generation was 22% lower in 2023 than it would have been if solar and wind generation hadn’t been built. Between 2005 and 2023, wind and solar have avoided 19 gigatonnes of CO2 emissions, which is over half of 2023’s total global CO2 emissions.
Although power sector emissions reached an all-time high in 2023, solar and wind have prevented emissions rising even faster.
More than half of the world is already past the peak
More than half of economies are already at least five years past a peak in electricity generation from fossil fuels. Emissions from these 118 power sectors have fallen by a quarter in the last decade. Collectively, they represent 43% of global electricity demand.
Many developed economies peaked over a decade ago. European countries have seen the biggest falls – fossil generation in the UK has fallen by 63% since its peak in 2008, Greece by 57% (having peaked in 2007), Spain by 59% (2005) and Germany by 42% (2007). The biggest falls have happened in the last few years as solar and wind power have accelerated.
Other key developed economies have peaked, and seen smaller falls. Fossil generation in the US has fallen by 16% since its peak in 2007, Canada by 26% (having peaked in 2001), Australia by 24% (2009), Japan by 29% (2012) and South Korea by 13% (2018).
Collectively, OECD countries saw power sector emissions peak in 2007, with a fall of 28% since then.
Falling power sector emissions is already the reality for many countries, and the scene is now set for global emissions to start falling.
The world is past the peak
Looking back in time, it is likely that 2023 will have been the peak of power sector emissions.
Clean capacity growth was already enough to deliver an emissions decline in 2023, but a record fall in hydro generation prevented that. We forecast that power sector emissions will likely fall in 2024, due to solar surging and a rebound in hydro generation, even as electricity demand picks up.
A signal is emerging from the noise of year-on-year variability: the world is at the peak, and about to enter a new era of falling power sector emissions.
Clean capacity growth was enough to drive down emissions in 2023, but a fall in hydro generation prevented that
Clean power capacity growth reached a critical point in 2023 where, for the first time, it was enough to more than exceed typical demand growth and lead to a fall in emissions.
Clean power capacity additions increased in 2023. Solar capacity additions were 74% higher in 2023 than in 2022. Wind additions were 47% higher. This new clean capacity added during 2023 should have led to an increase of 930 TWh of electricity generation at typical load factors. This expected growth would have been more than the average annual rise in electricity demand of 2.5% over the last 10 years, which for 2024 would have been 730 TWh. This means the capacity added during 2023 would have been expected to deliver a 1.1% (200 TWh) fall in fossil electricity generation.
However, instead of falling, emissions rose slightly in 2023 because only half (493 TWh) of the expected rise in clean generation was recorded. This was predominantly because of a shortfall in hydro generation. Despite lower-than-expected demand growth, the clean growth was still not sufficient to meet all the rise in demand, which created a shortfall that was met by fossil generation.
The factors preventing a fall in 2023 masked the fact that clean growth was already fast enough to deliver falling emissions.
Ember forecasts that power sector emissions will fall slightly in 2024
We forecast that 2024 will likely see a fall in power sector emissions, as bumper growth in clean generation outweighs higher electricity demand growth.
We forecast that electricity demand will increase significantly by 968 TWh in 2024. But clean generation will likely grow even faster, adding an estimated 1300 TWh in 2024, which is more than double the increase in 2023 (+493 TWh). As a result, Ember estimates fossil generation is set to decline slightly by 333 TWh or 2% in 2024.
The latest forecasts give confidence in the projected growth in clean generation in 2024. Hydro generation should see a large rise, most importantly in China, even as a warmer climate increases the risk of droughts in future years. As demonstrated in Ember’s Mid Year Insights, long term trends on hydro capacity factors vary significantly across regions and years. Solar and wind additions will hit new records. BloombergNEF (BNEF) forecasts a 29% rise in solar additions from 444 GW in 2023 to 574 GW in 2024, and the Global Wind Energy Council (GWEC) forecasts a 9% increase in wind additions from 115 GW in 2023 to 125 GW in 2024.
Electricity demand will also grow. We forecast the rise in electricity demand in 2024 will be around 3.3% (+968 TWh), compared to 2.2% (+627 TWh) in 2023, and well above the last 10 years’ trend growth of 2.5%. The expected increase is driven by a bounceback in OECD electricity demand from low levels in 2023, and spurred on by a step-rise in electric cars, heat pumps and data centres, and strong industrial growth in China and India. Ember forecasts a 2-3% rise in the EU, compared to a 3% fall in 2023. The US Energy Information Administration (EIA) forecasts a 3% rise in the US, compared to a 1% fall in 2023.
Ember’s 2024 forecast assumes much faster electricity demand growth worldwide (+3.3%) than in 2023, and January-February data already indicates strong industrial production in China, and stronger than expected GDP growth in India. As the IMF and others upgrade industrial growth in China and India for 2024, it remains possible that electricity demand overshoots our forecast, which could result in power sector emissions registering another small rise in 2024, especially if droughts do not come to an end.
Most significantly, China is set to see a decline in fossil fuels in 2024. China’s strong growth in solar and wind power deployment in the last months of 2023 led the IEA to forecast a 3% fall in coal generation in China for 2024, which is a substantial change from their previous forecast of a coal rise. China added 37 GW of new solar and 10 GW of new wind capacity in January and February alone, surpassing previous record additions. Furthermore, early signs point to the drought relenting in 2024, which should boost hydro generation. This sets the country on a path to achieve new record additions of clean electricity in 2024.
The choices we make now will determine how rapidly emissions fall
Power sector emissions will fall, but the pace of the decline depends on how fast the world embraces clean electricity.
Power sector emissions will inevitably reduce given current forecasts for solar and wind, but the step up to tripling renewables would almost halve them.
Solar and wind forecasts are already big enough to enable emissions to fall
The latest industry forecasts give confidence that clean electricity deployment will provide enough electricity generation to meet even accelerated electricity demand growth throughout this decade.
The latest solar forecast from BNEF and wind forecast from GWEC are for annual additions to continue to rise from the record levels in 2023, throughout this decade. Almost 90% of the forecast rise in clean generation is driven by solar and wind additions, with nuclear, hydro, bioenergy and geothermal making up most of the rest.
Even if the annual increase in demand rises from the historic 2.5% per year to the 3.5% increase envisaged by 2030 in the IEA Net Zero Emissions scenario, clean generation is forecast to rise even more, reducing fossil fuel consumption and power sector emissions.
Tripling renewables would bend the curve on emissions
Tripling global renewable electricity capacity by 2030 – as countries committed to do at COP28 in 2023 – has the potential to almost halve power sector emissions by 2030.
Tripling renewable electricity means adding 14,000 TWh of annual generation by 2030, compared to 2022. This would help cut fossil power generation by 6,570 TWh (-37%). And because generation from coal, the most carbon-intensive fossil fuel, falls fastest, that leads to a 45% fall – an almost halving – in power sector emissions, according to the IEA Net Zero Emissions scenario.
Furthermore, renewables will not only replace fossil fuels in the power sector, but also across the energy system. Under the IEA scenario, over half of the rise in renewable electricity generation is used to meet a 32% rise in electricity demand, which adds 9,000 TWh to global electricity demand by 2030. Much of this is due to electrification, where renewable electricity would cut oil and gas from sectors like transport and buildings, and therefore reducing CO2 emissions outside the power sector.
The tripling of renewable capacity would provide a massive boost in clean energy. In the IEA NZE scenario, renewables leapfrog past oil, coal and gas to become the world’s largest primary energy source by 2030, from fourth place today. Already, renewables are the second largest source of electricity, after coal.
Ember’s research shows that government plans to 2030 already align with a doubling of global renewable capacity. The analysis showed that many national plans are behind the curve of current renewables growth and need updating to keep up; this would then make a global tripling a real possibility. Many OECD countries – including the US, Canada, the UK, Netherlands and Germany – are already aiming for net zero power by 2035.
Power was the biggest emitting energy sector in 2023. It is possible that it could become the first sector to reach net zero, while unlocking emissions reductions across the global economy as the world moves towards a clean, electric future. Power sector emissions will fall this decade. But how rapidly they fall depends on the actions taken now.
Solar is leading the energy revolution – and there is more to come
In recent years, solar’s rapid capacity additions have surpassed all expectations, positioning it at the forefront of the clean energy revolution. Solar generation rose more slowly than capacity in 2023, but will see a huge increase in 2024, with projections of a bumper year for solar generation. 2023 brought an unprecedented rise in supply – and fall in price – of solar panels, making them cheaper and more plentiful than ever. Given the excess of supply, and the rapid drop in battery storage costs, solar is increasingly limited only by how fast it can be connected to the grid.
Solar capacity has been growing fast
Solar growth has taken the world by surprise. Solar capacity additions have been growing exponentially since 2000. From 2000 to 2010 cumulative global capacity doubled every two years, then from 2010 to 2023 the rate slowed to doubling every three years. This move to a slower pace of exponential growth is not a cause for concern, and the path to a global tripling of renewables or meeting the IEA NZE scenario for 2030 does not require exponential growth to continue. A doubling every 3.8 years from 2023 to 2030 is consistent with the IEA’s NZE scenario.
Record-setting solar capacity additions exceeded expectations in 2023
Record-setting annual capacity additions were 76% higher in 2023 than in 2022, and continue to exceed predictions. Each year the IEA has upgraded predictions: from 2021 to 2022 to 2023 the IEA’s accelerated case scenario predicted that 2023 annual additions would be 218 GW, 257 GW, and 406 GW, respectively. With recent updates from China, the actual additions for 2023 are 444 GW according to BNEF. To put the scale of additions in 2023 into context, annual additions of solar capacity had not broken 200 GW per year until 2022, which itself was a record year.
Solar capacity has boomed due to steep declines in costs, supportive policy environments, technology efficiency improvements, and increased manufacturing capability. A key to the rapid rise is Wright’s law of technology learning curves, whereby the technology gets cheaper as it is deployed more and it is deployed more as it gets cheaper. Increased deployment is evident as there are now 33 countries with more than 10% share of solar generation, including Chile (20%), Australia (17%) and the Netherlands (17%), as well as the state of California at 28% (itself the world’s fifth largest economy).
The growth in annual solar additions unlocks a plausible pathway to tripling renewables
According to the IEA NZE scenario, a global tripling of renewables from 2022 to 2030 means a quintupling of global solar capacity from 1,223 GW in 2022 to 6,101 GW in 2030. Solar has been so successful that its contribution to renewables capacity in 2030 was revised upwards from 48% in the 2021 IEA NZE scenario to 55% in the 2023 update.
Given 2023’s record additions, meeting this goal means annual solar additions need to increase at a compound annual growth rate of 9% through to 2030, which is just over a third of the historic growth rate of 23% from the prior decade (2012 to 2022). According to the IEA NZE scenario, the land resources needed to support this level of growth are a fraction of the available suitable land.
Solar generation rose less than expected in 2023, but 2024 will see a big increase
Solar generation did not rise as much as solar capacity did in 2023, primarily because of the location of additions and growing underreporting. Nonetheless, solar generation in 2024 should reflect the capacity boom of this year and next.
Cumulative global solar capacity rose 36% in 2023, but solar generation rose only 23%
Global solar generation increased by 23% (+307 TWh) in 2023, with the share of solar reaching 5.5% in 2023 (1,631 TWh), up from 4.6% in 2022 (1,324 TWh). While impressive, this growth is not as fast as expected given the large amount of capacity installed.
There has been a strong linear relationship between capacity and generation over the past seven years, which shows 1 GW of solar capacity yields 1.09 TWh of generation. Based on that strong relationship, generation in 2023 was 182 TWh less than expected.
The shortfall is primarily explained by the location of capacity additions, under-reporting of generation, the timing of installations and weather.
- 60% of solar capacity added was in China, and 14% in Europe. These regions receive relatively little sunlight by global standards.
- There were large additions in countries that do not report up-to-date generation, particularly in Asia and the Middle East and North Africa. There are also growing challenges with reporting distributed generation, including behind-the-metre rooftop solar, and underreporting in large markets like the EU and Japan.
- Installations occurred unusually late in the year, and therefore contributed less to 2023 generation. Some of this effect will be persistent: Chinese installations always spike in December to meet targets. 2023 was particularly extreme however, with almost a quarter of China’s capacity additions happening in December.
- Solar insolation varies year to year, with the EU in particular experiencing less than average insolation in 2023.
- A number of factors contributed to the remaining shortfall. Curtailment increased in some markets, particularly in Japan, the Netherlands and Australia, though it remained consistent with recent years in China and most of the EU. Other possible explanations include the increasing proportion of rooftop solar in China, temperature-related efficiency changes, the use of less optimal sites, and patterns in the location and timing of installations that could not be measured from available data.
Generation is still growing but deeper integration of solar requires proactive planning
Although the increase in generation was lower than expected in 2023, the boost will be seen in 2024 generation figures. The additional electricity generation from panels installed late in 2023 (+21 TWh), less sunny weather (+6 TWh) and the under-reported generation (+45 TWh) would have brought total solar generation to 1,703 TWh in 2023, representing an increase of 29% compared to 2022.
Based on 2023 additions and BNEF’s 2024 Q1 solar installation outlook, we expect recorded solar generation in 2024 to be between 2,150-2,350 TWh, depending on how accurate installation forecasts are. This change represents at least a 32% increase compared to 2023, and provides reassurance that solar remains on track with the 26% average growth rate required for net zero.
Nonetheless, challenges must be addressed. Grid congestion is already a major bottleneck to solar deployment around the world, with suitable connection points becoming rarer. In 2024, curtailment is expected to increase in China and California due to insufficient storage. With long construction lead times, investing in new transmission capacity now will maximise the benefits of solar. In the meantime, connect-and-manage approaches to planning – ensuring a quick grid connection with some curtailment risk in exchange – can ensure congestion does not unnecessarily slow the energy transition.
Harnessing the full potential of solar
2023 brought an unprecedented rise in supply of solar panels, yet many countries – even many sunny countries – still have a low amount of solar generation.
Global solar supply can meet global tripling goal and then some
Global solar PV manufacturing capacity is forecast to reach 1,100 GW by the end of 2024. According to the IEA market update in June 2023, this is more than sufficient to meet the needs of the IEA NZE scenario. This suggests that solar can potentially play an even bigger role in the global clean energy transition if needed.
In 2023, the amount of solar manufactured in China outpaced global demand, with module spot prices collapsing by more than 50% in the second half of the year and pushing domestic installations higher and higher. Solar module prices are now significantly lower than would be expected based on Wright’s law of technology learning curves. As Chinese state lending has been increasingly redirected from the residential sector to manufacturing, the country now accounts for 80-85% of global solar module production.
Oversupply of modules will persist into 2024. EU demand remains large, but with inventories high, electricity prices falling and barriers to installation, exports to the EU are unlikely to be larger than in 2023. Meanwhile China’s solar exports to India, which grew rapidly in the last four months of 2023 as prices fell, will shrink drastically, as from April onwards any government supported solar projects will be required to use domestically manufactured solar panels. China’s need to find new export markets is a tremendous opportunity for countries around the world to take advantage of how cost competitive and available solar is compared to other generation sources.
Promising solar regions remain untapped
There is not a clear relationship between sunshine and solar uptake, with many sunny countries yet to tap the potential of solar. While a few leaders like Australia and Spain are producing almost 20% of their power from solar, 66% of countries get less than 5% of electricity from solar. The presence of high solar generation even in countries with relatively poor insolation like Germany (12%) and the Netherlands (17%) highlights the potential solar has for meeting generation needs regardless of natural endowments.
There are promising signs in some regions, with module imports to the Middle East rising in 2023. Many countries across the globe face financial and logistical challenges, and it is important to enable development in high potential countries through the appropriate financing and de-risking mechanisms. Africa alone accounts for one-fifth of the global population and has huge solar potential, and yet the region currently attracts just 3% of global energy investment.
Demand growth in 2023 was below trend, but in future it will only go up
Global electricity demand growth was particularly weak in early 2023, mostly due to falls in OECD countries, but the latest monthly evidence shows growth is already picking up.
Five fast-growing technologies accounted for over half of the demand growth, and all could benefit from a focus on efficiency – EVs, heat pumps, electrolysers for green hydrogen, data centres and air conditioners. As electrification picks up speed, OECD demand growth will begin to rise for the first time in two decades. But as of 2023, China is ahead of the world in beginning electrification of its economy.
Demand growth will not just bounce back from the weak levels in 2023, it will enter a new era of faster growth – just how fast will depend, in part, on a focus on efficiency.
Global demand growth was below trend in 2023 but acceleration is already underway
Global electricity demand increased by 627 TWh in 2023, mostly due to strong growth in China and other developing countries. Falls in OECD countries were due to short-term non-structural factors and the latest monthly evidence shows growth is already picking up.
Global electricity demand was weak in 2023 due to falls in OECD countries
Global electricity demand rose by 2.2% in 2023, which was 0.3 percentage points below the average annual increase from the past ten years (+2.5%). The slowdown was caused mainly by a fall in electricity demand in OECD countries, which shaved 0.6 percentage points from global demand.
The downturn in EU electricity demand was due to multiple factors, including a drop in industrial electricity consumption, mild weather and energy savings and efficiency. The US saw a dramatic shift in weather conditions from a particularly cold winter and hot summer in 2022 to unusually mild temperatures in 2023. Among OECD countries in Asia Pacific, especially in Japan, high energy prices incentivised the adoption of energy saving measures and put pressure on industrial consumption.
Many South Asian countries experienced economic headwinds and power shortages, especially Pakistan and Bangladesh, where severe gas shortages spiralled into power shortages.
This left China as the main driver of global demand growth, contributing 2.1 percentage points to global demand growth in 2023.
Electricity demand was already picking up by the end of the year
The main factors weighing on global electricity demand had already subsided towards the end of the year, leading to a gradual acceleration of demand growth over the second half of 2023. Global electricity demand from January to August 2023 was 1% higher than the same period in 2022. In the last four months of 2023, demand was 4.5% higher than the same period in 2022.
In the EU, the energy crisis that followed Russia’s invasion of Ukraine had already eased as electricity prices fell to pre-war levels and heavy industry started to recover; so demand has been on a mild recovery path since October 2023.
In the US, the demand fluctuations were driven by extreme weather. January 2022 was colder than usual, followed by an extremely hot spring and summer, especially in May, contributing to spikes in electricity demand, while the winter of 2023 was milder than usual.
Meanwhile, demand growth in the rest of the world accelerated after a relatively slow start to the year. Strong growth in China in Q4-2023 was anticipated by national authorities as a result of increased economic activity after the easing of Covid-19 restrictions, although colder-than-average weather in November and December made the rise particularly large.
The evidence suggests the slowdown in global demand growth has now likely come to an end.
Electrification, data centres and air conditioning are driving demand growth
Five fast-growing technologies are already noticeably contributing to electricity demand growth, accounting for over half of the world’s demand growth in 2023 – EVs, heat pumps, electrolysers for green hydrogen, data centres and air conditioners. All these technologies require a strong focus on efficiency to avoid wasteful demand growth in a world of limited clean electricity.
29% of global electricity demand growth was from electrification of transport and heating and green hydrogen
The contribution of key electrification technologies, which replace fossil fuels with electricity, is already significant at the global level. EVs and heat pumps have added an estimated 0.6% to global electricity demand in 2023 – 27% of total growth.
The contribution of heat pumps to global electricity demand is substantial, although it has eased slightly in 2023 – an estimated 100 TWh compared to 103 TWh in 2022, mainly due to slower heat pump sales in the US and the EU amid falling gas prices and uncertainty regarding policy support. Meanwhile, the contribution of EVs has increased, as strong EV sales in China, Europe, the US, Japan, and India created additional demand for an estimated 72 TWh of electricity, a 50% increase compared to 2022, bringing the share of EVs in global electricity demand to an estimated 0.7% from 0.5% in 2022.
The acceleration of electricity demand growth coming from EVs and heat pumps has contributed not only to reducing fossil fuel demand outside the power sector, but also to considerable efficiency gains and CO2 savings. The 72 TWh of additional demand from EVs in 2023 was enough to displace over 260,000 barrels of oil equivalent per day, had it been burned in ICE vehicles. This is comparable to Australia’s total gasoline consumption in 2021. The 100 TWh of additional demand coming from the new heat pump sales in 2023 would have required around 300 TWh of gas, if burned in a conventional boiler to produce the same amount of heat. This is similar to the total gas consumption of France.
As the world continues to electrify, the efficiency gains will mean that less overall energy is needed, even as demand for electricity increases. The benefits to electrification are many: cutting energy waste delivers cost savings, in addition to reducing emissions.
28% of electricity demand growth was from air conditioning and data centres
Another major source of global electricity demand growth has come from two key sectors – space cooling and data centres. Efficiency in these two sectors is particularly important to ensure the success of the energy transition.
Air conditioning added an estimated 0.3% to global electricity demand in 2023, assuming a continuation of the 4% per year on average since 2000 (+5% in 2022).
These high growth rates are influenced by poor efficiency standards: most air conditioners sold globally tend to be half as efficient as the best available technology, despite the limited difference in costs.
Data centres contributed as much as air conditioning to global demand growth in 2023 (+90 TWh, +0.3%), with an average annual growth rate of electricity demand from this sector of almost 17% since 2019. State-of-the-art cooling systems can improve energy efficiency of data centres by at least 20%.
Even with electrification, there needs to be a focus on efficiency, as the least efficient EVs on the market have double the consumption of the most efficient models. Heat pump efficiency can be improved by 10% or more, depending on refrigerants.
China is ahead of the curve, but even here electrification is still in its infancy
China is ahead of the curve in electrifying heating and transport and building electrolyser capacity. In 2023, China’s electricity demand from the charging and battery swapping service industry grew by 78% and added an estimated 56 TWh to China’s electricity demand – 3.5 times more than the rest of the world. While China accounts for 60% of electric light-vehicle sales, this segment represents only an estimated 18 TWh of the 56 TWh demand increase, with the rest coming from electric vans, trucks, buses and two-wheelers, which China dominates globally. It is also the largest heat pump market in the world with more installations per year than any other country. Electrolysers, used mostly in demonstration plants by chemical and petrochemical companies, have also grown faster in China than the rest of the world. As a result, China accounted for 50% of global electrolyser capacity in 2023.
Even in China, electrification is still in its infancy. Only a fifth of China’s electricity demand growth in 2023 (124 TWh of 606 TWh) was from the three electrification technologies, but this share will rise in time. These technologies added 1.4% to China’s electricity demand in 2023, up from 1.1% in 2022. Meanwhile in the rest of the world, electrification added 0.25% to electricity demand in 2022 and 0.28% in 2023.
As China further accelerates the deployment of key electrification technologies and the world continues to catch up, the contribution of electrification will expand even further.
Demand is now entering an era of faster growth
As electrification continues to accelerate, global electricity demand is entering a new era of stronger growth and at 3.4% annual growth over 2024-2026 is even expected to exceed global GDP growth (+3.1%).
Mature economies such as the US and the EU will see electrification underpin stronger electricity demand growth, leading to a greater contribution to global growth. In emerging economies, where demand will grow the fastest, wind and solar are ideal enablers for accelerating electricity access and economic growth, as already demonstrated by China’s experience. Even as global electricity demand increases from electrification in transport, buildings and industry – accounting for 54% of demand growth by 2030 in the IEA Net Zero Emissions scenario – this will lead to lower overall energy demand due to considerable efficiency gains.
The IEA NZE scenario forecasts an annual increase in demand of 3.5% until 2050, assuming ambitious efficiency improvements across sectors and technologies, so even faster growth is possible if efficiency improvements disappoint. In a world of limited clean generation, wasteful demand growth would slow CO2 cuts in the power sector.
Without a strong move towards adopting the best available air cooling technologies, a continuing 4% annual growth rate in electricity demand from this sector would add 117 TWh per year by 2030. Cumulatively, this would add 730 TWh in total from 2023 levels – the equivalent of Brazil’s total electricity demand. Meanwhile, electricity demand from data centres could nearly double to 1,050 TWh within the next three years if the fast expansion of this sector continues without efforts to introduce more efficient cooling solutions.
The world is moving towards an electric economy, and governments need to embrace electrification, plan for fast renewables growth to meet electricity demand, and prevent wastefulness by having a strong focus on efficiency.
The countries showing how to rapidly transition to clean energy
Transforming an electricity system requires a variety of actions, but some common key enablers are galvanising the rapid growth in solar and wind around the world: high-level policy ambition, incentive mechanisms to unlock residential and utility-scale deployment and removing technical barriers to deployment. The following examples of three countries – China, Brazil and the Netherlands – show that despite very different starting points, the combination of these approaches is delivering rapid transformations of their electricity systems.
Different pathways, shared enablers
The power sectors of many countries are changing rapidly, largely due to the rise of wind and solar generation. Since the Paris Agreement in 2015, the combined share of wind and solar in the global electricity mix has increased from just 4.5% to 13.4%. This progress has made wind and solar the key solutions to combat climate change.
No other sources of electricity have ever grown from 100 TWh of generation to 1000 TWh faster. Solar and wind took just 8 and 12 years respectively, far ahead of gas (28 years), coal (32 years) and hydro (39 years). Like wind and solar, nuclear power also saw fast growth after it first passed 100 TWh in 1971, taking 12 years to pass 1000 TWh. However, now we have two clean sources growing even faster, and doing so at the same time.
Rapid wind and solar scale-up has been achieved by countries with different geographies, stages of economic development and political systems, demonstrating that we have all the tools necessary to make this fast change happen in power sectors across the globe.
There are many paths to a successful transition of the power sector and each country has different challenges to overcome. However, effective approaches have many things in common. Geography can be important, but it alone does not determine the ability to deploy wind and solar. Rapid large-scale deployment is driven by national or regional policy ambition, incentive mechanisms to increase demand and the removal of technical barriers to enable integration into the electricity mix.
Ambition
Ambition is often expressed through targets or commitments. Whether on a regional or national basis, these can be an effective tool for guiding long-term planning and driving deployment of renewables. They give customers, businesses and investors confidence in wind and solar.
Incentive mechanisms
Policies that incentivise the adoption of wind and solar drive up demand and investment for these technologies. Feed-in tariffs and net metering schemes that reward customers for excess generation are particularly effective in driving residential solar adoption. Tenders and auctions for large-scale installations ensure competition and push prices lower. Tax incentives and power purchase agreements (PPAs) make utility-scale deployment more attractive.
Removing barriers
For a fast transition to happen, there are many technical barriers to overcome. Integrating large proportions of variably-generating renewables into a power system requires efficient planning processes and grid connection, and ensuring a focus on flexibility. Maximising flexibility means creating a portfolio of actions, including ensuring fossil plants are flexible, building energy storage, building stronger, more efficient and smarter grids, redesigning electricity market rules and encouraging demand-side participation.
Furthermore, using natural resources effectively means facilitating the development of wind and solar in regions where conditions are more suitable through long distance transmission. With the electrification of transport, heating and industry, smart demand strategies, for example for electric vehicle charging or heat pump use, can match demand with wind and solar generation patterns and ease integration.
Case studies
Three leaders in the fast deployment of wind and solar – China, Brazil and the Netherlands – offer crucial insights on how countries are successfully applying these tools.
- China is the global leader in wind and solar, with both the largest absolute generation and the highest annual additions for over a decade. It has delivered wind and solar additions at breakneck speed, transforming the world’s largest electricity system.
- Brazil is using wind and solar to meet growing electricity demand. The country is taking advantage of the low costs of wind and solar and has made its power system more resilient, enabling it to be a leader in renewable electricity and avoid building up a reliance on gas or coal as electricity demand rises.
- The Netherlands has reshaped its power system as it seeks to rapidly phase out coal power and phase down gas power. The rapid build-up of wind and solar has reduced fossil generation from more than 80% of the power mix to less than 50% in just five years, putting the country on a path to rapid decarbonisation.
All three countries have used both wind and solar to deliver this transformation of their power sectors.
China
What has been achieved?
China is the global leader in wind and solar deployment. In 2023, more than half of global additions in wind and solar generation came from China. China’s wind and solar share has grown from just 3.9% in 2015 to 15.6% in 2023. This is especially remarkable given the size of China’s electricity system. Wind and solar are now generating 1,470 TWh of electricity, 37% of the total global wind and solar generation and more than the entire electricity demand of Japan or 75% of India’s electricity demand in 2023.
The speed of the transition has accelerated in recent years with wind and solar generation doubling in just three years from 2020 to 2023. The additions of wind and solar since 2015 have helped to meet strong growth in electricity demand. This reduced growth in fossil generation and therefore avoided emissions of more than 4 gigatonnes over that period. This is equivalent to the annual power sector emissions of the US, India and the EU combined.
What enabled it?
- Clean energy has received strategic prioritisation at the highest level, specifically of the so-called “new three” industries of solar power, EVs and batteries, leading to a huge surge in clean energy investments. This was driven not only by climate and pollution concerns, but also by a desire to reduce China’s energy import dependency and build future export markets. In 2023, clean energy was already the top driver of China’s economic growth.
- China introduced targeted policies to incentivise wind and solar. Feed-in tariffs and subsidies through tax incentives have resulted in higher investment and faster adoption.
- The build-out of grid infrastructure, such as long distance transmission lines, is particularly important to reduce curtailment and make use of the abundant wind and solar resources in China’s inland. Over the past decade, the country has constructed more than one-third of the global expansion of transmission grids. In combination with market reforms to prioritise offtake from wind and solar producers, China has managed to reduce the curtailment of wind and solar power in recent years despite connecting more installations to the grid than ever.
- Targets for renewable deployment have been successful at driving fast installations at scale. While China has often overachieved targets at a national level, with the country on track to achieve its 2030 deployment goals for wind and solar in 2025, local targets have been much more ambitious. Programs such as “whole county PV”, which required solar PV to be installed on a certain percentage of rooftops, have contributed to the rapid build-up of rooftop solar throughout 2022 and 2023.
Brazil
What has been achieved?
Wind and solar reached 21% of Brazil’s electricity generation in 2023, up from just 3.7% in 2015. It is a global leader in wind and solar, recording the second largest additions of any country in 2023, up from being the fourth largest in 2022 and has the second cleanest power sector in the G20. The country has avoided a major increase in its emissions, despite hydro generation not growing, thanks to wind and solar meeting all new demand in the last ten years.
What enabled it?
- Brazil became an early adopter of wind and solar in the region. After the 2001 energy crisis that saw droughts heavily restrict availability of hydropower, the country introduced the “Alternative Energy Sources Incentive Program” (PROINFA) to promote other renewable sources such as wind and solar. This included auctions for wind and solar projects starting in the mid-2000s that enabled fixed price contracts and spurred investment and growth in the renewables sector. This was aided by financial support for private companies through the Brazilian Development Bank (BNDES).
- Brazil is using natural resources effectively. The country has great wind as well as solar potential due to its latitude. It has further plans to develop more offshore wind, predominantly in the northeast of the country where conditions are most suited to development. Additionally, large hydropower plants and reservoirs provide the flexibility needed to incorporate variable renewables into the grid.
The country’s National Electricity Agency (ANEEL) introduced and subsequently expanded the size of installations that qualify for net metering. This is a tremendous driver of adoption of distributed generation, with solar PV making up the vast majority of such installations.
The Netherlands
What has been achieved?
The Netherlands is one of the fastest adopters of wind and solar in the world. Wind and solar generation rose from 8% in 2015 to 41% in 2023. This has reduced the country’s reliance on fossil fuels from 84% in 2015 to less than half (49%) of generation. As a result, the emissions intensity of power generation has halved (-48%) and emissions have declined 46% since 2015. Solar additions have been rising especially fast in recent years. Despite its high latitude, the Netherlands now has the second highest per capita solar generation in the world, behind Australia.
What enabled it?
- The government announced in 2017 that it would phase out coal by 2030 to reach its climate targets. In 2019, the Dutch government agreed legally binding targets to reduce CO2 emissions by 2030, which necessitated a phase down in gas generation as well. The decision included targets for onshore and offshore wind, as well as solar energy. These targets set top-down ambition, ensuring policymakers introduce further actions to enable faster renewables growth.
- Long-running financial incentives through its Sustainable Energy Production and Climate Transition Incentive Scheme (SDE, SDE+ and SDE++) reward producers for the CO2 reduction achieved by wind and solar and create a stable environment for investment into renewables.
To incentivise the adoption of rooftop solar, the Netherlands introduced a net metering scheme in 2004. Combined with high energy prices and the reduction in costs for solar PV installations, this policy has made rooftop solar an attractive investment for home owners. The Dutch government recently decided to continue its current net metering scheme until at least 2025.
China, Brazil and the Netherlands have seen remarkable growth in wind and solar that has transformed their electricity systems at a rapid pace. Signalling ambition can create an environment in which wind and solar can thrive, enabling trust and confidence among investors. Choosing the right set of incentive mechanisms to drive the demand for wind and solar systems as well as the regulatory solutions to overcome technical barriers and facilitate the integration of wind and solar into the mix is more important than a country’s economic or geographic starting position.
Of course, even countries that have been successful in their transition so far are still facing challenges. For example, in the Netherlands new wind and solar installations are being held back by grid congestion issues that could have been avoided with better long-term planning. Similarly, policies like net metering offer great incentives for residential solar adoption, but ensuring that additional grid costs are not shifted onto lower income households is an important consideration to achieve a just transition. Additionally, the impacts of wind and solar deployment on local communities have underlined the need to ensure adequate safeguards are in place.
Crucially, China, the Netherlands and Brazil have overcome barriers to the transition in the past. The current political, economic and engineering challenges are also solvable. We have all the tools we need to get transitions off the ground where they have just started, facilitate acceleration where it is most needed and push progress further in countries leading the global transition.