The United Arab Emirates (UAE) has solidified its position as a frontrunner in renewable energy competitive auctions, joining the ranks of prominent nations including European countries, India, the United States, Korea, and Brazil. According to the International Energy Agency (IEA), these auctions, which enable governments, businesses, and power utilities to procure clean power through a bidding process, constitute the largest source of policy-driven growth in the renewable energy sector.
Renewable power expansion owes its remarkable progress to two primary drivers: policy-driven growth and market-driven growth. The latter, fueled by power purchase agreements (PPAs), predominantly spearheaded by the United States, accounts for 17% of the global expansion in utility solar and wind energy. Conversely, auctions have emerged as the dominant force behind policy-driven growth, propelling renewable energy development to new heights.
In its Renewable Energy Market Update, the IEA emphasized that the burgeoning growth in renewable power is primarily led by solar photovoltaic (PV) energy. Notably, the report forecasts the addition of a staggering 107 gigawatts (GW) of renewable capacity in 2023 alone, bringing the global total to 440 GW—an amount equivalent to the combined installed capacity of Germany and Spain.
The report attributes this unprecedented expansion to several factors. Expanding policy support, a heightened focus on energy security concerns, and an improving cost competitiveness when compared to fossil fuel alternatives have paved the way for the meteoric rise of renewable energy. These positive factors have outweighed challenges such as rising interest rates, increased investment costs, and persistent supply chain issues.
Within the realm of renewable power, solar PV capacity, encompassing both large-scale utility systems and smaller distributed systems, is set to account for two-thirds of the projected global renewable capacity increase in 2023. The IEA highlights the proactive efforts of policymakers, particularly in Europe, who have actively sought domestic alternatives to imported fossil fuels in order to bolster energy security. This shift in focus has created a favorable environment for solar PV, particularly in the residential and commercial sectors, which can be rapidly deployed to meet the escalating demand for renewable energy.
Looking ahead, the report predicts continued growth in solar PV installations throughout 2024, while acknowledging ongoing challenges for the expansion of wind energy. As the UAE and other leading nations forge ahead in their pursuit of clean and sustainable power sources, the global renewable energy landscape is undergoing a profound transformation.
