Renewable Energy Growth Trends
The past decade has seen a consistent, dramatic outperformance of renewable energy growth against predictions. Countries are increasingly focusing on renewable energy to meet decarbonization targets, with wind and solar energy poised to become the backbone of global power supply. This trend has attracted diverse players, including major oil and gas companies transitioning towards renewables, and private-equity and institutional investors prioritizing renewable energy in their strategies. The growth is not just confined to energy production; it encompasses the entire value chain, including steel manufacturing and car manufacturing sectors, both of which are integrating renewable energy into their operations.
Future Projections
According to McKinsey, by 2026, the global renewable-electricity capacity is expected to increase by over 80% from 2020 levels, reaching more than 5,022 gigawatts. Wind and solar will contribute two-thirds of this growth, a 150% increase. By 2035, renewables are projected to generate 60% of the world’s electricity.
Challenges & Strategic Focus
Despite the optimistic growth, the renewable energy sector faces significant challenges. These include the scarcity of top-quality land for development, a labor shortage in both blue-collar and white-collar sectors, supply chain pressures, and volatility in profitability and returns. To navigate this complex landscape, successful renewable energy developers will need to focus on value-chain excellence, economies of scale and skill, and an agile operating model.
The renewable energy sector, particularly wind and solar power, is on a robust growth trajectory. With the right strategies and overcoming current challenges, it has the potential to reshape the global energy landscape, contributing significantly to the world’s decarbonization efforts.