Renewable Energy Market

The global Renewable Energy Market is valued at USD 1326.4 Billion in 2023 and is projected to reach a value of USD 2834.6 Billion by 2032 at a CAGR (Compound Annual Growth Rate) of 8.8% between 2024 and 2032.

Key highlights:

• Asia Pacific dominated the Renewable Energy market in 2023 and obtaining the largest revenue share of 42.3%
• In 2023, the solar power segment dominated the market with a revenue share of 32.4%
• The industrial segment asserted its dominance in the market and capturing the largest revenue share of 63.2% in 2023
• The surge in the installation of hydropower projects fuels the market growth.
• Increasing adoption of ambitious energy goals and policies across various utilities drives market growth.
• The market is moderately fragmented, with several top players adopting strategies like partnerships, mergers, acquisitions, collaborations, and new product launches to strengthen their market position.

Regional Overview

In 2023, Asia Pacific held a 42.3% revenue share in the market.

The rising installation of solar power projects in India and China is propelling the growth of the industry in this region. According to the Ministry of New and Renewable Energy (MNRE), India's current capacity for installed renewable power stands at 133.89 GW. Likewise, China's solar industry is poised to achieve unprecedented milestones in the years ahead. Surpassing the 500 gigawatts (GW) threshold by the conclusion of 2023 will mark a significant achievement, accomplished over a span of 13 years. In addition, countries in the region such as Australia and Japan, demonstrate substantial growth prospects due to their significant investments in solar power generation over recent years.

U.S. Market Overview

The US renewable power industry, valued at USD 134.6 Billion in 2023 to USD 270.2 Billion in 2032, is anticipated to grow at a CAGR of 8.1% from 2024 to 2032. Increasing government incentives and rising demand for clean energy sources is accelerating the growth of the sector in United States. For instance, In June 2023, NJR Clean Energy Ventures (CEV) finished building an 8.9-megawatt (MW) floating solar array, spanning 17 acres across the Canoe Brook reservoir in Short Hills, New Jersey. This array stands as the largest of its kind in North America, catering to approximately 95% of the power demand for New Jersey American Water's Canoe Brook Water Treatment Plant. Operational since January, the facility generates sufficient electricity to supply 1,400 homes. In addition, the United States witnessed a historic peak in renewable power utilization, constituting roughly 13% of the nation's overall power consumption in 2022. Within this, the electric power sector contributed around 61% to the total renewable power consumption, while renewable power sources contributed approximately 21% to the total electricity generation in the U.S.

Government Initiatives and Regulatory Scenario:

In 2024, renewable power deployment is expected to grow by 17% to 42 GW, contributing to almost a quarter of electricity generation. This estimate, while lower than the National Renewable Energy Laboratory's projection, takes into account the potential impact of the Inflation Reduction Act (IRA) and Infrastructure Investment and Jobs Act (IIJA). These acts are not just potential boosters, but significant drivers of growth, with the potential to increase annual wind and solar deployment rates to 44-93 GW between 2023 and 2030. Despite a rise in renewable costs in 2023 due to high financing, labour, and land costs, the long-term trends remain favourable. The IRA tax credits have made utility-scale solar and onshore wind competitive with conventional generation, providing reassurance to stakeholders. The IIJA and IRA have already spurred USD 227 billion in announced investments, with USD 100 billion realized so far, a testament to their effectiveness. States offered USD 24 billion in tax breaks in 2022, attracting significant investment to California, Texas, and Florida. Additionally, disadvantaged and low-income communities are benefiting from targeted incentives under the IRA, further instilling confidence in the direction of the industry.

What are the latest developments among corporations in the renewable sector for 2024?

In 2023, 30 companies joined RE100, a global initiative to source all electricity from renewables, raising membership to 421. About a quarter are headquartered in the US, with many targeting 2025 for total renewable commitments. Big tech firms lead in procuring renewable capacity, a trend expected to grow in 2024 due to the rise of generative AI, which could significantly boost clean electricity demand. Corporations are also engaging in the emerging tax-credit transfer market and pushing for governmental action on climate change, exemplified by 131 companies advocating for a fossil fuel phase-out by 2035. In 2024, increased investment in renewable infrastructure, regulatory support, and manufacturing boosts could enhance grid resilience and strengthen the clean energy supply chain, supporting solar, wind, storage, and green hydrogen projects. Deloitte's 2024 renewables industry outlook explores these impacts.

The global Renewable Energy market can be categorized as Product, Application, and Region.

How is the Product segment performing in the industry?

In 2023, Product generated a significant revenue share of 32.4% in the sector. The Product segment is divided into Hydropower, Wind Power, Solar Power, Bioenergy, and Others. The use of solar power is expanding quickly all over the world. Investments in the installation of solar panels to produce electricity from solar thermal energy are growing all over the world for use in a variety of commercial and residential buildings, industries, and homes. For instance, as per Freyr Energy, investing in solar panels is considered secure and can yield a return on investment (ROI) ranging from 25% to 30%, typically recouping the initial investment within 3 to 5 years. Homeowners are eligible for government subsidies when installing on-grid solar systems, while businesses can benefit from tax credits, including accelerated depreciation of up to 40%. The global market for renewable power is anticipated to witness rise in the solar segment due to a surge in the government sector's use of solar electricity.

Application Overview

In 2023, the industrial segment held a significant revenue share of 63.2% in the market. The application segment is classified into Industrial, Residential, and Commercial. renewable power sources offer a means to reduce carbon emissions and cut down on operating expenses within the industrial sector. The number of utility projects and the expansion of the PV module business throughout the industrial sector are predicted to increase due to the growing demand for clean electricity. The Solar Energy Industries Association estimates that, there will be approximately 37 GW of operating power plants in the United States, and an additional 112 GW are under development. Over the course of the projection period, these factors are anticipated to fuel demand for solar PV panels in the industrial application segment.

Key Trends

Integration of Energy Storage Solutions

The integration of energy storage solutions offers enhanced energy management and grid stability, driving the market's growth. For example, Tesla's deployment of large-scale battery storage systems, like the Hornsdale Power Reserve in South Australia, demonstrates this trend.

Advancements in Offshore Wind Projects

The advancement in offshore wind projects is gaining traction due to their high energy potential and reduced visual impact compared to onshore wind technology. Projects like the UK's Hornsea One offshore wind farm exemplify this trend, being one of the world's largest offshore wind farms.

Supportive Government Policies and Regulations

Supportive government policies and regulations to accelerate renewable power deployment are revolutionizing the market's growth. Examples include the Renewable Energy Target (RET) in Australia and the Renewable Energy Standard (RES) in the United States.

How is the IRA tax credit revival affecting U.S. clean energy manufacturing and supply chains?

A revival in domestic clean energy manufacturing is underway as companies restore to leverage IRA tax credits and meet renewable developers' demands for domestic content. Since the IRA's passage, over USD 91 billion has been invested in over 200 U.S. manufacturing projects, including USD 9.6 billion in solar, USD 14.4 billion in storage, USD 1.4 billion in wind, and USD 54 million in hydrogen. This reshoring aims to shorten supply chains, increasing transparency and resilience while reducing emissions. However, grid infrastructure and flexibility investments must support the rapid expansion of wind and solar PV to prevent curtailment. Biofuels, which saved 2 million barrels of oil daily in 2022, face challenges as prices remain high. Despite this, biofuel demand is set to grow by 11% by 2024, driven by energy security policies, particularly in Indonesia and Brazil.

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Market Dynamics

The surge in the installation of hydropower projects fuels the market growth

The market is witnessing significant momentum, particularly in the hydropower segment. According to the International Renewable Energy Agency, global hydropower installed capacity surged to 1,393 gigawatts (GW) in 2022, marking a notable increase of 2.19% from the previous year. This growth trajectory is expected to continue, driven by upcoming hydro projects and technological advancements. In August 2022, Natel Energy, founded by MIT alum siblings, introduced innovative hydropower systems featuring fish-safe turbines and other eco-friendly features designed to mimic natural river conditions. Additionally, government initiatives, such as the Government of India's declaration regarding the development of two hydroelectric projects in Nepal, the West Seti hydroelectric Project and the Seti River Hydropower Project, have accelerated the rapid expansion of the market. With the estimated USD 2.4 billion in investments required for these projects, the hydropower segment is expected to increase due to a combination of smart investments and technology advancements.

Increasing adoption of ambitious energy goals and policies across various utilities drives market growth

The increasing adoption of ambitious energy goals and policies across various jurisdictions and utilities has propelled market expansion in recent years. Presently, twenty-nine jurisdictions, accounting for nearly half of US electricity retail sales, have implemented mandatory renewable portfolio standards, while twenty-four jurisdictions, including two newcomers in 2023, have committed to achieving zero greenhouse gas emissions or 100% renewable power goals by 2030 through 2050. These initiatives are anticipated to drive a substantial demand for clean electricity, estimated at an additional 300-terawatt hours (TWh) by 2030. Furthermore, a growing number of individual utilities, consisting of 56 individual and 28 parent utilities serving 83% of US customer accounts, have set carbon reduction targets, with twenty-five utilities pledging to achieve either an 80% carbon reduction or an 80% share of clean generation by 2030.

Competitive Landscape

The renewable power industry is moderately fragmented, with several top players adopting strategies like partnerships, mergers, acquisitions, collaborations, and new product launches to strengthen their market position. Companies focus on technological advancements and innovation to reduce renewable power generation costs. The industry is characterized by increased collaboration, with firms building multi-megawatt offshore wind farms and small start-ups partnering with local utilities for community solar initiatives. The global renewable power sector remains competitive and dynamic, driven by technological advancements, changing market conditions, and evolving customer demands.

The key players in the global Renewable Energy market include - ABB (Switzerland), Xcel Energy Inc. (US), EDF Energy (France), National Grid Renewables (US), Acciona (Spain), Enel Spa (Italy), Innergex Renewable Energy (Canada), The Tata Power Company Limited (India), General Electric (US), Invenergy (US) among others.

What are the latest advancements in wind and solar power projects?

Wind Power Projects:

• April 2023: ArcelorMittal Brazil, in partnership with Casa dos Ventos, is developing the Babilonia wind power project with a capacity of 554 MW. This project, requiring an estimated investment of USD 800 million, will be located in Bahia, northeast Brazil. ArcelorMittal holds a 55% stake in the joint venture, with Casa dos Ventos holding the remaining share.

Solar Power Projects:

• January 2023: Cepsa plans to construct three additional solar power projects in Castilla-La Mancha, Spain, with a combined capacity of 400 MW, showcasing our ambitious commitment to renewable power. These solar energy farms in Campo de Criptana and Arenales de San Gregorio are expected to require an investment of USD 305 million.
• May 2022: NJR Clean Energy Ventures (CEV) has commenced construction on an 8.9-MW floating solar installation in Millburn, New Jersey, which is set to become the most enormous floating array in the United States. This project will use a floating racking system to accommodate 16,510 solar panels on a reservoir at the New Jersey American Water Canoe Brook Water Treatment Plant. The clean energy generated is projected to meet approximately 95% of the facility's annual power requirements through a power purchase agreement with CEV.