Solar and wind power to reach 5.4 TWac between 2024 and 2033

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Global solar deployment will add 3.8 TWac of new design capacity by 2033 compared to 1.6 TW for wind, while battery storage is forecast to grow by 640%

Developers will add more than 5.4 terawatts (TWac) of new solar and wind capacity to the grid between 2024 and 2033, bringing the total global capacity to 8 TWac, according to a new Wood Mackenzie analysis. This comes as the world moves to electrify economies and achieve decarbonization goals.

Energy storage capacity (excluding pumped-storage hydro) will increase by more than 600%, and almost 1 TW of new capacity is expected to come online in the same period. This makes energy storage one of the fastest growing markets in the energy industry as the challenges of integrating renewable energy sources grow.

“Global demand for renewable energy has reached unprecedented levels, driven by national policy goals, technological innovation and energy security concerns. Integrated energy technology solutions will continue to evolve, as evidenced by the significant increase in storage capacity growth despite inflation, grid constraints and permitting challenges,” said Luke Lewandowski, vice president of global renewable energy research at Wood Mackenzie.

Annual capacity will increase from about 500 GW of new solar and wind capacity installed in 2023 to an average of 560 GW per year over a 10-year horizon. China will continue to dominate solar, storage and wind, with 3.5 TWac forecast to be connected to the grid between 2024 and 2033.

Lewandowski added: “Solar PV is leading the deployment race, accounting for 59% of the global capacity scheduled to come online between 2024 and 2033. Energy storage will have the most balanced geographic footprint over time, in part because of its important role in making renewable energy available.”

Solar energy: Total installed global photovoltaic capacity to nearly quadruple between 2024 and 2033

“Ultra-low module prices boosted solar deployment in Europe and China last year and will continue to do so in the near future. However, grid constraints and a return to lower power prices, and consequently lower capture rates, will impact these markets and other regions,” said Juan Monge, principal analyst for distributed photovoltaics at Wood Mackenzie.

Wood Mackenzie’s Global Photovoltaic Forecast projects that 4.7 terawatts direct current (TWdc) will be added between 2024 and 2033, with China accounting for 50% of the capacity growth.

Monge added: “Ultimately, maximizing solar PV capacity, as well as wind capacity, over the next 10 years will depend on additional technological advances: from expanding grid infrastructure to encouraging flexible solutions, transportation and heating electrification.”

In 2023, dramatic module price declines in China and tight project turnaround times for tendered projects resulted in a 150% annual increase in installations across all PV segments. Annual increases in installed capacity will continue through 2026, when Wood Mackenzie forecasts a two-year slowdown due to an expected lull in development activity before the next round of planned orders that will lead to larger deployments.

In terms of first-quarter installations, U.S. developers installed more solar in Q1 2024 than in all of 2019, installations in China rose 36% year over year, and new capacity in India by Q1 accounted for 85% of total installed capacity in 2023. However, the distributed photovoltaic boom in Europe has begun to fade, with residential installations in Q1 shrinking by more than 30% in Germany and more than 50% in the Netherlands as retail rates fell.

Energy storage: Global cumulative capacity to increase six-fold by end-2033, exceeding 1 TW/3 TWh

“Global energy storage deployment in 2023 achieved a record increase of 162% compared to 2022, with 45 GW/100 GWh installed. While impressive, this growth is only the beginning of the multi-TW market as policy support in terms of tax and capacity exemptions and hybrid auctions accelerate storage deployment in all regions,” said Anna Darmani, Principal Analyst, Energy Storage at Wood Mackenzie.

The global energy storage market is on track to reach 159 GW/358 GWh by the end of 2024, according to Wood Mackenzie’s second-quarter update to its global energy storage market forecasts. Looking ahead, 926 GW/2,789 GWh will be added between 2024 and 2033, an increase of 636%.

China remains the world leader in energy storage due to its growing solar market, with an average annual capacity increase of 42 GW/120 GWh expected over the next 10 years.

In Europe, grid-scale projects are booming as developers seek to capitalize on emerging contract revenue opportunities. Demand from the distributed segment fell 23% in 2024 as retail rates stabilize. However, with lower system costs and regulatory changes, the distributed market is expected to resume growth from 2026.

Wind: Global wind industry to add over 1.7 TW in next 10 years

Policy support from China’s central government is driving the world’s largest wind market, according to Wood Mackenzie’s Q2 Global Wind Market Outlook. China is forecast to install an average of 91.5 GW per year.

Lucas Stavole, senior research analyst at Wood Mackenzie, said: “China’s central government announced a plan in May to promote energy transformation and ensure the country achieves carbon neutrality goals. Project development has been accelerated in the short term, and renewable energy investment will be a long-term economic driver.”

Challenges related to permitting, grid access, financing, and supply chain availability are affecting the 2024–2026 outlook, pushing the potential into 2027–2033 and beyond the 10-year horizon. These dynamics have primarily impacted countries in North America, Western Europe, and Asia.

Outside China, the average global wind power addition will be 85 GW per year, a significant increase from the previous 10-year average of 37 GW. The Americas region will add a total of 230 GW by 2033, as offshore wind gains ground in the region and government incentives continue to drive growth.

The offshore wind sector, following the 11 GW connected globally in 2023, will have an average connected capacity of 39 GW per year between 2024 and 2033 (386 GW in total), peaking at 54 GW in 2033. More than 50% (199 GW) of the total offshore wind capacity installed during the forecast period will be installed in China.

Source: Wood Machenzie