According to a new report published by Allied Market Research, titled, "Renewable Energy Market by Product Type and End Use: Global Opportunity Analysis and Industry Forecast, 2021–2030," the global renewable energy market size was valued at $881.7 billion in 2020, and is projected to reach $1,977.6 billion by 2030, growing at a CAGR of 8.4% from 2021 to 2030.
Renewable energy is derived from natural resources such as wind, solar, biomass, and geothermal that are constantly replenished. Wind energy, a type of renewable energy, is used to generate electric energy from kinetic energy source. Wind turbine converts the wind energy into mechanical energy, which is further converted into electrical energy through generator. Wind energy can be generated at offshore and onshore. Onshore wind energy is associated with onshore turbines that are located on land, whereas offshore wind turbines are found in ocean or sea.
According to the International Energy Agency, the share of renewable energy to meet the global energy demand is predicted to grow in the next five years to reach 12.4% in 2023. Renewable energy is derived from natural processes such as wind and sunlight. Solar, geothermal, wind, bioenergy, hydropower, and ocean power are some of the major sources of renewable energy. Currently, renewable energy is utilized in heating, electricity, cooling, and transport sectors. Renewable energy collectively provides around 7% of the world’s energy demands. Renewables are relatively more expensive than fossil fuels. In addition, several factors are responsible to drive the usage of renewable energies, the most crucial being the attribution of global warming due to carbon dioxide (CO2) emission from the combustion of fossil fuels.
The concern about the reduction of greenhouse gases emissions, increase in search for energy security along with the aversion to the traditional nuclear power, and the lack of progression in the application of the nuclear power are expected to drive the demand for geothermal power sector which further escalates the demand for renewable energy market during the forecast period These factors are predicted to notably contribute toward the global market.
However, developing new resources requires large initial investments to build infrastructure. These investments increase the cost of providing electricity, especially during early years. Initially, the developers need to find publicly acceptable sites with good resources and with access to transmission lines. Finding a potential solar site requires several years of monitoring to determine whether they are suitable. In addition, the workers need to be trained to install, operate, and maintain the new technologies. Some require operating experiences in certain climatic conditions, before the performance can be optimized. All these factors increase the cost of installing renewable energy plants. This factor is anticipated to thereby hamper the market growth.
Economies such as China, and India, are expected to drive the demand for renewable energy market. There is significant increase in energy demand in countries such as China, and India owing to rise in investment in renewable energy projects. The residential and industrial sectors are expected to consume more energy during the forecast period in Asia-Pacific. Furthermore, India has significant growth potential; however, due to its inconsistent policy and business environment, in past the renewable energy share in total energy production was less. There has been an increase in investments in renewable energy projects in India, owing to which it is one of the countries experiencing rapid growth in the Asia-Pacific market. For instance, a shift in trend toward use of localized energy procurements can be seen in the recent years.
Various government bodies in countries such as India, have taken the advantage of community choice aggregation (CCA) policies, which permits government to procure renewable energy resources on behalf of their constituents while retaining their existing electricity provider for transmission and distribution services. All these factors are expected to offer future growth opportunities to the global renewable energy market.
The renewable energy market analysis is done on the of type, end-use, and region.
By type, the market is segregated into hydroelectric power, wind power, bioenergy, solar energy, and geothermal energy. The hydroelectric power type dominated the global market in terms of revenue in 2020, with over three-seventh of the total share. This is attributed to the fact, surge in investments in off-grid energy generation and rural electrification across the developing countries such as India, China, Brazil, and Vietnam have surged the demand for hydropower plants. In addition, initiatives such as the Small Hydropower Programme by the Ministry of New and Renewable Energy and Rajiv Gandhi Grameen Vidyutikaran Yojana taken by the Government of India to electrify rural areas and promote the utilization of small hydropower energy for off-grid and mini-grid is expected to drive the growth of the market.
By end use, the market is fragmented into residential, commercial, industrial, and others. The residential segment dominated the global market, with over three-eighth of the total share in 2020. This is attributed to the fact that; solar energy is widely used in residential applications such as rooftop solar panels and building integrated photovoltaic (BIPV) systems, owing to low cost of electricity production and reduction in carbon footprint & dependency on fossil fuels. In addition, government of various countries such as China, India, and the U.S. have implemented various policies to encourage the use of solar energy by offering subsidies to install solar panels in homes.
Region-wise, the renewable energy market is analyzed across North America, Europe, Asia-Pacific, and LAMEA. The Asia-Pacific renewable energy market is projected to grow at the highest CAGR during the forecast period, owing to rise in industrialization as well increase in population. The renewable energy market has grown considerably in countries such as China and India. China is one the key players in hydropower, onshore, wind power and solar photovoltaic, and became the world’s largest producer of bioelectricity in 2017.
Key players operating in the global renewable energy market include ABB, Acciona, EDF, Enel Spa, General Electric, Innergex, Invenergy, National Grid Renewables, The Tata Power Company Limited (Tata Power), and Xcel Energy Inc.
The global market analysis covers in-depth information of the major renewable energy industry participants.
The novel coronavirus is an incomparable global pandemic that has spread to over 180 countries and caused huge losses of lives and the economy around the globe. The renewable energy market has been negatively impacted due to the wake of COVID-19 pandemic. The COVID-19 pandemic severely impacted the wind turbine manufacturing in countries such as China and Germany. For instance, in 2020, Germany's Nordex SE reported negative EBITDA of $86.5 million down from positive EBITDA of $21 million in previous financial year (2019). In addition, limited availability of spares and manpower for maintenance is a major problem affecting the market growth. During high wind season, planned maintenance became a major issue for industry players, owing to reduced labor force and social distancing norms. Furthermore, project delays and cancellation of orders further affected the key markets for both blade production and wind turbine installations. For instance, Siemens Gamesa Renewable Energy SA accounted for a net loss of $577 million during its fiscal third quarter in 2020. However, shifting trend toward domestic supply chain may reduce the reliance on foreign imports, encouraging domestic production of wind turbines. Furthermore, implementation of digitization will aid in remote monitoring for project execution; thus, limiting the labor force as much as possible.
Key findings of the study
- The solar energy segment is estimated to display the highest growth rate, in terms of revenue, registering a CAGR of 13.3% from 2021 to 2030.
- The industrial end use is anticipated to register the highest CAGR of 8.9% during the forecast period.
- Europe accounted for 35.5% of renewable energy market share in 2020, in terms of revenue, growing at a CAGR of 8.4%