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Renewables Race to Fill Resource Gap as Demand for Clean Energy Outpaces Supply
The renewable energy sector has seen significant growth in recent years, driven by record public and private investment. In 2024, renewables were lifted by an increasing demand for clean energy, setting the stage for continued growth into 2025. Utility-scale solar and wind dominated the new capacity additions, accounting for nearly 90% of all new builds and expansions in the first nine months of 2024, a sharp increase from 57% in 2023.
Solar Energy's Growth Surge
Among the various renewable energy sources, solar has seen the most significant growth. Solar capacity jumped 88%, reaching 18.6 gigawatts (GW). This surge in solar generation enabled it to surpass hydropower and nuclear, becoming the fourth-largest source of installed capacity, following wind. Despite challenges in other areas, solar's expansion demonstrates its technological maturity and the sector's ability to scale quickly.
Wind Energy Faces Challenges, But Makes Strides
Wind energy, on the other hand, faced a slight setback in 2024. Wind capacity additions fell by 14% to 2.6 GW, hindered by supply chain disruptions, financing issues, and permitting challenges. However, wind generation set a new milestone by exceeding coal-fired generation for two consecutive months, signaling a shift in energy markets towards cleaner sources.
Battery Storage Expansion
The storage sector also made significant strides, with battery storage capacity rising by 64% to 7.4 GW. As renewables such as wind and solar often generate excess power, battery storage has become an essential tool for utilities, helping to balance demand and supply. By 2024, battery storage capacity was expected to increase by a record-breaking 14.9 GW, highlighting the growing role of storage in supporting the clean energy transition.
Momentum for Clean Energy in 2025
Looking ahead to 2025, the momentum for clean energy is expected to continue, driven by several factors. Many industries, including cleantech manufacturing, data centers, and direct air capture (DAC), are increasingly turning to renewables to meet their growing power demands. These sectors will play a crucial role in helping renewable energy companies overcome existing constraints by reshoring supply chains, optimizing operational efficiencies with AI, and exploring new carbon markets.
The growing demand from industries like cleantech manufacturing and data centers is expected to contribute significantly to the energy needs of the future. Deloitte estimates that cleantech manufacturing plants will add 11 GW of demand by 2030, while data centers will increase demand by approximately 44 GW. The rapid growth of direct air capture plants will also create additional demand, bringing the total expected increase in energy demand from these industries to more than 57 GW by 2030.
The Race to Fill the Resource Gap
As demand for clean energy accelerates, the renewable energy sector faces the challenge of filling the growing resource gap. While the pace of demand growth outstrips supply, several factors are in favor of renewables. Technological advancements, cost-effectiveness, and the modular nature of renewable energy systems provide a solid foundation for continued growth. Additionally, reshored supply chains, AI-driven innovation, and carbon market monetization offer further opportunities to address the supply-demand imbalance.