Renewables 2025: The IEA’s Warning and Australia’s Window of Opportunity.
The International Energy Agency’s (IEA) Renewables 2025 report provides the agency’s latest forecasts and analysis for renewable energy deployment through to 2030. It examines electricity, transport and heat sectors globally, explores manufacturing and policy trends, and evaluates the financial health of renewable industries.
The headline finding is that global renewable power capacity is expected to double by 2030, adding around 4,600 GW—equivalent to the combined electricity generation capacity of China, the European Union and Japan. Solar PV dominates, accounting for roughly 80% of new growth, with wind, hydropower, bioenergy and geothermal making up the rest. In more than 80% of countries, renewable capacity will expand faster between 2025 and 2030 than in the previous five years.
While the outlook remains strong, the IEA notes that challenges are mounting. Supply chain disruptions, grid integration constraints, and financing pressures are threatening to slow momentum. According to the report, the global forecast for renewables has been revised down 5% from last year’s report, largely due to policy reversals in the United States (the early phase-out of tax credits and restrictions on new federal land projects) and slower growth expectations in China following its shift from fixed tariffs to competitive auctions. (1)
Key Global Trends
The report highlights several investment and policy themes shaping the next decade:
Solar surge: Solar PV capacity is expected to more than double by 2030, driven by low costs, faster permitting, and broad public acceptance.
Wind resilience: Despite higher costs and supply chain issues, global wind capacity will still nearly double, led by China and the EU.
Hydropower recovery: Growth in pumped hydro storage is expected to boost hydropower’s share of new capacity.
Energy diversification: Renewable energy companies are moving towards hybrid systems (solar plus storage) and strengthening financial discipline.
The IEA also notes that while renewable developers remain optimistic, many are adopting more flexible investment strategies amid rising uncertainty. Companies are committing less capital upfront, maintaining liquidity, and seeking stronger value-chain resilience—particularly in solar manufacturing, where oversupply and price competition have pushed some Chinese producers into negative margins.
Australia’s Outlook
Australia’s outlook is steady, with the country expected to add nearly 45 GW of renewable capacity by 2030, largely from solar PV. This growth will be underpinned by expanded state-level auctions, the Capacity Investment Scheme (CIS), and robust corporate demand for clean energy. Combined with ongoing distributed solar adoption, these factors position Australia to exceed its 2030 capacity ambitions.
In the broader Asia-Pacific context, Australia contributes around 7% of regional renewable capacity growth between 2025 and 2030. India leads the region with 345 GW of new capacity, followed by ASEAN nations (15%), Pakistan (9%), Japan (8%) and Australia (7%). For Australia, distributed solar will continue to dominate, while large-scale projects face grid connection and transmission challenges.
Investment Takeaways for Australian Environmental Investors
From an Australian investor’s perspective, the IEA’s analysis reinforces several themes:
1. Policy-driven opportunity:
The CIS, state auctions and renewable energy zones remain central to future growth. For investors, this means increased transparency and lower risk in large-scale projects, particularly those aligned with grid infrastructure investments.
2. Storage and grid integration:
The report’s focus on hybrid systems and grid flexibility highlights the growing importance of battery storage and smart grid technologies. For Australian investors, exposure to energy storage developers, battery minerals and grid services will become increasingly strategic.
3. Critical minerals advantage:
Australia’s role in diversifying global supply chains for rare earths and other critical minerals remains pivotal. The IEA notes that global efforts to reduce dependence on Chinese supply are fuelling new investment in domestic mining, refining and recycling—an area where Australia holds a structural advantage.
4. Corporate decarbonisation demand:
Strong corporate procurement, through power purchase agreements (PPAs), is creating consistent demand for renewable generation. This supports long-term revenue visibility for developers and fund managers investing in commercial-scale renewables.
5. Financial discipline and valuation reset:
Rising interest rates and inflation have pressured valuations across renewable equities, but financial health remains resilient. Developers are emphasising disciplined capital allocation and diversified revenue streams—an encouraging sign for institutional investors looking for sustainable growth exposure.
The Bottom Line
The IEA’s Renewables 2025 report paints a picture of continued growth in renewables, led by solar, but within a more competitive, disciplined and policy-dependent environment. For Australia, the message is clear: the pipeline is robust, but execution hinges on grid reform, timely approvals and storage deployment. For investors, the focus should remain on scalable technologies, grid-connected infrastructure, and critical minerals—areas where Australia has both natural and institutional strengths.
References
International Energy Agency (2025), Renewables 2025: Analysis and Forecasts to 2030, 7 October 2025. https://www.iea.org/reports/renewables-2025
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