Global renewable power capacity additions will be strongly led by solar photovoltaic in the next five years, with the European Union's renewable electricity growth overtaking the U.S. but China staying firmly in first place by 2023, the International Energy Agency said in its annual report on renewables published Oct. 8.

The EU will see 124 GW of renewable power capacity come online in 2018-2023, driven by new bloc-wide renewables targets for 2030, additional auctions in key markets and a growing demand for corporate power purchase agreements, the agency said. Capacity in the U.S. is seen growing by 44%, which the IEA said was lower compared with earlier forecasts due to the expected impacts of tax reform and trade tariffs.

China will continue to dominate renewable energy growth, accounting for over 40% of global capacity expansion with more than 400 GW coming online in the forecast period. The country will also overtake the EU as the largest consumer of renewable energy by 2023.

Overall, global renewable generation capacity is forecast to expand by more than 1,000 GW to 2023 in the report's central scenario, compared with a forecast for 920 GW in the period from 2017 to 2022 published last year.

Despite increasing cost-competitiveness, renewable energy will still rely on supportive government policies and the right market design, the IEA said. Under an accelerated case, assuming more supportive government measures, renewables growth in the electricity sector could be 25% higher, according to the report.

Solar takes biggest growth share

In technology terms, solar PV's expected growth of 575 GW will account for more than half of all renewable capacity expansion thanks to supportive government policies and market improvements across most regions, the IEA said. The growth of distributed solar generation will also speed up so that utility-scale capacity will only make up 55% of solar additions over the forecast period.

The IEA sees global solar demand decreasing in the short term because of policy changes in China, but expects a demand recovery just after 2020. Global additions should exceed 140 GW by 2023 due to accelerating cost reductions and global installed capacity.

"Commercial, residential and off-grid PV applications together account for most of the extra growth, which indicates untapped potential in these segments, especially in China, India, Europe and Latin America," according to the report.

The IEA said that concentrating solar power, or CSP, will grow by 4.3 GW, or 87%, with most of the capacity added in China and no expected commissions in Spain and the U.S., currently the two countries with the most installed CSP capacity.

Wind is set to remain the second-largest contributor to renewables growth, with a 60% expansion by 324 GW. Offshore wind will make up 10% of the additions, meaning capacity will triple to almost 52 GW in 2023. Half of this growth will be driven by the EU and the other half by China and other Asian countries, the IEA said.

Hydroelectric power capacity is expected to increase by 125 GW, a 40% decrease from the 2012‑2017 period due in large part to a lack of large-scale projects in China and Brazil.

Modern bioenergy to drive renewable energy growth

The agency also highlighted the overlooked role of modern bioenergy, which it said would continue to drive overall renewable energy growth for the next five years and account for 30% of the additional renewables consumption globally.

Half of all renewable energy consumed in 2017 already came from modern bioenergy — four times the contribution of solar PV and wind combined, the IEA noted — with the vast majority from heat for industry and buildings as well as the transportation sector.

"Other renewables make a negligible contribution to these two sectors, which together account for 80% of total energy consumption," the IEA said in its report. "In 2023, modern bioenergy remains the main renewable energy source, although its share of total renewable energy declines slightly as solar PV and wind expansion accelerate in the electricity sector."

The agency's definition of the term excludes the traditional use of biomass, such as burning wood or charcoal for cooking.