Welcome to ES!
User Login 中文 日本語
SNEC ES﹢
login-icon

Bridging The Solar Gap: Accelerating Deployment To Meet 2030 Climate Targets Amid Global Challenges – McKinsey Insights

Source：solarquarter

Nearly nine years after the landmark Paris Agreement, the world is at a crucial point in the transition away from fossil fuels, almost halfway through what many have called a “decisive decade” for climate action. Translating the ambitious climate targets set by governments and companies into concrete actions relies heavily on accelerating the deployment and adoption of various interrelated technologies. These technologies include renewable energy sources like solar and wind, electrification technologies such as electric vehicles and heat pumps, and less mature technologies like carbon capture, utilization and storage (CCUS), green and blue hydrogen, and sustainable fuels.

These decarbonization technologies, alongside others such as nuclear energy, long-term energy storage, and energy efficiency measures, are essential to reducing greenhouse gas emissions. Despite the progress made in deploying technologies like solar and wind power, there remains a significant gap between current deployment levels and what is needed to meet climate targets for 2030 and 2050. This gap is due to various challenges, including raw material shortages, labor shortages, and lengthy permitting procedures.

Solar photovoltaic (PV) energy has experienced remarkable growth in both Europe and the United States over the past decade, driven by supportive policies and significant private sector investment. Since 2015, Europe has added around 180 GW of solar PV capacity, while the United States has added approximately 120 GW. Despite this progress, the pace of solar PV deployment is not on track to meet the ambitious 2030 targets set by both regions.

Europe, for instance, aims for 600 GW of solar capacity by 2030 but currently has plans for less than 390 GW, leaving a significant shortfall. Similarly, in the United States, although there is substantial capacity in the pipeline, a large portion has not yet reached the final investment decision (FID) stage, putting future projects at risk of delay or cancellation. While the modular nature of solar PV allows for relatively quick deployment, bottlenecks in system approval processes and long permitting times pose challenges. To meet the 2030 targets, there needs to be a concerted effort to accelerate project approvals and secure the necessary investments.

Three major issues are currently threatening the deployment of necessary capital for these projects. First, the business case for many of these technologies remains weak, with economic returns and policy predictability often uncertain. Second, many technologies are not yet cost-competitive for consumers, mainly due to a lack of at-scale manufacturing capacity. Third, several technologies have not been tested on a large scale and require years of development, which adds uncertainty about their effectiveness and efficiency.

A recent analysis suggests that corporate, public, and private equity investors are hesitating to deploy capital because of these uncertainties. The amount of invested capital lags behind what is needed to meet deployment targets and many announced projects have not yet reached the final investment decision (FID) stage. This delay increases the risk of cancellations or delays, particularly for projects with longer lead times, such as offshore wind.

To meet climate commitments, innovation, and policy changes are required. A detailed, fact-based assessment of real-world progress is essential to maintain momentum and ensure that the energy transition continues at the necessary pace. This analysis focuses on the progress of specific low-emissions technologies in Europe and the United States, which have set explicit 2030 targets. While progress has been made, the insights reveal a potential disconnect between the ambitious climate targets set and what is likely to be achieved at the current pace.

On the policy side, all 195 countries that signed the Paris Agreement have committed to Nationally Determined Contributions (NDCs), with over 70 countries now having net-zero targets enshrined in law or outlined in policy documents. Industrial policies in many OECD economies are now focusing on building a competitive cleantech value chain, with substantial public funds earmarked for developing climate technologies.

In Europe, the European Green Deal aims to make the EU climate-neutral by 2050, with intermediate targets to reduce greenhouse gases by at least 55 percent by 2030 compared to 1990 levels. In the United States, the Inflation Reduction Act (IRA) of 2022 represents the largest climate investment in US history, aiming to cut emissions by 40 percent by 2030 from 2005 levels.

Despite these policies and continued cost improvements, renewable energy installation capacity has grown significantly globally. However, a gap remains between announced projects and those realized after reaching FID. For example, in the US, less than 15 percent of announced green or blue hydrogen projects have reached FID, indicating a high risk of project fall-through. This pattern is seen across most critical energy transition technologies, highlighting the need for more effective policy measures and investment strategies.

Several challenges, such as economic uncertainties, lack of technology maturity, lengthy permitting procedures, labor shortages, raw material shortages, and geopolitical uncertainties, continue to hinder progress. These factors make it challenging to secure investment and achieve sustainability goals alongside energy security, affordability, and reliability.

To close the gap between climate ambitions and actual achievements, governments and companies must reassess their strategies in light of changing global conditions. Adjusting portfolio strategies and actively reducing risks in critical developments will help stakeholders navigate the evolving market landscape. By forming partnerships, engaging with policy discussions, addressing infrastructure needs, and staying informed about market developments, stakeholders can better position themselves to achieve their climate goals and ensure sustained growth toward a net-zero future.

Declaration: The content quoted and reproduced from other organizations and websites is intended to convey more information rather than for profit. It does not represent endorsement of their views or verification of their descriptions; the content is for reference only. Copyright belongs to the original authors. If there is any infringement, please contact us for removal.