• Andreea Vasilescu, Partner |
4 min read

Earlier this year, the International Energy Agency (IEA) issued a report on progress towards achieving the objectives of the Paris Agreement. Its conclusions were striking. The IEA stated that if targets are to be attained, renewable energy capacity additions must triple from 2022 levels by 2030. That means installing over 1,200 gigawatts annually by the end of the decade, which is equivalent to the total electricity generation capacity in the United States from all fuel types at the end of 2022. It is a daunting task. It is even more daunting to consider that a similar pace of renewable deployment would need to continue through to 2050.

The primary vehicle for achieving ambitious climate goals is elevating the share of renewables in the global energy mix from its current level of 14 percent to 77 percent by mid-century. Yet in spite of remarkable progress in the deployment of renewables in the past decade, the renewable energy industry and its many supporters are far from reaching the scale necessary to achieve this goal.

KPMG report addresses obstacles to renewables deployment and proposes solutions

In an effort to understand the challenges still preventing a more rapid deployment of renewable energy, and hence to attempt to arrive at some possible solutions, KPMG surveyed 110 respondents from over 24 territories and countries across the globe, who answered questions about the need to accelerate renewable deployment, current market challenges, and policy effectiveness. The majority of respondents hold senior leadership positions at both public and privately held companies, and represent stakeholders across the renewable energy industry. 

The ten main barriers to development of renewables identified in the KPMG report

The KPMG report identified ten key barriers to faster deployment of renewables, based on the responses to the survey. These were: 1. Market structures. Existing ones often favour conventional power generation rather than the flexibility which low carbon resources need, like energy storage which can fill the gaps when wind and solar generation is low. 2. Access to capital. The International Renewable Energy Agency estimates that $30 trillion in investment will be needed annually over 30 years to achieve the Paris Agreement’s climate targets. This is particularly challenging in a time of high interest rates and supply chain inflation. 3. Investment in grid infrastructure. A grid capable of providing reliable electricity while integrating massive additions of intermittent renewable generation will differ from the grid societies have depended on for over a century. 4. Planning and permitting. The transition to renewable energy is a massive infrastructure project. However, it takes far too long from identifying a need to final operation- about a decade according to one U.S. study. 5. Accelerating storage solutions. Renewable energy needs greater storage capacity because the sun does not always shine and the wind does not always blow. However, this can present financial and logistical challenges 6. Supply chain issues. It is critical to ensure resilient and reliable supply chains if use of renewables is to grow. But problems exist, for instance the fact that critical minerals and equipment manufacturing is currently concentrated in too few countries. 7. Access to critical raw materials. The IEA estimates that mineral requirements for clean energy technologies will need to quadruple by 2040 to meet the Paris Agreement’s targets. To make this possible, a lot will have to happen, including expanding mining capacity and diversifying where critical raw materials are sourced. 8. Nature and biodiversity. Renewables projects require development of new infrastructure and it is critical that the impact on biodiversity is taken into account. For example, wind farms, if wrongly located, can kill migrating birds which fly into them. 9. Social license to operate. If projects are to be successful and move forward quickly, local communities must support them and see their benefits. 10. Emerging markets. According to the Global Energy Alliance for People and Planet (GEAPP), even if developed economies hit their net-zero goals by 2050, if emerging economies remain reliant on fossil fuels the world will be on course to warm by 2.5 degrees Celsius. However, coal still remains the primary source of electricity in many emerging markets and investors can face greater risks, such as political or economic instability. 

These barriers can be overcome if all stakeholders work together

These barriers and the challenges ahead may seem insurmountable. But with decisive action and collaboration among all stakeholders they can be overcome. After all, tremendous progress has been made by the renewables sector over the past few years. So in our report, we have provided detailed insights on each of these barriers and shared potential ways they can be tackled. The aim in clearly outlining the complex barriers to the development of renewables, and potential solutions, is to provide businesses with a comprehensive understanding, enabling them to make informed decisions. 

How KPMG can help

At KPMG, we are deeply committed to understanding the renewable energy landscape, identifying challenges, and providing solutions tailored to our clients’ needs. Our considerable experience in energy transition equips us to offer professional services that address specific hurdles and help promote business growth. If your organization is seeking guidance on navigating the energy transition, KPMG professionals are here to assist, helping to ensure that your strategies are not only effective but also commercially viable. Let us help you shape a sustainable future grounded in robust commercial principles and practices.