Renewable Energy Expansion: Key Challenges and Emerging Opportunities

The global expansion of renewable energy is key to addressing climate change. After a decade of dramatic cost reductions—especially for solar photovoltaics and wind—renewables now approach cost parity with fossil generation. While this cost reduction has led to a steep increase in solar and wind power in several countries, the global share of solar and wind generation remains modest—approximately 15% as of 2023. This article reviews recent economic studies and identifies three central challenges and corresponding opportunities for scaling up renewable energy—underdeveloped regulatory and market design, insufficient intertemporal market integration, and inadequate spatial market integration. The insights from this review highlight effective ways to accelerate the global transition to renewable energy.