IRENA Sees Possible Decline Of Renewable Energy Expansion In 2026

The International Renewable Energy Agency (IRENA), has predicted that global renewable energy capacity additions are expected to decline in 2026 for the first time in five years as electricity transmission constraints and trade barriers slow development.

The IRENA, highlighted a growing infrastructure challenge for the global power industry as one of the reasons for the development.

Speaking October 27 at Singapore International Energy Week, IRENA Director-General Francesco La Camera said electricity networks are failing to expand quickly enough to accommodate increasing solar and wind generation, particularly in China.

The warning follows a record year for renewable development.

Global installations, including hydropower, increased by 692 gigawatts in 2025, raising total installed renewable capacity 15.5 per cent to approximately 5,149 gigawatts.

Renewable energy represented roughly half of global installed electricity generation capacity at year-end, although its share of actual electricity production is lower because generating technologies operate at different utilization rates.

China, the world’s largest renewable energy market, has emerged as a central factor in the anticipated slowdown.

During the first half of 2026, China’s electricity networks reportedly curtailed enough renewable generation to supply Mexico’s electricity needs for an entire year.

Curtailment occurs when available generation exceeds what transmission systems or local electricity markets can accommodate, forcing operators to reduce output even when generating facilities are capable of producing power.

Similar challenges have emerged in Australia and Japan, where rapid renewable development has placed additional pressure on existing transmission infrastructure.

La Camera expects renewable additions elsewhere to be insufficient to offset slower Chinese growth, although he did not provide a specific global installation forecast for 2026.

The slowdown comes as electricity demand continues increasing because of data centers, artificial intelligence infrastructure, industrial electrification, and expanding cooling requirements.

These developments are placing additional pressure on utilities to increase generation capacity while maintaining reliability and managing electricity costs.

For renewable developers, transmission limitations can delay project connections, reduce electricity sales, and weaken expected investment returns.

Projects facing significant curtailment may generate less revenue than originally anticipated, particularly where financing assumptions depend on higher utilization.

The challenge creates opportunities for transmission developers, engineering firms, grid equipment manufacturers, and energy storage providers.

Investment in high-voltage transmission lines, substations, grid controls, and battery storage can improve the ability of electricity systems to accommodate variable generation.

However, these projects often face lengthy permitting processes, equipment procurement delays, and substantial capital requirements.

Natural gas generation and other dispatchable power resources may also remain important where electricity demand is increasing faster than transmission and renewable capacity can be integrated.

For energy investors, the central issue is increasingly the relationship between generation investment and the infrastructure required to deliver reliable electricity.

Additional solar and wind installations do not automatically translate into equivalent increases in usable electricity when grid capacity is constrained.

Investors will be monitoring renewable installation trends, transmission investment, curtailment rates, and grid connection timelines to evaluate how infrastructure limitations influence future energy development.

The expected slowdown illustrates that expanding global electricity supplies requires coordinated investment in generation, transmission, storage, and system reliability rather than generating capacity alone