By Giulia Petroni

The International Energy Agency slashed its forecast for renewable energy capacity growth in the U.S. this decade, citing the early phase-out of federal tax incentives and regulatory shifts under the Trump administration.

The West's energy watchdog now expects the U.S. to add nearly 250 gigawatts of new capacity by 2030--down by almost 50% from last year's projections--as a result of fresh import restrictions, the suspension of new offshore wind leasing and a crackdown on permitting for onshore wind and solar projects on federal land.

President Trump has vowed to boost the oil-and-gas industry, in part by cutting support for renewable-energy and emissions-reduction initiatives. A key factor in the U.S. downgrade was the "One Big Beautiful Bill Act," the IEA said, which has accelerated the phase out of tax credits and imposed new construction-start requirements for wind and solar PV projects.

"With the pushing forward of deadlines, renewable capacity additions are now projected to peak in 2027, then decline in 2028 and remain stable through 2030," the agency said. "After this period, renewable power growth will rely largely on state-driven renewable portfolio or clean energy standards and corporate PPAs [power purchase agreements], rather than federal incentives."

China's shift from a fixed tariff system to an auction-based model is also impacting project economics and dampening growth expectations. Previously, wind and solar projects benefited from guaranteed long-term revenues tied to fixed tariffs, while now projects are awarded contracts based on competitive bids, with payments tied to market conditions.

Despite these shifts, Beijing continues to dominate the global renewable landscape, accounting for nearly 60% of capacity growth. The country is on track to meet its 2035 solar and wind power targets five years ahead of schedule, the IEA said.

The downgrade is partly offset by more optimistic outlooks for other regions, particularly India and Europe. According to the agency, New Delhi will become the second-largest growth market after China, with capacity set to increase by 2.5 times in five years on higher auction volumes, faster hydropower permitting and a surge in rooftop solar installations.

Globally, the IEA revised its renewable capacity growth forecast down by 5%, but said it still expects capacity to double between now and 2030, increasing by 4,600 gigawatts. That is roughly the equivalent of the combined power generation capacity of China, the European Union and Japan.

Solar power is set to account for nearly 80% of the global increase due to its low costs and faster permitting processes.

"In addition to growth in established markets, solar is set to surge in economies such as Saudi Arabia, Pakistan and several Southeast Asian countries," Executive Director Fatih Birol said. "As renewables' role in electricity systems rises in many countries, policymakers need to pay close attention to supply chain security and grid integration challenges."

The report came as clean-energy think tank Ember said renewable energy generated more electricity than coal in the first half of the year for the first time on record.

Offshore wind, however, is a weak spot in the IEA's forecast, with its growth outlook about a quarter lower than last year due to permitting delays, supply chain bottlenecks and rising costs.

Write to Giulia Petroni at giulia.petroni@wsj.com

(END) Dow Jones Newswires

October 07, 2025 07:00 ET (11:00 GMT)

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