Energy security concerns stemming from the Russia-Ukraine war have prompted countries to increasingly turn to renewable energy sources such as solar and wind power to reduce their reliance on imported fossil fuels. At the same time, the price of imported fossil fuels has soared, increasing the competitiveness of solar PV and wind power relative to fossil fuels. According to the latest version of the International Energy Agency's "Renewable Energy 2022", it is estimated that during 2022-2027, the global renewable energy power generation capacity will increase by 2400GW, which is equivalent to China's current total power generation capacity.
Global renewable energy capacity expansion over the next five years will be much faster than expected a year ago. In 2022-2027, the IEA's base case forecast shows that global renewable energy installations will grow by nearly 2,400 GW, which is equivalent to China's current installed capacity. That's an 85% increase from the previous five-year forecast and almost 30% from last year's forecast, the largest upward revision to the IEA's forecast ever. Renewables will account for more than 90% of global electricity capacity additions over the forecast period, driven primarily by China, the European Union, the United States, and India. These countries are all actively promoting energy policy, regulatory and market reforms, with China's 14th Five-Year Plan and market reforms, the European Union's REPowerEU program and the US Inflation Reduction Act being the main drivers of the revised forecasts.
By 2025, renewable energy will surpass coal as the largest source of electricity generation globally, and its share in the electricity mix will increase by 10 percentage points by then, reaching 38% in 2027. Renewables are the only source of generation that continues to grow, with coal, natural gas, nuclear and oil seeing their share of generation decline. Wind and solar PV capacity will more than double over the next five years, providing nearly 20% of global electricity generation in 2027, requiring additional power system flexibility to match. Meanwhile, growth in dispatchable renewables, including hydropower, bioenergy, geothermal and solar thermal, remains limited.
By 2027, global solar PV installed capacity is expected to surpass coal installed capacity to become the largest installed capacity in the world, and cumulative solar PV installed capacity will triple, increasing by nearly 1500 GW in this period, surpassing natural gas by 2026, Overtake coal by 2027. Although currently due to rising commodity prices, utility-scale solar PV is the cheapest option for new electricity generation in the vast majority of countries around the world. Distributed solar PV (such as rooftop solar buildings) will also accelerate growth due to higher retail electricity prices and increased policy support to help consumers save on energy bills.
Global wind power capacity is set to double, with offshore projects accounting for a fifth of the increase. Over 570 GW of onshore wind capacity is expected to come into operation during the period 2022-2027. Global offshore wind power growth is accelerating, while Europe's global share of offshore wind power installed capacity will drop from 50% in 2021 to 30% in 2027, due to the rapid development of offshore wind power in China and the United States.
Further analysis by the International Energy Agency shows that if countries address policy, regulatory, licensing and financing challenges, global renewable energy capacity could increase by 25% compared to the base case forecast above. In most advanced economies, the challenges to furthering the development of renewable energy lie primarily in permitting procedures and inadequate grid infrastructure. In emerging economies, policy and regulatory uncertainty remains a major barrier to accelerated renewable energy expansion. In developing economies, there are challenges with weak grid infrastructure and lack of access to affordable financing. If countries address these challenges, global renewable energy capacity could increase by nearly 3,000 GW.