Global investment in clean energy is increasing rapidly. A new report from the International Energy Agency (IEA) says global investment in manufacturing five key clean energy technologies – solar and wind power, batteries, electrolyzers and heat pumps – will have risen to $200 billion in 2023. According to Electrek, this represents an increase of more than 70 percent compared to 2022 and accounts for around four percent of global GDP growth and almost ten percent of global investment growth.
Two European countries supplied with 100 percent clean energy
Doubled spending on solar panels
Spending on solar panel manufacturing more than doubled last year, according to the report, while investment in battery manufacturing increased by around 60 percent. This means that the production capacity for PV modules already corresponds to the demand for 2030 based on the IEA’s net zero emissions scenario. For battery cells, manufacturing capacity, including announced projects, is 90 percent on track to meet net-zero demand at the end of this decade.
The report notes that many of the projects in the pipeline will soon become operational. Around 40 percent of investments in clean energy production in 2023 went to plants that are scheduled to go into operation in 2024. For batteries, this proportion increases to 70 percent. China continues to dominate clean energy manufacturing. More than 80 percent of the global production capacity for solar modules is located there, followed by the USA and India with five percent and Europe with just one percent. This is not expected to change this decade.
Batteries on the rise: costs have fallen by 90% in the last 15 years
China dominates clean energy
However, the IEA notes that battery cell manufacturing may become less geographically concentrated in China by 2030. If all announced projects are realized, Europe and the USA could each reach around 15 percent of the world‘s installed capacity by 2030. New data and analysis based on assessments of more than 750 factories show that China remains the lowest-cost producer of all clean energy technologies. Building production facilities for batteries, wind and solar energy is typically 70-130 percent more expensive in the US and Europe than in China.
However, the vast majority of the total production costs for these technologies (70-98 percent) are attributed to operating costs, which include energy, labor and materials. The IEA says policies may influence current production cost differences. “While some technologies still require greater investment, the direction is clear. Policymakers have a great opportunity to design industrial strategies that focus on the clean energy transition,” says IEA Executive Director Fatih Birol.