Clean Energy Investments Reach 200 Billion In 2023, Says IEA Report

The International Energy Agency (IEA) in its recent report found that renewable energy investments reached approximately USD 200 billion in 2023. The renewable energy investment reportedly witnessed a 70% increase compared to 2022.

Among the renewable energy investments, sectors such as clean technology, solar PV, and battery manufacturing received more than double the investment, reaching around USD 80 billion in 2023. Within this, investments in battery manufacturing grew by around 60% to USD 110 billion.

The IEA report on ‘Advancing Clean Technology Manufacturing’ highlighted significant growth in clean technology manufacturing. IEA found that investments in solar PV and battery manufacturing plants accounted for more than 90% of the total in both years. The IEA report found that global manufacturing investments are based on five key clean energy technologies. These technologies are solar PV, wind, batteries, electrolyzers, and heat pumps. During this period, the investment rose to USD 200 billion in 2023, accounting for around 4% of global GDP growth.

The report found that the United States (US), and the European Union saw notable advancements in clean technology manufacturing. China leads in investment, although its share decreased slightly from the previous year. The report anticipates continued growth in the United States and India’s manufacturing capacities, albeit not significantly altering China’s dominant position. According to the study, China continues to be one of the major solar panels exporters. Furthermore, it highlights India’s emergence as an alternative export hub for wind turbine components. Similarly, in manufacturing capacity, it found China to have cost advantages. The IEA report indicated an increase in clean energy investment to stand at around USD 200 billion in 2023, growing by more than 70% relative to 2022. These investments were dominated by solar PV and battery manufacturing installations together accounting for 95% of the total in 2023.

The report gave an overview under which China accounted for three-quarters of the investment in 2023, down from 85% in 2022. Whereas both the United States and the European Union based on the study made significant inroads in 2023. Their combined share of clean technology manufacturing investment reached 16% in 2023. The investment rose from 11% in 2022. Countries like India, Japan, Korea, and Southeast Asia made most of the remaining share, with virtually no manufacturing investment taking place in either Africa or Central and South America.

Battery manufacturing also had a record year in 2023. In battery manufacturing production reached more than 800 gigawatt-hours (GWh), rising 45% from 2022. Capacity additions also surged, with almost 780 GWh of cell manufacturing capacity added – around a quarter more than in 2022. This raised the total installed capacity to around 2.5 terawatt-hours (TWh), or almost three times the current demand. Globally, battery manufacturing capacity could exceed 9 TWh by 2030 if all announcements are realized. Battery manufacturing deployment needs in 2030 under the NZE Scenario are within reach: more than 90% could be met by announced expansions that have reached final investment decisions.

China, the United States, and the European Union together account for around 80% to 90% of manufacturing capacity for solar PV, wind, battery, electrolyzer, and heat pump manufacturing. Little change to this overall concentration is foreseen by 2030, even if all announced projects come to fruition. China alone accounts for more than 80% of global solar PV module manufacturing capacity and 95% of wafers.

This looks unlikely to change significantly this decade, with the country set to match or exceed the capacity additions planned in other countries like the United States and India. For battery cell manufacturing, the situation is somewhat different: Planned capacity additions in Europe and the United States look set to reduce China’s present share of global capacity, with both regions reaching around a 15% share by 2030 if all announced projects are realized. Europe and the United States announced battery cell manufacturing capacity is sufficient to meet the 2030 domestic deployment needs associated with their own climate goals

Production cost gaps are found in facilities in the United States and Europe are 70% to 130% more expensive per unit of output capacity than those in China for solar PV, wind, and battery manufacturing, before accounting for the difference in the cost of capital between regions. India’s capital costs are around 20% to 30% higher than China’s, but significantly lower than those of the United States and Europe