Investment in renewable energy technologies is outstripping fossil fuel investment, with solar PV taking the largest share for clean energy.

Falling costs trigger solar PV boom

The report from the International Energy Agency (IEA) delves into the global energy investment landscape. The research shows that investments in renewable power, grids and storage, energy efficiency, low-emissions fuels, and nuclear and other clean power sources is increasing while fossil fuel investments have experienced minor increases over the past few years. For the first time, clean energy investment worldwide has surpassed $3trn USD.

Specifically, spending on renewable power, grids and storage is now higher than total spending on oil, gas and coal. Solar PV has experienced significant growth in recent years and now surpasses all other generation technologies combined in terms of investments. Falling costs is a likely driver of this as solar PV supply chain pressures are easing while prices fall. Solar panel costs have decreased 30 per cent in the last two years alone, and prices are likely to continue this trajectory as the costs of minerals and metals crucial to the technology are forecast to fall.

China is responsible for driving a significant portion of clean energy investment while developing economies account for just 15 per cent of global clean energy spending. China’s solar energy boom has caused a surge in global clean energy investments, while Africa and Latin America still lag on the clean energy transition. Overall, China’s clean energy investments have increased 75 per cent since 2020.

More investment to come

The report forecasts global clean energy investment to approach $320bn USD in 2024, up 50 per cent since 2020. Solar PV investment is predicted to surpass $500bn USD in 2024, a positive sign for the clean energy sector and governments seeking secure energy systems. As the green technology sector advances and explores various options for power generation and storage, the efficiency of these systems increases. For example, in 2023 each dollar invested in wind and solar PV energy yielded 2.5 times more energy output than a dollar spent on the same technologies a decade prior.

Improvements in clean energy technologies is triggering a shift away from fossil fuels as a primary energy source. In 2015, the ratio of clean power to fossil fuel power investments was around 2:1, in 2024 this ratio is set to reach 10:1.

Nuclear energy investments are also forecast to grow in 2024, taking 9 per cent of total clean power investments. Battery storage investment, an essential partner technology for renewable energy, is anticipated to exceed $50bn USD this year, but battery storage investment is highly concentrated in China and advanced economies.

As for oil and gas, investment in 2024 is expected to return to 2017 levels, but the decline isn’t significant enough to spark momentous optimism for environmental progress.

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