New Delhi: Investments in the manufacturing of clean energy technologies such as solar photovoltaic (PV) panels, wind turbines, batteries, electrolysers, and heat pumps surged to $200 billion in 2023, a jump of over 70 per cent from the previous year, the International Energy Agency (IEA) reported on Monday. This investment has accounted for around 4 per cent of global GDP growth, according to the agency’s latest findings.
The report, “Advancing Clean Technology Manufacturing,” indicates a substantial increase in funding for solar PV and battery production. Solar PV manufacturing spending more than doubled last year, while investment in battery manufacturing rose by about 60 per cent. The current capacity for solar PV modules is already sufficient to meet the demands of 2030 as outlined in the IEA’s net zero emissions scenario. Additionally, if announced projects proceed as planned, battery cell manufacturing will reach 90 per cent of the capacity needed by the end of this decade.
Approximately 40 per cent of the total clean energy manufacturing investments made last year are allocated to facilities slated to become operational in 2024. For battery manufacturing, this figure is notably higher at 70 per cent.
IEA Executive Director Fatih Birol stated, “Record output from solar PV and battery plants is propelling clean energy transitions – and the strong investment pipeline in new facilities and factory expansions is set to add further momentum in the years ahead.” Birol also emphasized the necessity for increased investment in some technologies and advocated for a more globally dispersed clean energy manufacturing sector.
Despite China currently dominating more than 80 per cent of global solar PV module manufacturing capacity, the report suggests a shift towards less geographical concentration by the end of the decade. If all announced projects are completed, Europe and the United States could each account for about 15 per cent of global installed battery cell manufacturing capacity by 2030.
The report also highlights that while China remains the lowest-cost producer of all clean energy technologies, the major portion of production costs, ranging from 70 per cent to 98 per cent, stems from operational expenses including energy, labor, and materials. These figures indicate that current cost disparities are not fixed and could be influenced by effective policy measures.
Produced in response to a request from G7 leaders in 2023, the IEA’s report includes insights from a high-level dialogue on diversifying clean technology manufacturing held at its headquarters in Paris, along with analysis from the latest edition of the IEA’s flagship technology publication, Energy Technology Perspectives.
