Global financing for clean tech manufacturing soared to $200 million in 2023
Energize Weekly, May 15, 2024
Global investment in clean technology manufacturing grew year-over-year by 70 percent to $200 billion in 2023, making it one of the largest industrial sectors for new financing, according to a report by the International Energy Agency (IEA).
“Governments and firms around the world are racing to define their place in the clean energy economy, which is growing quickly as policy makers develop new industrial strategies that also bolster energy security and address climate change,” the IEA said.
The report focused on manufacturing in five technologies: solar, wind, battery storage, electrolysers, and heat pumps.
Clean technology manufacturing accounted for 0.7 percent of 2023 global investment across all sectors compared with 0.5 percent for steel.
“In growth terms, the contribution is even starker – in 2023, clean technology manufacturing alone accounted for around 4 percent of global GDP growth and nearly 10 percent of global investment growth,” the IEA said.
The lion’s share of investments in manufacturing plants was for solar photovoltaics (PV) and batteries. They accounted for 90 percent of financing in both 2022 and 2023. PV investments more than doubled to $80 billion, and battery investments were up 60 percent to $110 billion.
There are three “tell-tale signs” of continued momentum in clean technology manufacturing investment extending into the mid-2020s, the IEA said.
First, about 40 percent of 2023 investments were in facilities that are scheduled to come online in 2024. Nearly 70 percent of those investments are for new battery plants.
Second, 85 percent of the clean technology projects in the pipeline – either under construction or with final investment decisions – are set to go into operation by 2025.
Finally, a portion of the capacity that is scheduled to come online by the end of the decade “is seeing some degree of financial commitment now,” the agency said.
In 2023, China accounted for three-quarters of global clean technology manufacturing investments. That was down from 85 percent in 2022 as the U.S. and Europe increased their share of investments.
Battery manufacturing tripled in the U.S. and Europe, and solar PV manufacturing doubled between 2022 and 2023.
“Outside these three major manufacturing hubs, India, Japan, Korea, and countries in Southeast Asia made important contributions in specific areas, while investment in regions such as Africa, Central America, and South America was negligible,” the report said.
China alone accounts for more than 80 percent of global solar PV module manufacturing capacity and 95 percent for wafers. There is adequate global capacity to provide solar panels through 2030, but factories are only at 50 percent utilization. The reason for this is a supply glut on the market, even while new capacity is added.
“While the sharp increase in supply has driven down module prices, supporting wider consumer uptake, stockpiles of solar PV modules are growing and there are signs of downscaling and postponements of planned capacity expansions, particularly in China,” the report said.
Battery manufacturing had a record year in 2023. Production totaled more than 800 gigawatt-hours (GWh), a 45 percent increase from 2022 as nearly 780 GWh of cell manufacturing capacity was added.
New manufacturing capacity for wind and electrolysers also grew faster in 2023, although the gains were not as dramatic. Existing capacity for wind could deliver nearly 50 percent capacity required to meet the IEA’s Net Zero Emissions scenario in 2030. Announced projects could meet a further 12 percent of capacity.
Capacity additions for heat pump manufacturing slowed due to stagnation in most of the key markets.
“Clean technology manufacturing is increasingly in the spotlight,” the IEA said. The production of key technologies to support the transition to clean energy has become the cornerstone of industrial policies designed to boost employment and economic development in many countries.
