A report by the International Energy Agency revealed that renewable energy sources are expected to attract $2 trillion globally by 2024 out of a forecast total energy investment of $3 trillion for this year.
According to the IEA, total investment in energy worldwide is expected to exceed $3 trillion for the first time.
“Some $2tn is expected to flow towards clean technologies such as renewables, electric vehicles, nuclear power, grids, storage, low-emissions fuels, efficiency improvements, and heat pumps. The remainder – slightly over $1tn is set to go to coal, gas, and oil,” the report said.
It revealed that despite fiscal stress, global investment in clean energy is expected to almost double the amount spent on fossil fuels by 2024, revealing that was helped by improving supply chains and lowering costs for clean technologies.
However, the energy agency says that despite record-breaking spending on clean energy, there are still huge imbalances and shortfalls in energy investment in many parts of the world.
It stated that China, which sees strong domestic demand for solar panels, lithium batteries, and electric vehicles, is expected to account for the largest share of investment in clean energy reaching about 675 billion USD this year. Europe and the United States follow with clean energy investments of $370 billion and $315 billion, respectively.
These three major economies alone make up more than two-thirds of global clean energy investment,” the report revealed.
In emerging and developing economies, investment in clean energy in 2024 is expected to exceed $300 billion for the first time, led by Brazil and India. The report notes that this level of spending, which represents only about 15% of total global spending, is far below what is needed to meet growing energy demand in many of these countries, where high capital costs have hampered the development of new projects.
“This figure is broadly in line with implied demand levels in 2030 under current policies, but is much higher than expected under scenarios where national or global climate targets are met,” the report says.
“Notably, clean energy investment by oil and gas companies will account for just 4% of total industry capital spending in 2023,” the report says.
It added that spending on the grid, which is key to a faster transition to clean energy, is expected to hit $400 billion by 2024, after being stuck at around $300 billion a year from 2015 to 2021.
Investment in battery storage is also expected to take off and is expected to reach $54 billion by 2024. However, this spending remains very geographically concentrated.
IEA Executive Director Fatih Birol commented: “Clean energy investment is setting new records even in challenging economic conditions, highlighting the momentum behind the new global energy economy. For every dollar going to fossil fuels today, almost two dollars are invested in clean energy.
“The rise in clean energy spending is underpinned by strong economics, by continued cost reductions, and by considerations of energy security. But there is a strong element of industrial policy, too, as major economies compete for advantage in new clean energy supply chains.
“More must be done to ensure that investment reaches the places where it is needed most, in particular the developing economies where access to affordable, sustainable and secure energy is severely lacking today.”
In the transition plan, Nigeria chose gas as a transition fuel because it is cheaper and cleaner than gasoline and diesel. Similarly, the Rural Electrification Authority plans to obtain about 9 megawatts of electricity from the solar grid.
