Supportive policies, corporate strategies, and growing interest from investors have increased the production of solar PV (Photo-voltaic), wind power, batteries, heat pumps, and electrolysers globally says a report by the International Energy Agency (IEA).
According to the energy agency, the global energy crisis has instilled further impetus to develop manufacturing capacity that can strengthen energy security and diversify the supply chain.
IEA added that announcements of new manufacturing projects for several essential technologies for the clean energy transition have accelerated in recent months, highlighting the growing global momentum behind the new energy economy.
“The projected output in 2030 from announced projects for solar PV has increased by 60 percent, for batteries it has increased by 25 percent, and for electrolyser by around 20 percent,” IEA said.
“The latest data available for year-end 2022 show installed manufacturing capacity posted strong year-on-year growth for batteries (72 percent), solar PV (39 percent), electrolyser (26 percent) and heat pumps (13 percent). Wind manufacturing capacity grew much more modestly at around two percent.”
In monetary terms, IEA says the projected output value of the announced manufacturing capacity for the five key clean technologies is estimated to be $790 billion per year by 2030. This projected output value surpasses the market size for the demand of these technologies, which is estimated to be $640 billion in 2030, in a scenario in which governments implement their announced climate pledges on time and in full.
Read also: Nigeria seeks $8.2bn for finance energy transition plan this year
It also said that while the pipelines of announced projects for solar PV and batteries appear well-stocked, many of the projects they comprise have not yet started construction or reached a final investment decision.
“Globally, only around 25 percent of the announced projects for solar PV manufacturing capacity can be considered committed, with the equivalent figure for batteries being around 30 percent,” IEA said.
IEA added that to date, manufacturing capacity in clean energy technologies is highly geographically concentrated. The top three markets account for between 80 percent to 90 percent of global manufacturing capacity, depending on the technology.
According to IEA, if all announced projects worldwide are completed, the share of manufacturing clustered in these markets would shift to between 70 percent and 95 percent by 2030 for different technologies.
“If we look at the projects that are currently under construction or planned worldwide, China is set to strengthen its leading position in key clean energy technologies,” said Fatih Birol, executive director, IEA.
“There is a need for effective international cooperation and further diversification to ensure secure and resilient technology supply chains, meet the world’s climate goals and enable all countries to enjoy the economic benefits of the new global energy economy.”
The energy agency added that the increased efforts to diversify manufacturing thus far have been supported by major policy announcements in many countries over the last year that are beginning to expand supply chains in different regions.
“In addition to clean technology manufacturing, the issue of critical mineral security is of strategic importance to many countries and an area where the need for international cooperation is acute,” IEA said.
“These minerals are an essential component in the clean energy transition and diversification is necessary to mitigate disruptions or bottlenecks in supply chains.”
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
