- IEA’s new report sees solar as a star performer, leading clean energy investments in 2023
- Total energy investments this year are predicted to be $2.8 trillion, and clean energy will secure $1.7 trillion
- Solar alone is expected to accumulate $380 billion, meaning $1 billion/day in 2023
- Clean energy investment is likely to be unevenly distributed which is something the world needs to watch out for
In 2023, global investment in clean energy is forecast by the International Energy Agency (IEA) to rise to $1.7 trillion out of $2.8 trillion to be invested in energy with solar getting more than upstream oil for the 1st time ever—in absolute terms over $1 billion per day this year or $380 billion as a whole.
The IEA’s new report World Energy Investment 2023 calls solar a star performer as it leads low-emissions electricity technologies to account for close to 90% of investment in power generation this year.
“For every $1.0 invested in fossil fuels, about $1.7 are now going into clean energy. Five years ago, this ratio was one-to-one. One shining example is investment in solar, which is set to overtake the amount of investment going into oil production for the first time,” according to IEA Executive Director Fatih Birol.
Even as spending on upstream oil and gas is expected to rise by 7% in 2023, it will be back to 2019 levels.
What’s supporting this investment in clean energy is the recovery post COVID-19 and response to the global energy crisis with the Russian invasion of Ukraine and policies support through instruments as the Inflation Reduction Act (IRA) in the US, and new initiatives across the globe.
According to the report, annual clean energy investment is expected to rise by 24% between 2021 and 2023, driven by renewables and electric vehicles, compared with a 15% rise in fossil fuel investment over the same period. But, as the IEA points out, more than 90% of this increase comes from advanced economies and China, presenting a ‘serious risk of new dividing lines in global energy if clean energy transitions don’t pick up elsewhere’.
Biggest shortfalls in clean energy investments, as the IEA sees, are in emerging and developing economies where investment is being held back by higher interest rates, unclear policy frameworks and market designs, weak grid infrastructure, financially strained utilities and high cost of capital.
There are some bright spots though like ‘dynamic investments’ in solar in India, in renewables in Brazil and some parts of the Middle East.
Complete IEA report can be downloaded for free from its website.
The agency plans to release a new report on Scaling Up Private Finance for Clean Energy in Emerging and Developing Economies with the International Finance Corporation (IFC).