IEA’s Clean Technology Manufacturing Report

• The IEA's new report looks at the future global manufacturing scenario for 5 key clean energy technologies
• For solar PV, the projected output in 2030 from announced projects since the end of 2022 has gone up by 60%
• Both solar PV and battery manufacturing project pipelines appear well-stocked, but not so much for wind, heat pumps and electrolyzers
• Production plans remain highly concentrated geographically but there is a need to diversify the supply chain

If all the manufacturing capacity projects announced to date were built by 2030, for solar PV it would 'comfortably exceed the level needed' as the International Energy Agency (IEA) estimates for net zero emissions (NZE) globally by 2050, but announcements made for wind, heat pumps and electrolyzers are still off the levels required.

In case all the projects announced to date were built, the anticipated output of manufacturing capacity for all these 4 clean energy technologies and batteries will reach $790 billion annually by 2030.

The IEA makes this observation in it's The State of Clean Technology Manufacturing report that explores manufacturing plans for solar PV, wind, batteries, heat pumps and electrolyzers announced globally. It aims to understand how these plans can shape the clean energy landscape by the end of 2030.

According to the report, since the end of 2022 the projected output in 2030 from announced projects for solar PV has increased by 60% while for batteries it has gone up by around 1 quarter and for electrolyzers by around 20%.

Till the end of 2022, installed manufacturing capacity posted strong YoY growth for batteries with 72% improvement, 39% for solar PV, 26% for electrolyzers, 13% for heat pumps and 2% for wind.

For solar PV, till the end of 2021 global manufacturing throughput was over 190 GW, but installed manufacturing capacity rose by almost 40% annually to about 640 GW with 90% of it relative of 2021 taking place in China. Yet, manufacturing throughput was only around 260 GW meaning global average utilization rate was around 405.

Solar PV manufacturing capacity continues to expand rapidly with the IEA counting around 480 GW of additional module manufacturing capacity having been announced as of Q1/2023-end, in addition to 570 GW cells, 250 GW wafers and 570 GW polysilicon. Yet only close to 25% of the announced module manufacturing capacity is committed (under construction or reached final investment decision).

China's LONGi, JinkoSolar and Trina Solar as the world's top 3 solar module producers lead the major project announcements (read plans with stated production capacity of at least 20 GW annually or above) made in Q1/2023 that are mostly sited in China, accounting for 45% of the total additional capacity announced till the end of March 2023.

Battery projects are also on the rise as the analysts believe announced projects for this technology could cover virtually all of the 2030 global deployment needs of the NZE 2050 scenario.

Announced project pipelines for solar PV and batteries appear 'well-stocked', but significant gaps remain for wind, electrolyzers and heat pumps. Nonetheless, relatively short lead times for both announcements and constriction for the factories that supply these technologies imply a more positive outlook than the gaps initially suggest.

Manufacturing operations remain geographically concentrated for all these 5 technologies with 4 nations and the EU accounting for around 80% to 90% of global capacity examined in the report as China alone accounts for 40% to 80% across these. If all announced projects are realized, it would shift to 70% to 95% for the 4 nations and the EU while China will represent 30% to 80% share. But the IEA recommends further diversification.

"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," said IEA Executive Director Fatih Birol.

The report is available for free download on the IEA's website.