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Enel subsidary 3Sun's solar manufacturing plant in Italy. (Courtesy: Enel) |
A recent report from the International Energy Agency (IEA) has shed light on the burgeoning investment in the manufacturing sector of clean energy technologies, particularly in solar photovoltaic (PV) and battery technologies. This surge in investment is not only driving economic growth but also creating fresh industrial opportunities and bolstering employment prospects on a global scale.
According to the IEA's report titled "Advancing Clean Technology Manufacturing," global investment in the manufacturing of five key clean energy technologies - solar PV, wind, batteries, electrolysers, and heat pumps - soared to $200 billion in 2023. This marked a staggering increase of over 70% from the previous year and contributed to approximately 4% of the global GDP growth.
The report highlights a remarkable doubling in spending on solar PV manufacturing and a significant 60% rise in investment in battery manufacturing over the same period. Consequently, the current manufacturing capacity for solar PV modules already aligns with the projected demand for 2030 as per the IEA's net-zero emissions scenario. Similarly, for battery cells, accounting for announced projects, manufacturing capacity stands at 90% of the target needed to meet net-zero demand by the end of the decade.
IEA's executive director, Fatih Birol, underscored the pivotal role of clean energy transitions propelled by record output from solar PV and battery plants. He emphasized the substantial investment pipeline in new facilities and expansions, poised to further accelerate momentum in the coming years.
While acknowledging the dominance of certain regions in clean energy manufacturing, particularly China, the report anticipates a potential shift in the geographic concentration of battery cell manufacturing by 2030. Europe and the United States could each capture around 15% of the global installed capacity if all announced projects materialize.
Despite China's current status as the lowest-cost producer, the report suggests that production cost disparities observed today are not set in stone. Operational costs, including energy, labor, and materials, constitute the majority of total production costs and are subject to policy influence.
In response to a request from G7 Leaders in 2023, the report offers valuable insights and guiding principles for policymakers to shape industrial strategies with a strong emphasis on clean energy manufacturing. It emphasizes the need for tailored approaches and lays out principles gleaned from a high-level dialogue convened by the IEA in November 2023.
As the world pivots towards a cleaner and more sustainable energy future, the surge in investment in clean energy manufacturing signals a positive trajectory. With strategic policymaking and concerted efforts, nations can capitalize on this momentum to drive economic growth while advancing environmental sustainability.
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