A new report from S&P Global forecasts a major shift in global energy investments, with the clean technology sector set to surpass fossil fuels by 2025. This transition is driven by the growing urgency to address climate change and reduce CO2 emissions, following the goals set by the 2015 Paris Agreement. The report anticipates a record US$670 billion (A$1.085 trillion) in investments in renewable power generation, green hydrogen production, and carbon capture and storage (CCS) by 2025, with solar photovoltaic (PV) technology leading the charge.
Key trends influencing this shift include:
- Dominance of Solar PV: Solar PV is expected to account for half of all clean tech investments and two-thirds of installed renewable capacity, marking its central role in the energy transition.
- Supply Chain Challenges: S&P Global highlights that an oversupply of equipment, particularly from China, will impact the solar, wind, and battery sectors. Although this may stabilize prices, China’s dominance in PV and battery manufacturing is projected to decrease by 2030.
- Energy Storage Solutions: With solar PV prices declining, integrating energy storage systems is becoming critical to ensure the financial viability of projects. Storage solutions help manage price fluctuations and ensure renewable energy can meet demand consistently.
- AI Integration in Energy Management: The rise of intermittent renewable energy sources is driving the adoption of artificial intelligence (AI) to improve forecasting and grid integration. AI-powered applications are helping mitigate risks from discrepancies in energy generation forecasts, thus enhancing renewable energy’s reliability.
- Data Center Influence: Data centers are increasingly playing a pivotal role in corporate clean energy procurement. S&P projects that data centers will source 300 TWh of clean energy annually by 2030, with North American data centers accounting for 60% of this growth.
- Advancements in Carbon Capture: The report notes that ammonia will continue to be crucial in low-carbon hydrogen production. Additionally, the carbon capture, utilization, and storage (CCUS) sector is set to expand significantly, with a projected 70 million metric tons of CO2 capture capacity by 2025.
While the projected investments in clean energy are substantial, S&P Global warns that they still fall short of the levels needed to meet urgent climate targets. The transition to a low-carbon economy, however, is well underway, with solar PV, energy storage, AI, and carbon capture leading the way in reshaping global energy markets.
