Global investment in solar energy will exceed spending on oil, according to a report

UPDATED 05:02 am ET on 2023-05026

Global solar investment is projected to surpass oil spending for the first time in 2023, with China leading the way, according to a report by an energy watchdog.

An estimated $400 billion will be allocated to solar power this year, the International Energy Agency (IEA) said in its annual report on Thursday. global investment in energy report.

Around $2.8 trillion globally is projected to be invested in energy in 2023, of which more than $1.7 trillion is expected to go into clean technologies, including renewables, electric vehicles, nuclear power, grids , storage, low emission fuels, efficiency improvements. and heat pumps,” the Paris-based agency reported.

Investment in clean energy exceeds the estimated trillion dollars allocated to fossil fuels, which includes coal, gas and oil. In the past, the annual energy investment of $2 trillion was split evenly between fossil fuels and clean technologies.

China, in particular, has seen an exponential acceleration in its solar sector, with installations during the first four months of this year already tripling the numbers recorded during the same period in 2022, a double increase compared to the previous year. last year.

China alone added more than 100 gigawatts (100 billion watts) of solar PV capacity in 2022, nearly 70% more than in 2021.

The report says that this strong growth in China’s solar industry is contributing significantly to global progress towards achieving net-zero emissions targets.

According China electric power newsciting the National Energy Administration, China’s combined wind and solar power capacity reached 820 gigawatts (GW) at the end of April, constituting 31% of the country’s total installed power generation capacity, with the wind energy representing 14% and solar energy 17%. %

The state-run industry daily reported that between January and April, newly installed wind and solar capacity amounted to 63 GW, representing 74% of the country’s new installations. This figure represents an increase of 11.5 percentage points with respect to the previous year.

“Clean energy is moving fast, faster than many people realize. This is clear in investment trends, where clean technologies are moving away from fossil fuels,” said Fatih Birol, executive director of the IEA.

“For every dollar invested in fossil fuels, about $1.7 now goes to clean energy. Five years ago, this ratio was one to one.”

The report attributed the rise in clean energy investment to several factors, including volatile fossil fuel prices, the implementation of inflation-related policies in the United States, Europe, Japan and China, and growing concerns about energy security. derived from the Russian invasion of Ukraine.

However, the IEA report also warned that the Russian action has simultaneously fueled increased investment in the oil and gas exploration and production sectors, with an expected 7% increase in such investments in 2023, marking a comeback. to levels last seen in 2019.

“The few oil companies that are investing more than before the COVID-19 pandemic are mostly large national oil companies in the Middle East,” the IEA said.

The report says investment in renewable energy is expected to have risen 24% since 2021, while investment in fossil fuels saw a more modest increase of 15%.

Meanwhile, global demand for coal hit an all-time high in 2022, partly due to record gas prices, with 40 gigawatts of new coal plants approved, the highest number since 2016. Almost all of them in China.

Investment in coal supply is expected to increase by 10% in 2023, almost six times the levels aligned with global climate goals for 2030.

China’s love of coal shows “high political priority given to energy security after severe power market strains in 2021 and 2022, even as China rolls out a range of low-emission technologies on a large scale,” the report says. .

A critical obstacle preventing the expansion of renewable energy sources is the challenge of connecting the projects to electricity grids, according to the report.

This barrier remains the most significant obstacle to promoting the adoption and integration of renewable energy into existing power systems, the IEA said.

In addition, more than 90% of the growth in clean energy investment is in advanced economies and China, posing a serious risk of a new global divide if clean transitions do not pick up in developing countries and middle income.

However, the IEA said there have been some encouraging solar investments in India and renewables in Brazil and parts of the Middle East.

Edited by Mike Firn.

Updated to add data on China’s wind and solar capacity.