Clean Technology Manufacturing Skyrockets to $200 Billion: IEA Report Reveals Solar PV and Battery Investments Lead the Charge

Investment in the manufacturing of clean technology surged to approximately $200 billion in 2023, marking a substantial 70 percent increase from the previous year, as per a report by the International Energy Agency (IEA). Solar PV and battery manufacturing plants led the way in these investments.

The IEA report highlighted that solar PV and battery manufacturing dominated with over 90 percent of total investments in both 2023 and 2022. Specifically, investment in solar PV manufacturing more than doubled to about $80 billion in 2023, while battery manufacturing saw a growth of around 60 percent to $110 billion.

The report emphasized the global rush to harness the benefits of clean technology manufacturing, citing its potential to bolster economic security, employment opportunities, and the resilience of clean energy transitions.

According to IEA, investments in clean technology manufacturing represented approximately 0.7 percent of global investment across all sectors in 2023, surpassing established industries like steel, which contributed 0.5 percent. In terms of growth, clean technology manufacturing accounted for about 4 percent of global GDP growth and nearly 10 percent of global investment growth in 2023.

China, the United States, and the European Union collectively dominated solar PV, wind, battery, electrolyzer, and heat pump manufacturing capacity, comprising around 80% to 90% of the global share. Despite anticipated project developments, IEA predicts minimal change to this concentration by 2030.

The report also noted a shift in global investment patterns, with China's share of investments decreasing from 85 percent in 2022 to three-quarters in 2023, as the United States and Europe witnessed robust growth, particularly in battery manufacturing.

Regarding production costs, IEA showcased China's status as the lowest-cost producer across all technologies, before considering supportive policy measures. Facilities in the United States and Europe typically incur 70 percent to 130 percent higher costs per unit of output capacity compared to China for solar PV, wind, and battery manufacturing.

Additionally, IEA marked India's capital costs to be around 20 percent to 30 percent higher than China's but significantly lower than those of the United States and Europe.

The report also shared that beyond manufacturing costs, various factors influence firms' investment decisions, including the size of the domestic market, availability of skilled workers, infrastructure readiness, permitting processes, and regulatory regimes. Policy interventions, it added, can enhance the attractiveness of investment regions without directly subsidizing manufacturing costs.