07.06.2024
Source: Energy & Management Powernews
Despite high financing costs: The International Energy Agency (IEA) expects investments by the energy industry to rise this year, especially for renewable energies.
The latest "World Investment Report" from the International Energy Agency, IEA (Paris) shows that around 3 trillion dollars will be invested this year, two trillion of which will be invested in "clean technologies": renewable energies, electric cars, grid expansion, nuclear power, storage, heat pumps, low-emission fuels and efficiency improvements.
1 trillion dollars (920 billion euros) will be spent on new coal-fired power plants and other investments in the use of fossil fuels. In 2023, new coal-fired power plants (without deep CO2 storage, CCS) with a total capacity of 50,000 MW were approved, primarily in China.
IEA Director Fatih Birol attributes the high growth in "clean technologies" to the fact that suppliers wanted to secure a good starting position in the competition for these future technologies. Concerns about the climate and the security of energy supply also played an important role.
The People's Republic of China is the undisputed leader in cleantech investment with 675 billion dollars (620 billion euros), driven by high demand for lithium batteries, solar modules and electric cars in particular. The EU states invest 370 billion dollars (289 billion euros) in the same sectors and the USA 315 billion dollars (289 billion euros).
"Oil and gas industry invests too little in cleantech"
Birol accused the oil and gas industry of investing too little in clean energy. Only 4 percent of their investments were being spent on this, 96 percent would continue to flow into their traditional businesses, Birol explained. The IEA expects the industry, led by production companies in the Middle East, to invest 7 percent more in oil and gas production this year than in 2023, which is in line with expected demand at the end of this decade, but is incompatible with the declared climate targets.
Independent of Birol's report, the Secretary-General of the United Nations (UN), Antonio Guterres, called for an advertising boycott against the oil and gas industry for similar reasons.
Looking at generation alone, according to the IEA, investments in fossil fuel generation this year amount to 1,116 billion dollars (+2.3 percent), in renewables to 771 billion dollars (+4.9 percent) and in "nuclear power and other clean technologies" to 80 billion dollars (+19.4 percent). 452 billion dollars (+8.6 percent) will be invested in the expansion of grids, including storage, and 669 billion dollars (+3.5 percent) in increasing energy efficiency.
Investment in photovoltaics was particularly dynamic in the face of falling prices for solar modules. At 500 billion euros, it reached the same level as for all other energy sources this year.
There are considerable regional differences. The People's Republic of China spends by far the most, almost 840 billion dollars, on its electricity supply, including 185 billion for fossil fuels and 359 billion for renewable energies. The USA invests 490 billion dollars in the electricity industry, of which 197 billion dollars is for fossil fuels and 85 billion dollars for green energy. In the EU, the total is 442 billion dollars, of which 36 billion is for CO2-intensive generation and 106 billion for renewable generation.
Only 15 percent in emerging and developing countries
The most important message of the IEA report is that emerging and developing countries (excluding China) only accounted for 15 percent of investments in clean energy this year, said Birol. This is "a far cry from what would be necessary to meet the growing demand for energy in these countries."
The main reason for this is the high cost of capital and financing. Financing alone accounts for up to 60 percent of the costs of a project in these countries due to uncertain framework conditions, high risks and interest rates.
More needs to be done to ensure that investments are made where they are most urgently needed. These are primarily developing countries, where access to an "affordable, sustainable and secure energy supply" is still not available.
In addition to the sometimes unfavorable macroeconomic circumstances, the energy transition is being hindered worldwide by bottlenecks in the grids and insufficient storage capacity. The IEA therefore sees it as a good sign that investments in the grids are rising sharply this year to 400 billion dollars. More money is available for this, particularly in Europe, and the political framework conditions have improved. This also applies to the United States, China and parts of Latin America.
More is also being invested in battery storage, the costs of which have fallen sharply: 54 billion dollars this year. However, these investments will also mainly take place in industrialized countries and China. Developing countries account for only 1 percent of this sum.
Author: Tom Weingärtner
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