The International Energy Agency (IEA) released its annual report on Thursday, revealing a significant shift in the energy landscape: solar energy investment is set to surpass all other power generation sources in 2024.
Solar Takes the Lead in Investment
The IEA report states, “Investments in photovoltaic solar technology are expected to exceed $500 billion in 2024, surpassing all other sources of (electricity) production combined.” This means that solar will attract more investment than fossil fuel-based electricity generation (coal, oil, gas), wind, nuclear, and dams.
Clean Energy Momentum Gains Despite Challenges
Despite rising interest rates hindering some new projects, particularly in the Global South, global investment in clean energy is expected to nearly double compared to fossil fuels in 2024. This surge is driven by improvements in supply chains and falling costs of clean technologies, including a 30% drop in the cost of photovoltaic panels over the last two years.
A New Energy Economy Emerges
In 2024, the world is projected to spend $2 trillion on clean energy equipment (solar, wind, nuclear, electric vehicles, electricity grids and storage, low-carbon fuels, energy efficiency, heat pumps) – twice the amount allocated to fossil fuels ($1 trillion). Investments in gas and oil extraction and production are expected to reach $570 billion this year (+7% after 9% in 2023).
The IEA emphasizes that last year marked a turning point, as investments in renewable electricity and grids “exceeded for the first time the amount spent on fossil fuels.”
Fatih Birol, IEA Executive Director, remarked, “Investments in clean energy are setting new records, even in challenging economic conditions, highlighting the momentum of the new global energy economy.”
Addressing Investment Imbalances
While the growth in clean energy investment is encouraging, the IEA also highlights significant investment imbalances. Excluding China, the $300 billion expected in 2024 for emerging and developing economies falls short of “what is needed to meet the growing demand for energy in many of these countries.”
Birol stresses the need for action, urging, “More needs to be done to ensure that investments go where they are most needed.”
Accelerating the Transition to a Sustainable Future
Governments and businesses are increasing their investments in clean energy to reduce greenhouse gas emissions from fossil fuels, which contribute to global warming. The IEA emphasizes the urgency of this transition, stating that investments need to double or triple renewable energy capacity by 2030 to effectively address the climate crisis.
To learn more, download the report here.