S&P Global Commodity Insights, “the leading independent provider of information, analysis, data and benchmark pricing for the commodity, energy and energy transition markets,” released a new report on January 23rd on key trends in clean energy technologies for 2024.
“We forecast clean energy technology (CET) investment to increase 15% to nearly $800 billion in 2024, led by solar PV,” said Philippe Franguil, head of gas, power and climate solutions at S&P Global Commodity Insights.
This article looks at some of the key trends identified in the report that will shape the future of clean energy, from offshore wind breakthroughs to the technology race between East and West.
1. Increased investment in clean energy technologies
According to a forecast by S&P Global Commodity Insights, investment in clean energy technologies is expected to increase significantly by 10-20% in 2024 (compared to 2023), reaching almost $800 billion.
Solar energy will dominate the investment landscape, accounting for about 55 percent of investment, followed by wind energy, but the report notes that “growth will be more slow.”
Battery energy storage and electrolysis are expected to be the “fastest growing areas for new investment.”
2. Average capital investment in clean energy technologies will fall
A new report from S&P Global Commodity Insights predicts the average cost of clean energy technologies will continue to fall in 2024.
This should come as solar PV and battery costs are falling rapidly due to oversupply and falling raw material prices, even as the costs of offshore wind and hydrogen are rising.
As the report points out, solar and battery costs “will fall significantly in 2023 and be well below 2020 levels in 2024.”
3. The growing importance of decarbonization
As the report explains, the renewable energy industry is changing its approach after being criticized in the past for failing to focus equally on reducing carbon emissions in the most energy-intensive segments of the value chain while selling components to produce low-carbon electricity.
Hoping to improve transparency and traceability of their renewable energy supply chains and materials, renewable energy producers are increasingly planning to decarbonize their operations by 2030. They are also developing strategies to reduce emissions at the core of their products.
The report explains how decarbonization should be achieved:
“Increasing the use of low-carbon electricity sources such as renewables and hydroelectric plants, reducing the use of coal and natural gas, progressively reducing material consumption (such as polysilicon and silver), exploring new, less intensive manufacturing techniques, and using materials with lower carbon emissions.”
4. Price competition between solar power generation manufacturers and battery storage manufacturers
After two years of strong profits, battery and solar panel makers are expected to see margins decline through 2024, according to an S&P report.
Downstream stakeholders in the solar industry, such as distributors and installers, will be subject to increased financial risk exposure due to declining prices, excess inventory and potential impairments.
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In the second half of 2023, oversupply and falling raw material prices for solar modules and batteries will lead to downstream price wars, with S&P expecting market consolidation to peak in 2024.
Large manufacturers “will have to differentiate themselves through innovative products and better decisions that prioritize price over quality,” while small and medium-sized manufacturers “are likely to experience negative gross margins.”
5. An “unprecedented milestone” for offshore wind power
When it comes to offshore wind, 2024 “will witness an unprecedented milestone,” the report authors wrote.
More than 60 gigawatts of additional capacity (“enough to cover Poland’s total electricity demand”) will be sold in at least 17 separate markets, setting a record for offshore wind energy.
Despite recent increases in the cost of offshore wind due to supply chain bottlenecks and rising financing costs from interest rates, the expected surge in auction capacity is “clear evidence of the unwavering commitment from both established and emerging markets to advance and adopt this vital technology.”
6. Wind turbines: competition from the east
The global wind turbine supply market is undergoing change as Chinese turbine makers challenge their Western peers.
Historically, the wind turbine supply market has been divided into two groups, “roughly 15 Chinese manufacturers supplying domestically in China and four geographically diversified Western companies supplying primarily to other parts of the world,” according to the S&P report.
But onerous contracts, rising overheads, unstable supply chains and excessive input costs are damaging the balance sheets of Western manufacturers.
The report said Chinese wind turbine manufacturers are “increasingly competing with Western countries in the international market” by lowering costs, advancing technology and making new investments in the supply chain.
For example, the report notes that the price gap between the two groups has grown to almost 70 percent. In terms of rated capacity, China’s recently announced turbine production exceeds that of Western countries by at least 30 percent.
The report predicts that pricing pressures and technological competition will continue, saying “Western turbine manufacturers will continue to face the dual challenge of defending market share while restoring profitability.”
Editor’s Note: Opinions expressed by authors here are their own and not those of Impakter.com. Featured Photo: Solar Panels. Featured Photo Credit: CHUTTERSNAP.
