Global market for clean energy technology set to triple over coming decade: IEA

IEA report estimates $2 trillion market volume by 2035

Covers wind, PV, EV, BESS, electrolysis, heat pumps

Highlights complex interplay between energy, industry, trade

The global market for six core clean energy technologies is set to rise from $700 billion in 2023 to more than $2 trillion by 2035, according to a new report by the International Energy Agency published Oct. 30.

Titled ‘Energy Technology Perspectives 2024 (ETP-2024),’ the report focuses on the outlook for the top six mass-manufactured clean energy technologies: solar PV, wind turbines, electric cars, batteries, electrolyzers, and heat pumps.

“The market for clean technologies is set to multiply in value in the coming decade, increasingly catching up with the markets for fossil fuels. As countries seek to define their role in the new energy economy, three vital policy areas — energy, industry and trade — are becoming more and more interlinked,” said IEA executive director Fatih Birol.

The report is based on a new bottom-up dataset and quantitative modeling of countries’ stated policies and maps the current state of clean energy manufacturing and trade and how they are set to evolve.

The IEA said most clean energy technology spending is concentrated in China, the EU, the US and increasingly India, while countries in Southeast Asia, Latin America, and Africa account for less than 5% of the value generated from producing clean technologies.

Manufacturing capacity

In the case of solar PV, a massive ramp-up of manufacturing capacity in China helped to drive the current boom in installations.

However, the utilization rates of solar component manufacturing facilities remain low with the IEA estimating an average utilization rate of 55% in 2023.

Capacity additions increased less rapidly for other clean technologies.

EV manufacturing capacity additions fell slightly to 5.7 million in 2023 as EV sales growth slowed. An estimated 70% of the 2023 additions were in China, 13% in the EU, and 8% in the US.

In batteries, most of which are for EVs, manufacturing capacity doubled between 2021 and 2023 to over 2.5 TWh, with battery cell manufacturing capacity well above global demand. In 2023, the utilization rate of cell production facilities was less than 25% in China, which accounts for around 85% of global production capacity, and 35% worldwide, the report said.

For wind turbines, manufacturing capacity expanded despite rising costs, with capacity additions doubling in 2023 to around 30 GW.

For wind nacelles, global manufacturing capacity increased to 180 GW by the end of 2023, compared to 115 GW of global wind capacity installations.

Nearly all wind manufacturing capacity additions were in China.

In the case of electrolyzers, manufacturing capacity development is still in its early stages, far exceeding current demand, with the speed of the roll-out uncertain.

Similarly, for heat pumps, announced manufacturing projects would boost global capacity by about one-third to 185 GW in 2030, though how much of this new capacity can be considered committed is unknown due to recent declines in sales and cost inflation.

For now, the heat pump market project pipeline remains concentrated in Europe, the IEA said.

Clean technology trade

The report also considers the implications for trade in clean energy technology products. China, projected to remain the world’s manufacturing powerhouse, is expected to reach clean technology exports of around $340 billion by 2035, roughly equivalent to the projected oil export revenue this year of Saudi Arabia and the United Arab Emirates combined, it said.

“[G]overnments should strive to develop measures that also foster continued competition, innovation and cost reductions, as well as progress towards their energy and climate goals,” the IEA’s Birol said.

Platts, part of S&P Global Commodity Insights, last assessed utility-scale PV modules (50-100 MW) at US cents 8.75/W (FOB China), US cents 11/W (DDP Europe) and US cents 25/W (DDP US) on Oct. 29.