Countries are racing to capitalise on the benefits of clean technology manufacturing such as economic security, employment and the resilience of a clean energy transition.
Investment into clean technology manufacturing is becoming significant enough to register in broader macroeconomic data.
In 2023 it accounted for about 0.7% of global investment across all sectors. This means it drove more spending than established industries such as steel (0.5%).
Register with us to get a 10% discount on your Enlit Africa (21-23 May) delegate pass, using the code 3SI10DL
In growth terms, clean technology manufacturing alone accounted for about 4% of global GDP growth, and almost 10% of global investment growth.
The IEA’s new Energy Technology Perspectives Special Report is designed to help policymakers prepare industrial strategies. It focuses on five key clean energy technologies – solar PV, wind, batteries, electrolysers and heat pumps.
Virtually no clean technology manufacturing takes place in Africa today.
Outsized effect of solar PV on clean technology manufacturing
This first of its kind analysis shows that investment in clean technology manufacturing was around $200 billion in 2023. That grew by 70% on the 2022 figures.
Investment into solar PV and battery manufacturing led the way, accounting for more than 90% of the total investment in both years.
This investment more than doubled to about $80bn in 2023. Investment into battery manufacturing grew by about 60% to $110bn.
Have you read?
How the Global South is catalysing renewable energy manufacturing
China accounted for three-quarters of this global investment in clean technology in 2023, down from 85% in 2022.
Investment in the US and Europe grew strongly – especially in battery manufacturing. Investment here more than tripled.
For solar PV manufacturing, investment in China more than doubled between 2022 and 2023.
“India, Japan, Korea and Southeast Asia made up most of the remaining share, with virtually no manufacturing investment taking place in either Africa or Central and South America.”
Clean technology manufacturing is growing to meet net-zero needs
Near-term momentum for clean technology manufacturing is looking strong.
Around 40% of investments in 2023 were into facilities that should come online this year. Specifically, almost 70% of this manufacturing facility investment is for batteries.
Projects that are already under construction or have reached final investment decision, through 2025, together with the already existing capacity, would exceed by 50% the global solar PV deployment needs in 2030, based on the IEA’s Net Zero Emission by 2050 Scenario. And it would meet 55% of battery cell requirements.
This momentum is also spreading to adjacent sectors. Almost half of committed battery manufacturing announcements in the US will be via joint ventures with automakers.
“Existing manufacturing capacity for solar PV modules and cells could today achieve what is necessary to meet demand under the NZE Scenario in 2030 – six years ahead of schedule, with only modest gaps remaining for the upstream steps of wafer and polysilicon manufacturing,” says the IEA.
Of interest
Deployment of battery storage doubles, outpacing other energy tech
But, these facilities making the cells and modules are experiencing a global 50% utilisation rate.
This is partly to be blamed on a solar PV module supply glut. Also, the rapid expansion of the manufacturing capacity.
The sharp increase in supply has driven down the module prices, which supports wider consumer uptake.
But, the solar PV stockpiles are growing, and there are signs of downscaling and postponements of planned capacity expansion, especially in China.
Of interest
Africa has enough renewable energy sources to power its people
Manufacturing of batteries looking good
Battery manufacturing also had a banner year in 2023. Production was more than 800GWh, a 45% increase from 2022.
Capacity additions also surged – almost 780GWh of cell manufacturing capacity was added. This is about 25% more than in 2022.
It raised total installed capacity to about 2.5TWh, which is almost three times the current demand.
Globally, battery manufacturing capacity could exceed 9GWh by 2030, if all announcements are realised.
Of interest
Critical minerals value chains for clean energy tech deployment
This means battery manufacturing deployment needs in 2030 under the NZE Scenario are within reach. More than 90% could already be met by announced expansions that have reached final investment decisions.
Wind, electrolysers and heat pumps
New manufacturing capacity for wind and electrolysers also grew fast in 2023, though the gains were not as dramatic as those of batteries and solar PV.
“Existing capacity for wind could deliver nearly 50% of NZE Scenario needs in 2030, while announced projects could meet a further 12%.”
When it comes to heat pump manufacturing, this slowed down because demand from the majority of the leading markets stagnated. Existing capacity could deliver only about a third of 2030 needs in the NZE Scenario.
This could, however, change given the short lead times typical of capacity expansion in this sector.
Of reference
Interest in low-emissions hydrogen is strong but lacks policy path
“China, the United States and the European Union together account for around 80% to 90% of manufacturing capacity for solar PV, wind, battery, electrolyser and heat pump manufacturing.
“Little change to this overall concentration is foreseen to 2030, even if all announced projects come to fruition.
“China alone accounts for more than 80% of global solar PV module manufacturing capacity and 95% for wafers.”
This situation looks unlikely to change significantly in this decade. China is set to match or exceed the capacity additions planned in countries such as the US and India.
Things look different on the battery cell manufacturing side
Europe and US are planning to add capacity that will reduce China’s present share of global capacity. The two together should reach around a 15% share by 2030, if all announced projects are realised.
This announced battery cell manufacturing capacity would be enough to meet 2030 domestic deployment for the US and Europe.
Manufacturing for wind, electrolysers and heat pumps will stay geographically concentrated in the same places through 2030.
Did you know?
Global energy systems are changing, but is it enough?
Beyond the main producer countries, Central and South America account for 4% to 6% of nacelles, blades and towers in the wind turbine component space.
“Virtually no clean technology manufacturing takes place in Africa today.”
“Concentration is even more pronounced for upstream solar PV and battery components, but the prospect of surplus capacity may open up possibilities for greater diversification of production in this area.”
Read more in the IEA’s Energy Technology Perspectives Special Report
Sign up for our premium, curated insights and news
