Despite the continued implementation of industrial strategies in other countries, the value of China’s exports will exceed $340 billion by 2035, the International Energy Agency said.
The value of the global market for six major mass-produced clean energy technologies – solar, wind, electric vehicles (EVs), batteries, electrolysers and heat pumps – almost quadrupled between 2015 and 2023, to more than $700 billion, or roughly the half the value of the world market. value of all natural gas produced in the world that year.
According to the latter Perspectives on energy technology 2024 (ETP-2024), published Wednesday by the International Energy Agency (IEA), under current policies, the market for these clean technologies will nearly triple and exceed $2 trillion by 2035.
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Global investments in clean technology production will increase by 50% to $235 billion by 2023. This increase corresponds to almost 10% of the growth in investments in the entire global economy. Four-fifths of clean technology investment in manufacturing in 2023 – around $188 billion – was spent on solar and battery production, while electric vehicle factories accounted for another 15%. Moreover, investments are expected to remain close to recent record levels, around $200 billion in 2024.
Despite the continued implementation of industrial strategies in other countries, the value of China’s clean technology exports will exceed $340 billion by 2035 under the current policy context.
China is currently the country with the lowest costs for producing the key clean energy technologies discussed in the report, excluding explicit financial support from governments. Manufacturing PV solar panels, wind turbines and battery technologies costs on average up to 40% more in the United States, up to 45% more in the European Union and up to 25% more in India.
Under current policies, net imports of fossil fuels and clean energy technologies into Europe will reach $400 billion by 2035.
Installation prospects
The report uses scenarios such as the Stated Policies (STEPS) scenario, which reflects the current policy landscape, and the Announced Commitments (APS) scenario, which assumes governments meet their climate targets, to predict the potential growth of these technologies .
According to the IEA, global solar panel production capacity could reach 1,546 GW in 2035 under the STEPS scenario, and increase to 1,695 GW under the APS scenario. In 2023, the global capacity was 1,115 GW.
The report predicts that global solar panel demand will increase from 460 GW in 2023 to 674 GW in 2035, with an average growth rate of 3% per year, and to 724 GW in 2050 under STEPS. Under APS, global demand for solar panels will reach 860 GW in 2035 and 894 GW in 2050.
Europe
The European Union is currently the largest importer of solar PV modules in the world, with domestic production expected to meet just under 15% of demand in 2023. Instead, imports – mainly from China and Southeast Asia – were sufficient to meet a greater share of demand, leading to a significant increase in inventories, which in that year were about three times the level of annual installations.
The EU’s share of global solar energy production capacity has fallen to less than 1%. The only exception to this trend is polysilicon, of which the European Union has 3% of the global supply thanks to the high purity of polysilicon produced in Germany, which is still exported to China.
According to the IEA, the EU will remain the world’s largest importer of modules in 2035, with the main change being that part of its imports will come from the US. Domestic production is around 7 GW as there are currently no significant production expansion announcements; on the contrary, there are indications that existing module production capacity could be reduced.
Policy and support
An IEA survey of more than 50 major clean technology manufacturers and materials supply chains reveals factors other than costs that influence investment decisions. These include various forms of policy support, market access, industrial base capabilities and expertise, and infrastructure.
The IEA notes that “governments must reconcile their commitment to well-functioning markets and cost-effective clean energy transitions with the need to establish secure and resilient clean technology supply chains. This means we have to make difficult choices about which industries to support, how to structure trade relationships and where to prioritize innovation efforts.”
The report concludes that, beyond the extraction and processing of critical minerals, emerging and developing economies can leverage their competitive advantages to move up the value chain. For example, Southeast Asia could become one of the cheapest places to produce polysilicon and wafers for solar panels over the next decade, while Latin America – especially Brazil – has the potential to expand wind turbine production for export to other markets in India. America. North Africa has the resources to become an electric vehicle manufacturing hub in the next decade, while several countries in sub-Saharan Africa could produce iron using low-emission hydrogen.
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