Renewable energy investment boom set to continue in 2023 and beyond

Climate technology has established itself like never before with its potential as a safe-haven investment in an uncertain macroeconomic environment.

Over the next five years, PitchBook predicts that the climate tech industry will grow into a $1.4 trillion market, representing a compound annual growth rate of 8.8% for climate tech. – enough to make any self-respecting investor frown.

Renewables are the clear winners of 2022 and beyond. Russia’s invasion of Ukraine triggered an energy price crisis that underscored the urgency of transitioning to clean energy – not just for the good of the environment – but for economic stability and Politics. Interest in wind, solar and large battery technology has reached heights never seen before.

According to a report by the International Energy Agency (IEA), the total energy bill paid by consumers worldwide is expected to exceed $10 trillion, a record price.

Investments in clean energy have accelerated dramatically and are expected to surpass $1.4 trillion in 2022, according to the World Economic Forum. Three-quarters of the overall growth in energy investment is driven by clean energy, which has been growing at an average annual rate of 12% since 2020.

The EU installed 47% more solar power in 2022 compared to 2021 – enough to power 12.4 million homes and Euronews reported that the bloc’s capacity to produce solar power increased by 25% overall in 2022.

Meanwhile, in the United States, demand for residential solar power is growing at record speeds as households turn to home solar power as retail electricity prices rise.

Governments across Europe are finally doing their part to help the energy transition in a meaningful way, with the EU accelerating the rate at which permits are granted to renewable energy projects. In addition, the European Commission has proposed that countries reserve land or sea areas for renewable energies where the environmental impact of the project would be low.

Germany has approved plans for each state to allocate a minimum amount of land to onshore wind farms and EU energy ministers have backed laws with targets to get 40% of energy from from renewable sources by 2030.

In the United States, the Inflation Reduction Act (IRA) has given renewables another boon, with the extension of tax credits to 2032 that offer developers long-term support for implementing new large-scale renewable projects. The Deloitte Renewable Energy Outlook 2023 report predicts this will lead to up to 550 gigawatts of additional clean energy by the end of the 2020s.

Private investment in renewable energy in the United States hit an all-time high of $10 billion in 2022, levels of investment that Deloitte says are likely to continue in 2023 as investors are drawn to transparent returns and predictable on mature technologies that are backed by the IRA’s 10-year tax. credits.

The booming renewable energy sector could respond to supply chain constraints in 2023, which could extend project timelines and hamper growth until supply chain capacity increases to meet demand. demand, in which case renewables are expected to grow faster throughout 2024 and beyond.

It is fair to say that the energy transition is in full swing. And it is a transition that will permanently change geopolitical dynamics, with the potential to give every nation self-reliance and a stronger, more secure economy that is no longer powered by fossil fuels.

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