The tide continues to turn in favor of emissions-free sources of power, said a report from S&P Global Commodity Insights.
S&P said investment in renewable power generation, green hydrogen, and carbon capture and storage will reach $670 billion in 2025, marking the first time these investments outpace projected upstream oil and gas spending.
“Solar PV is expected to represent half of all cleantech investments and two-thirds of installed megawatts,” said Edurne Zoco, executive director, Clean Energy Technology, S&P Global Commodity Insights.
The report said clean energy is expected to be pushed higher in 2025 by new opportunities in corporate clean energy procurement and the integration of AI in energy management.
(Read: “The fastest energy change in history continues“)
S&P said despite the record financial commitments, overall investment levels remain insufficient to meet urgent climate goals. It said that capital efficiencies vary widely by region, with China expected to add nearly twice as many GW per dollar spent compared to the United States.
The report also noted that the global cleantech landscape is challenged by oversupply from China. While it expects that ongoing price declines may stabilize in 2025, competition among Chinese manufacturers is expected to keep prices low.
However, a slowing domestic economy in China complicates the maintenance of its expansive supply chain, said S&P 500. The slowing economy may prompt efforts to control manufacturing growth and raise barriers for new entrants. S&P projects that China’s share in module production will decline to 65% by 2030 and battery cell manufacturing to 61% by 2030.
The report identified three trends to look for in the coming years:
- Storage transforms power markets
Battery energy storage has become essential for enhancing project economics and mitigating low wholesale electricity prices in high-renewables markets. Despite reductions in solar costs, lower capital expenditure has led to lower power purchase agreement expectations.
“To remain competitive, solar projects must integrate battery energy storage solutions, enabling developers to navigate price fluctuations and improve the economic viability of renewable investments,” said S&P.
2. AI revolutionizes clean energy
As intermittent renewable energy sources become more common, the need for accurate forecasts has intensified.
“AI-powered trading applications are emerging as critical tools to mitigate risks associated with discrepancies—potentially up to 700%—between forecasted and actual energy generation, thereby enhancing energy management and facilitating the integration of renewables into the grid,” said S&P.
3. Datacenters drive clean energy procurement
Datacenters are expected to increase their role in corporate clean energy procurement, sourcing as much as 300 TWh by 2030. Datacenters already account for about 200 TWh, or 35% of all corporate clean energy procurement. By 2030, datacenters in North America could represent about 60% of the global increase in clean energy procurement by 2030.
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