Aug 30, 2024
Insights into the future of global power generation come in many forms.
Insights into the future of global power generation come in many forms. For instance, consider energy investments. By paying attention to who is investing and the projects they are putting money into, we can learn a lot about where the future of energy is headed. With that in mind, the International Energy Agency's (IEA) World Energy Investment 2024 report offers some fascinating insights.
Right off the top, the report suggests that two-thirds of all energy spending in 2024 will ultimately go into clean energy technologies. The numbers reflect total energy spending. That means they account for fuels, infrastructure, production costs, and so forth. Looking at the total cost of energy and the fact that two-thirds of all expenditures will go into clean energy says something important.
It tells us that the world is slowly weaning itself from fossil fuels. Nuclear is regaining support after many years of decline while new energy projects are more likely to be based on renewables rather than fossil fuels. Underscoring the many positive indicators in the report is the fact that solar seems to be doing so well.
Encouraging Growth in Solar
The IEA estimates a total of $3 trillion in energy related spending this year. Approximately $2 trillion will go toward clean energy development and production. Finally, $770 billion of that is expected to go into renewable electricity. Solar appears poised to lead the way.
An estimated $500 billion will be spent on solar electric production and distribution in 2024. That is more than all other forms of power generation combined. But this is not the half of it. The report notes two other factors that are very encouraging for solar:
Every dollar spent on wind and solar last year yielded 2.5 times more energy than it did 10 years ago.
Solar investments are expected to grow considerably despite the fact that market forces have led to a considerable decrease in solar panel prices.
Solar power generation has faced significant headwinds over the last two decades. Nonetheless, those who believe in solar have stayed the course and are finally beginning to see it pay off.
Decreases in Fossil Fuel Investments
While it appears that investments in clean energy will enjoy significant growth in 2024 and beyond, the report suggests decreases in fossil fuel investments. Only $80 billion will go into fossil fuel generation by the time the year is out. Investments in coal are expected to fall by 30% while gas investments decrease by an estimated 8%.
Surprisingly, nuclear power generation is expected to reach $80 billion this year. That is double the amount invested just six years ago. It appears as though a number of European countries that haven't realized their goals for solar and wind have returned to nuclear as a means of achieving the broader goal of putting an end to fossil fuel energy production.
Electric Vehicles Are the Wildcard
As we wrap up this post, it is important to mention that individual consumer investments in clean energy are up some 40%, according to the report. This is partially attributed to electric vehicle (EV) sales. But EVs are the wildcard in all of this.
It remains to be seen whether EVs will ever replace gas- and diesel-fueled vehicles. If they do, will we be able to produce enough cheap energy to keep up with the demand? Between power hungry data centers and EVs, the global energy supply could be severely tapped.
It is clear that fossil fuels are no longer the king of energy production. Energy investments tell the story, and they are pointing toward renewables and clean energy.
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