In the past decade, the global clean energy industry has rapidly expanded, among which solar photovoltaic power generation has become the most competitive investment hotspot due to its mature supply chain and low electricity cost, and has also become a key track for countries to strive for. Industry estimates that as emerging economies continue to increase their investment in clean energy, global investment in solar photovoltaic is expected to surpass oil and gas for the first time this year, setting a historical record.
1. Collective efforts from emerging economies
Recently, Indonesian state-owned utility company PLN issued a statement stating that it plans to seek $700 million in investment to build a solar photovoltaic power plant with an installed capacity of 200000 kilowatts locally, hoping to replace the current diesel power plants with solar photovoltaics and reduce carbon dioxide emissions. In the current corporate vision formulated by PLN, solar photovoltaic power generation will be one of the important means to achieve carbon neutrality.
It is understood that as early as 2021, Indonesia had set a goal of achieving net zero emissions by 2060; In July of that year, Indonesia submitted the latest national independent contribution goals to the United Nations to address climate change; In 2022, Indonesia launched the Just Energy Transformation Partnership (JETP) project, hoping to attract $20 billion in funding through multi-party cooperation to promote local and even the entire Southeast Asian region’s energy transformation.
Reuters cited the latest statement from CNN stating that Indonesia is hoping to raise funds for solar photovoltaic projects through the JETP project. PLNs director Evy Haryadi stated in a statement that the total diesel power generation capacity replaced by the solar photovoltaic power project is 1 million kilowatts. The current search for new solar photovoltaic power stations is only the first stage of the project’s development, and in the future, solar photovoltaic power projects will be further utilized to improve diesel substitution levels.
Industry data shows that currently, more than two-thirds of Indonesia’s energy supply still comes from coal, and by 2060, it is expected that 85% of Indonesia’s energy supply will come from renewable energy, with nuclear energy accounting for an estimated 14%. This also means that the country has enormous potential for the development of renewable energy.
In fact, Indonesia’s enthusiasm for the solar photovoltaic industry is a microcosm of the global expansion of the clean energy industry. The latest data released by the International Energy Agency shows that emerging markets and developing countries have become important forces driving global clean energy growth, with countries such as India, Indonesia, Saudi Arabia, and Brazil increasing their investment in clean energy.
2. Solar photovoltaics are particularly favored by capital
From the current clean energy transition policies formulated by major emerging economies and developing countries, solar photovoltaic has become the “first choice” for decarbonization of electricity in many countries. Taking India as an example, the country has proposed to complete the bidding target of at least 250 million kilowatts of new clean energy installations by 2028, of which it is expected that 80% will be solar photovoltaic power generation; At the same time, we will also encourage investment in the construction of local solar photovoltaic industry chains.
Economies with relatively mature clean energy development, such as China, the United States, and the European Union, are also actively investing in photovoltaic projects. Overall, solar photovoltaic has become the most favored clean energy by capital in the current energy field.
According to data from the International Energy Agency, global investment in clean energy, including wind power, photovoltaics, nuclear power, and hydropower, has increased in the past few years. In specific areas, the growth rate of solar photovoltaic investment is the most significant. The institution predicts that by the end of this year, the average daily investment in the global solar photovoltaic industry is expected to exceed $1 billion, and the total annual investment will exceed $380 billion, becoming the first clean energy industry in history to surpass investments in the upstream oil and gas sector.
3. Multiple challenges still exist
However, although global investment in clean energy, especially in the solar photovoltaic sector, has shown outstanding performance, the International Energy Agency also reminds us that there is still a long way to go before achieving established climate goals in global clean energy investment. The growth of clean energy investment in emerging economies and developing countries still faces many bottlenecks, such as weak grid infrastructure and high financing costs, These factors may all lead to inadequate preparation for the integration of renewable energy generation.
Meanwhile, in 2022, the global cost of wind and photovoltaic electricity has risen against the trend after nearly a decade of decline. Between the beginning of 2021 and the end of 2022, the cost of solar photovoltaic and onshore wind power in Europe increased by 30% and 15% respectively; Meanwhile, due to inflationary pressures and supply chain issues, international wind turbine manufacturers suffered losses last year, putting particular pressure on the expansion of the wind power sector.
To further improve the global level of clean energy investment, the International Energy Agency pointed out that clean energy investment in emerging economies should be promoted as soon as possible, helping them improve the investment environment and reduce investment risks. Preferential funds and specialized support should also be increased.