Offshore wind investment has hit an all-time high in 2023, signaling robust growth despite challenging market conditions, BloombergNEF’s Renewable Energy Investment Tracker 1H 2024 said.
The surge in investment, which reached an unprecedented $76.7 billion globally, marks a remarkable 79 percent increase, countering a 17 percent decline in onshore investment. China retained its position as the leading offshore wind market, followed closely by the UK and the US, BNEF report said.
The wind energy industry navigated a tumultuous 2023, with several significant projects in the US and the UK facing setbacks. Rising costs, including equipment and financing expenses, along with regulatory hurdles and supply chain disruptions, led to the cancellation of revenue contracts for 6.9 gigawatts of projects. However, amidst these challenges, key players such as Orsted, Iberdrola, Northland Power, and Mitsui & Co proceeded with major projects, demonstrating resilience and commitment to the sector.
Looking ahead, BloombergNEF predicts that governments will show increased willingness to invest in offshore wind, offering more favorable terms and risk-sharing mechanisms in auction deals. Additionally, anticipated decreases in interest rates could lower borrowing costs, facilitating financial closures for struggling projects in 2024.
Energy Transition Investment
In another report released by BloombergNEF, titled Energy Transition Investment Trends 2024, global investment in low-carbon energy transition soared by 17 percent in 2023, reaching an unprecedented $1.77 trillion. Despite geopolitical uncertainties, high interest rates, and inflationary pressures, this figure represents a new record level of annual investment, underscoring the resilience of the clean energy transition.
Electrified transport emerged as the leading sector for investment, witnessing a remarkable 36 percent growth to $634 billion in 2023. This surge includes investments in electric vehicles, associated infrastructure, and commercial vehicles.
Meanwhile, renewable energy saw an 8 percent increase to $623 billion, emphasizing continued investment in wind, solar, and geothermal projects. Power grid infrastructure also received significant attention, with investments totaling $310 billion, crucial for enabling the energy transition.
Meredith Annex, BNEF’s Head of Clean Power, highlighted the remarkable growth in renewable energy investment, despite challenges faced by various markets. She emphasized the need for concerted efforts to accelerate investment momentum to align with global climate goals.
While China remained the largest investor in clean energy with $676 billion, accounting for 38 percent of the global total, the European Union, US, and UK collectively surpassed China’s investment with $737 billion. This shift underscores the increasing momentum of clean energy investment in regions outside of China.
However, the report warns that current investment levels are insufficient to meet net-zero targets by mid-century. To align with BNEF’s Net Zero Scenario, annual energy transition investment would need to average $4.8 trillion from 2024 to 2030, nearly three times the investment observed in 2023.
Albert Cheung, Deputy CEO of BNEF, stressed the urgent need for policymakers to take decisive action to accelerate investment in clean energy technologies. He highlighted the significant growth in the global clean energy supply chain investment, projecting a surge to $259 billion by 2025. However, Cheung emphasized the necessity of ramping up investment across all sectors to achieve a net-zero.
Baburajan Kizhakedath