Investors Bet $2 Trillion on the Energy Transition
Feb 27, 2025
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Meredith Annex, Head of Clean Power at BNEF, brings her expertise to discuss the groundbreaking $2 trillion investment in the energy transition. She highlights the dominance of solar energy and the critical shift towards power grid and energy storage investments. The podcast delves into the contrasting trends in onshore and offshore wind, the emergence of small modular reactors in nuclear energy, and the underrated significance of heat pumps in decarbonizing sectors. It's a vital listen for anyone interested in the future of clean energy!
Global investments in the energy transition surpassed $2 trillion in 2024, highlighting a significant increase but slower growth in certain sectors.
Solar energy dominated renewable investments, comprising 72% of total funding, while energy storage and power grid investments also reached record highs.
Deep dives
Rising Investments in Energy Transition
In 2024, global investments in the energy transition surpassed $2 trillion for the first time, marking a significant milestone. Although investment levels increased by 11% compared to the previous year, the growth rate was slower than the previous years, indicating some deceleration in certain sectors. Traditional energy areas such as renewables and electrified transport comprised over 90% of the total investments, while emerging sectors like hydrogen and carbon capture, utilization, and storage saw a marked decline in funding, illustrating a stark contrast in investment focus. This situation calls for a reevaluation of the narratives surrounding emerging technologies versus established renewable solutions.
Solar Dominance and Global Trends
Solar energy once again led the renewable sector, accounting for 72% of the total $728 billion invested in renewables in 2024. The significant drop in module prices, particularly from Chinese manufacturers, has made solar installations more accessible across various global markets, including emerging regions in Central Asia and the Middle East. In contrast, consumer behaviors shifted in response to energy blackouts, particularly in areas like South Africa and Pakistan, where demand for solar solutions accelerated. The growth in solar adoption emphasizes the necessity for solar investments to enhance energy resilience in developing regions.
The Growth of Energy Storage and Grid Investments
Investment in energy storage soared to a record $53.9 billion in 2024, benefiting from declining lithium-ion battery prices and increasing demand for enhanced energy management solutions. The growing interest in storage technology aligns with the rising deployment of residential and commercial solar, as it effectively allows for improved energy consumption. Meanwhile, investments in the power grid also reached a record of $390 billion, driven by the urgent need to integrate more renewable energy sources and accommodate consumer demand. Despite this progress, the grid still faces challenges in meeting the needs of the anticipated renewable capacity, suggesting that infrastructure improvements remain critical for the energy transition.
Annual investment in the energy transition has surpassed $2 trillion for the first time. Investors placed bets on renewable energy, power grids and energy storage, while buzzy emerging technologies fell out of favor. On this episode, Dana Perkins is joined by Meredith Annex, BNEF’s head of clean power, to discuss the report ‘Energy Transition Investment Trends 2025.’
Complementary BNEF research on the trends driving the transition to a lower-carbon economy can be found at BNEF<GO> on the Bloomberg Terminal, on bnef.com or on the BNEF mobile app.