Falling solar and battery costs drive record renewable investment, but pace still short of COP28 target

Despite a record $US623 billion investment in renewable energy in 2023, a new report from BloombergNEF (BNEF) warns this figure must climb to an average of $US1 trillion per year over the remainder of the decade to meet the goal of tripling renewable energy capacity set at COP28.

The new report shows that, in the 10 months since COP28, the pace of the transition has maintained a steady rhythm thanks in large part to the rapidly falling costs of solar and batteries, and the continued affordability of wind energy.

BNEF now expects around 10.3 terawatts (TW) of renewable energy capacity to be up and running by 2030, up from 4.1 TW at the end of 2023.

These figures still remain 13 per cent short of what is needed for a net-zero pathway, but according to BNEF the goal is still within reach.

“Since COP28, we’ve seen real progress in renewable energy investment, but it’s not happening fast enough,” said Michael R. Bloomberg, the UN Secretary-General’s special envoy on Climate Ambition and Solutions, and founder of Bloomberg L.P. and Bloomberg Philanthropies, which supported the research.

“The more the public, private, civil society, and nonprofit sectors come together to develop and implement concrete plans for eliminating barriers to investment, the better chance we have of reaching our net-zero goals, growing the global economy, and saving more lives.”

In order to push renewable capacity deployment to the level needed to assure a net-zero pathway, BNEF estimates investment must reach $US1 trillion per year (in 2023 dollars) between 2024 and 2030, plus another $US193 billion per year for storage and $US607 billion for grids.

Even as these numbers seem mind-bogglingly large, BNEF believes they are nevertheless within reach, especially as the cost of renewable energy has fallen over the past decade.

According to BNEF’s report, around $US312 billion was invested in renewable energy in the first six months of 2024, including $US221 billion towards both large- and small-scale solar projects, and another $US91 billion towards wind energy.

“Solar has become so cheap that it is growing rapidly with very little government support and is now expected to make up the majority of progress to the tripling renewables target,” says BNEF, but warns that solar has a lower capacity factor and, in seasonal climates, can leave a large deficit in power supply during the winter months.

As such, other renewable technologies require a faster scale-up of capital, backed by similar investment in batteries and grid updates.

“The target of tripling renewable energy capacity to be on a net-zero pathway to 2050 is still achievable” said Meredith Annex, co-lead author of the report.

“However, governments need to remove barriers to renewable energy expansion and support the financing of clean energy projects, especially in developing countries. Building out power grids is particularly vital.”