More than $500 billion was invested in energy transition during 2023, Report informs, citing the international agency S&P Global Commodity Insights.
"But the figures do not capture the full impact of this historic acceleration in activity. Private capital funds have raised roughly $200 billion since August 2022 for new funds and have already invested roughly half of that amount, much of it into renewable power production and for assets that are often considered to be early stage or emerging technology. This has the potential to change what we traditionally think of as the ownership profile of power sector utilities.
"With over half a trillion dollars in investment deployed over the last 18 months, and significantly more announced investments still filling out the sector's capital stack, energy transition financing has firmly shifted in scale and speed even as supply chains, permitting and regulators struggle to keep up with the growing queue of both financed and planned projects.
"Capital influx is leading certain areas to advance more quickly than others. Battery deployment and manufacturing are accelerating sharply, while areas like carbon capture and storage still lag on a relative basis," S&P noted.
A recent S&P Global Commodity Insights analysis of transaction data showed that 82% of private capital energy transition investment was in electrification and the associated deployment of renewable power between August 2022 and August 2023, while only 18% was in decarbonization technologies for heavy industry. These varying levels of investment may bring about other effects, lead to price volatility and obstruct certain trajectories while displacing established business models.
The annual global gap in renewable energy investing may be as high as $700 billion, according to the latest S&P Global reference forecast. With $8 of every $10 of current renewable energy investment going to projects in developed economies plus China, a majority of the world's population is being left behind even as Global North countries accelerate both private and public sector investment.