The world now invests almost twice as much in clean energy as it does in fossil fuels, according to a report by the International Energy Agency (IEA), but there are major imbalances in investment, and emerging markets (EM) outside China account for only around 15% of global clean energy spending.

The report found that investment in solar PV now surpasses all other generation technologies combined. Also the integration of renewables and upgrades to existing infrastructure have sparked a recovery in spending on grids and storage.

Global energy investment is set to exceed $3 trillion for the first time in 2024, with $2 trillion going to clean energy technologies and infrastructure. Investment in clean energy has accelerated since 2020, and spending on renewable power, grids and storage is now higher than total spending on oil, gas and coal.

China is the world’s green energy champion having produced more renewable energy in May alone than the rest of the world produced for the whole year in 2023. China is set to invest almost $680bn in 2024, supported by its large domestic market and rapid growth in the so-called “new three” industries: solar cells, lithium battery production and EV manufacturing.

The EU is in second place with $370bn invested into clean energy today, followed by the US investment in clean energy increasing to more than $300bn in 2024, 1.6 times the 2020 level and well ahead of the amount invested in fossil fuels. Given the size of the US economy, the level of investment is below par and much of the investment still goes into fossil fuels. Another large chunk of investment has gone into upgrading its grid as more renewable power comes online.

Power sector investment in solar photovoltaic (PV) technology is projected to exceed $500bn in 2024, surpassing all other generation sources combined. Though growth may moderate slightly in 2024 due to falling PV module prices, solar remains central to the power sector’s transformation.

“In 2015, the ratio of clean power to unabated fossil fuel power investments was roughly 2:1. In 2024, this ratio is set to reach 10:1,” says IEA.

Nuclear power is also coming back in fashion. Investments in nuclear power are expected to pick up in 2024, with its share (9%) in clean power investments rising after two consecutive years of decline. Total investment in nuclear is projected to reach $80bn in 2024, nearly double the 2018 level, which was the lowest point in a decade.

Grids have become a bottleneck for energy transitions, but investment is rising. After stagnating around $300bn per year since 2015, spending is expected to hit $400bn in 2024, driven by new policies and funding in Europe, the United States, China and parts of Latin America. Advanced economies and China account for 80% of global grid spending. Investment in Latin America has almost doubled since 2021 but from a low base, notably in Colombia, Chile and Brazil, where spending doubled in 2023 alone. However, investment remains worryingly low elsewhere.

Investments in battery storage are ramping up and are set to exceed $50bn in 2024, but it is appeared almost exclusively in developed countries: in 2023, for every dollar invested in battery storage in advanced economies and China, only one cent was invested in other EMs.

Rising interest rates has led to higher financing costs. However, that is offset by easing supply chain pressures and falling prices. Solar panel costs have decreased by 30% over the last two years, and prices for minerals and metals crucial for energy transitions have also sharply dropped, especially the metals required for batteries.

“The annual World Energy Investment report has consistently warned of energy investment flow imbalances, particularly insufficient clean energy investments in EM outside China. There are tentative signs of a pick-up in these investments: in our assessment, clean energy investments are set to approach $320bn in 2024, up by more 50% since 2020. This is similar to the growth seen in advanced economies (+50%), although trailing China (+75%),” said the IEA.

The investment gains primarily come from higher investments in renewable power, now representing half of all power sector investments in these economies. Progress in India, Brazil, parts of Southeast Asia and Africa reflects new policy initiatives, well-managed public tenders and improved grid infrastructure. Africa’s clean energy investments in 2024, at over $40bn, are nearly double those in 2020.

“Yet much more needs to be done. In most cases, this growth comes from a very low base and many of the least-developed economies are being left behind,” says the IEA. “In 2024, the share of global clean energy investment in EM outside China is expected to remain around 15% of the total. Both in terms of volume and share, this is far below the amounts that are required to ensure full access to modern energy and to meet rising energy demand in a sustainable way.”