July 23, 2024
On July 18th, the Energy Research Institute of Peking University and the International Energy Agency jointly held a press conference for the “2024 World Energy Investment” report. This report comprehensively introduces the global energy investment situation in 2023, provides a preliminary interpretation of the new situation in 2024, and provides a global benchmark for tracking capital flows in the energy sector.
The report predicts that the total global energy investment will exceed $3 trillion for the first time in 2024, of which approximately $2 trillion will be used for clean technologies, including renewable energy, electric vehicles, nuclear energy, power grids, energy storage, low emission fuels, energy efficiency improvements, and heat pumps.
At the press conference, several experts and scholars from the energy and investment industries presented their conclusions and discussed the path of China’s energy investment under the new situation.
China Becomes Global Engine for Clean Energy Investment
The 2024 annual report innovatively introduces a regional analysis section. This section gathers practical experience and successful cases of energy transformation accumulated in ten characteristic regions around the world, including China.
The report points out that China’s investment in the energy sector continues to maintain a strong momentum, accounting for one-third of global clean energy investment and playing a key role in promoting China’s overall GDP growth.
Haneul Kim, Energy Investment Analyst at the International Energy Agency, emphasized China’s leading position in the global energy investment field at the press conference, pointing out China’s significant achievements in the renewable energy sector. For example, in 2023, the installed capacity of solar photovoltaic power generation was equivalent to the total global capacity of the previous year, and the installed capacity of wind power increased by as much as 66% year-on-year, becoming the largestcontributor to global nuclear power growth for five consecutive years.
In 2023, China’s “new three types” of solar cells, lithium batteries, and electric vehicles will achieve significant growth, with exports increasing by up to 30% year-on-year, becoming a key factor driving China’s trade growth. This growth is attributed to China’s strong production capacity and the government’s continued support for the development of clean technologies, laying a solid foundation for investment in the clean energy sector. However, despite China’s increasing international competitiveness in these green technologies, it still faces considerable pressure when exporting to key international markets such as Europe and the United States.
At the same time, the report also points out another side of China’s energy investment: despite the continuous increase in renewable energy production capacity, China’s investment in fossil fuels, especially coal, is still ongoing.
China’s energy investment sector faces the wave of transformation
Faced with the wave of global energy transformation, China’s energy investment sector is undergoing unprecedented changes and challenges.
Liu Wei, Director of Strategic Research at the Central Research Institute of State Power Investment Corporation, pointed out that in the current context of energy transformation, we not only face the major challenge of ensuring sustained and stable supply of energy and electricity, but also welcome the historical opportunity of promoting energy structure optimization through technological innovation.
Liu Wei emphasized that with the rapid growth of renewable energy such as wind power and photovoltaics, how to effectively integrate these intermittent energy sources and reduce their impact on the stability of the power grid has become an urgent problem to be solved. At the same time, the maturity of new energy technologies is directly related to the effectiveness of energy transformation, requiring ‘patient capital’ to support technological innovation and iteration.
As a representative of the new energy field, the rapid development of the photovoltaic industry has also brought many challenges. Liu Siming, the head of overseas strategy at Trina Solar, stated that the rapid development of the photovoltaic market has led to a trend of increasing volume and decreasing price. At the same time, with fierce competition within the industry and tightening regulatory policies, some Chinese photovoltaic companies are facing the challenge of IPO withdrawal financing pressure, and the deepening of electricity marketization reform has increased investor uncertainty. He emphasized that the complexity of project risk assessment poses a serious challenge to the formulation of investment decisions.
However, the traditional energy industry has not stood idly by in the wave of transformation. Yan Jiantao, Executive Director of Hong Kong Jiecheng Energy, analyzed that the proposal of carbon peak and carbon neutrality targets has led to a cooling down of traditional energy investment, and the petroleum industry has adopted cost reduction and efficiency improvement strategies, carrying out self reform and investment self-discipline. He stated that this trend provides an opportunity for the accelerated development of clean energy. Under the APS (Annotated Pledges Scenario) scenario and net zero emissions target, the current investment level not only resists the uncertainty of oil price fluctuations and policy changes, but also demonstrates significant advantages of low cost, high return, and short development cycle.
Yan Jiantao further revealed that the investment structure of oil companies is undergoing profound changes. About 30% of the funds are used to optimize existing investment projects, 27% are invested in new projects, and the remaining part is used to maintain the stable operation of existing projects. Although the number of investment projects has decreased, this reflects the trend of refinement and efficiency in resource allocation in the industry, indicating that the traditional energy industry is gradually achieving self optimization and upgrading in the process of transformation.
Investment in new opportunities and technology driven progress simultaneously
With the acceleration of global energy transformation, China, as an important force in energy consumption and transformation, is demonstrating unprecedented vitality and foresight in its energy investment strategies both domestically and internationally.
Liu Wei pointed out that there are many opportunities in the process of energy transformation. On the one hand, there is enormous potential for energy exports to regions such as Africa and the Middle East, providing new growth points for international energy cooperation and trade. On the other hand, digital upgrading is accelerating, and the application of technologies such as smart grids and big data can significantly increase the acceptance rate of new energy and optimize energy allocation efficiency.
When it comes to the important role of hydrogen energy as a future energy source, Liu Wei believes that as an important component of the future energy system, the development of hydrogen energy storage technology will provide important support for long-term energy storage and flexible scheduling. In addition, he also mentioned the rise of the environmental protection equipment manufacturing industry, which responds to the urgent global demand for environmental protection and brings unprecedented development opportunities for related industries.
Cecilia Tam, Director of Energy Investment at the International Energy Agency, focuses on the utilization of biomass resources in Southeast Asia from the perspective of the international investment landscape. She pointed out that the region has enormous potential in agricultural waste management, biomass energy projects, and garbage disposal. The local government should introduce relevant policies to support the development of this field, which not only helps improve the local environmental conditions, but also provides a favorable policy environment and development opportunities for international investment enterprises.
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