Cleantech Investments to Surpass Fossil Fuels for the First Time in 2025, Says Report

The year 2025 is set to witness a transformative shift in global energy investments, with cleantech investments surpassing fossil fuel investments for the first time, according to the latest report by S&P Global Commodity Insights, titled 'Top Clean Energy Technology Trends of 2025: Transformative Changes Ahead'.

The report forecasts cleantech energy supply spending, including solar power generation, green hydrogen production, and carbon capture and storage (CCS), will reach USD 670 billion. With this, solar PV is expected to represent half of all cleantech investments and two-thirds of installed megawatts. This indicates the growing dominance of renewable technologies, though the report emphasises that current investments remain insufficient to meet climate goals, particularly the target of tripling renewable capacity by 2030.

As per the report, this milestone is driven by a significant increase in solar energy capacity, which is expected to exceed that of gas and potentially coal, with at least 620 GW of new solar and wind capacity coming online in 2024 —equivalent to the combined power systems of India, Pakistan, and Bangladesh. Furthermore, battery energy storage systems (BESS) are set to exceed pumped hydro storage in installed capacity.

The report also highlightss regional disparities in capital efficiency. China is expected to achieve nearly twice as many gigawatts per dollar spent compared to the United States, making its market even more competitive. While investments soar, tensions within cleantech supply chains, especially in the solar, wind, and battery sectors, are expected to rise. China continues to oversupply the market with equipment, resulting in price declines and a shift in the industry's pricing dynamics. However, China's market share in PV module production is forecasted to decrease to 65 percent, while its share in battery cell manufacturing is expected to drop to 61 percent by 2030.

The report also dwells on the increasing importance of battery energy storage. As renewable energy penetration grows, storage solutions are becoming essential to enhance project economics and mitigate low wholesale electricity prices. While the reduction in solar PV costs has not yet translated into robust project development, battery storage integration is becoming vital for solar projects to remain competitive. Installations of long-duration energy storage systems are projected to double by 2025.

Additionally, AI is revolutionising the cleantech sector. AI-powered applications are improving renewable generation forecasting, grid planning, and trading, helping to mitigate risks associated with discrepancies in energy production. However, the report also points out potential risks, such as cybersecurity breaches and anomalous behaviours, that will need careful management.

Further, data centres are expected to play a significant role in corporate clean energy procurement. They are projected to source about 300 TWh of clean energy annually by 2030, up from 200 TWh today. This increase, especially driven by North American data centres, will contribute substantially to global clean energy demand.

Finally, the report discusses the ongoing pursuit of deeper decarbonisation through carbon capture, utilisation, and storage (CCUS) and ammonia-based low-carbon hydrogen production. The CCUS sector is anticipated to capture around 70 million metric tonnes of CO2 per year by 2025, indicating growing corporate interest in decarbonisation strategies. Despite high costs associated with carbon dioxide removal (CDR) technologies, the surge in CDR off-take agreements reflects stronger government policy support and corporate commitment.

S&P Global’s report signals a pivotal year for the energy transition, with cleantech at the forefront of reshaping global energy markets and supporting the achievement of climate targets.