Impact of Indian elections on renewable energy sector | Pawnshop Odier

In 2002, a renewable energy record was set when the global community installed more new renewable energy capacity in a single year than ever before. The record was broken just one year later, in 2003, and again in 2004. This trend has continued, with more and more renewable energy capacity added to the global energy mix each year over the past two decades. There was significant growth in 2023, with 510 gigawatts (GW) of new capacity added to the grid, a 50% increase compared to 2022. At this rate, it is expected that there will be 7,300 GW of renewable capacity by 2028, which enough to power more homes than there are in the world.

Electricity produced from renewable sources is increasingly produced at great distances from the end user. Countries with sunny or windy climates sell electricity to countries with less renewable potential. This trend is expected to significantly increase the demand for high-voltage direct current (HVDC) cabling needed to transmit this electricity over long distances. The question for governments and industry is whether they can secure the millions of kilometers of new cabling required to support the clean energy transition.

The transition to renewable energy is changing not only the energy landscape, but also the geopolitical landscape. As we move away from fossil fuels, countries with high renewable energy potential are becoming key players for those lacking reliable wind, solar or hydropower resources. Emerging economies are developing energy exports that have the potential to transform their economies. Projects such as directly connecting the UK to a solar and wind farm in Morocco are just one example of ambitious planned interconnections.

Offshore wind farms are being built further from land, which increases pressure on the supply of HVDC cables. The demand for these cables is expected to increase significantly in the coming years. While in China domestic manufacturers support the development of extensive power infrastructure, the rest of the world relies on a few key companies for HVDC cables. Delays in obtaining the necessary cabling have already caused delays in renewable energy projects, underscoring the importance of securing a stable supply chain.

Investments in infrastructure such as HVDC cabling are key to the energy transition. While there is a strong focus on technological innovation, the physical infrastructure needed to support the transformation is often overlooked. Network modernization and new cable manufacturing plants are essential to ensure a smooth transition to clean energy. Investors have the opportunity to support the development of this infrastructure while driving the transition to a sustainable, zero-carbon energy future.

The race to build a sustainable economy requires attention to both technological progress and the physical infrastructure that supports it. The HVDC cabling bottleneck is just one example of the challenges that must be overcome to achieve a successful energy transition. By investing in the necessary infrastructure, investors can play a key role in driving the transition to a cleaner and more sustainable energy system.