Clean energy investment reaches $1.8 trillion but falls short of COP28 targets, ET EnergyWorld

New Delhi: Despite a significant increase in global investment in clean energy, which last year amounted to USD 1.8 trillion, of which USD 660 billion was allocated to renewable energy sources, according to EY Renewable Energy Country Attractiveness the investment still falls short of the COP28 target of tripling renewable capacity by 2030 Index Report (RECAI 63). High capital costs and network congestion are the main obstacles that can hinder the necessary acceleration. The report highlights the key role of battery energy storage systems (BESS) in overcoming these challenges, particularly in mature markets where network congestion has become extremely problematic. According to EY, BESS is key to stabilizing and strengthening network infrastructure and enabling the connection of more distributed energy resources.

Arnaud de Giovanni, EY Global Renewables Leader, emphasized the importance of increasing the potential of BESS. “Scaling up battery energy storage systems can help solve many of the issues holding back clean energy progress,” Giovanni said. He highlighted four key areas for investors to focus on: building a resilient investment case, maintaining technology competitiveness, establishing the optimal business model or financing structure, and mitigating supply chain risks.

RECAI also introduced a new ranking of global markets based on their attractiveness for BESS investments. The United States took first place, boosted by a 30% tax break under the Inflation Reduction Act. China and the UK followed suit, benefiting from strong government support and advanced energy market designs, respectively.

Ben Warren, editor-in-chief of EY RECAI, noted the growing interest and complexity of BESS investing. “Investor interest in BESS is growing,” commented Warren, adding: “Investing in BESS is a long-term commitment; they are also highly localized and carry greater risk than other clean energy investments.”

EY projects global BESS deployment to quadruple between 2023 and 2030, reaching 572 GW/1,848 GWh, highlighting the growing role of energy storage in the dynamic energy sector.