The State of Clean Technology Manufacturing – November 2023 Update

Key findings

  • Clean energy technologies are foregrounded in the IEA’s updated Net Zero Emissions by 2050 Scenario (NZE Scenario), which highlights impressive growth in solar PV installations and electric vehicles as one of the success stories of recent years helping to keep the net zero goal within reach.
  • None of these advances would have been possible without growth in clean energy technology manufacturing, and manufacturing now needs to accelerate further in order to meet targets for 2030 deployment consistent with the net zero goal.
  • This Energy Technology Perspectives Special Briefing provides a snapshot of the latest developments in manufacturing capacity across five key technologies: solar PV, wind energy, heat pumps, electrolysers and batteries.
  • Announcements during just the middle two-quarters of 2023 – the analysis period since our last Special Briefing in May – account for nearly 40% of the total announced capacity for solar PV, 10% for batteries and 20% for electrolysers. However, the growth in announced capacity has been slowing. Globally, the average monthly rate of additions to the project pipeline during Q2‑Q3 2023 has halved relative to the period examined in the May Special Briefing for solar PV, reducing by nearly two-thirds for batteries, and by nearly one-third for electrolysers.
  • For the first time, announced projects for electrolyser manufacturing could meet deployment needs for the NZE Scenario in 2030. Almost 170 GW of installed manufacturing capacity could be expected by 2030, if all announced projects are realised. However, less than 10% of announced projects for electrolysers are committed – i.e. they have reached a final investment decision (FID) or are under construction. Meeting deployment needs for net zero will require all of these projects to move rapidly towards completion, backed by sustained and strong growth in demand for electrolysers, as well as a step-up in operations for already installed capacity.
  • Solar PV manufacturing continues to surge ahead, with projected throughput of existing and announced projects now two-thirds higher than the level required to satisfy deployment needs in 2030 in the NZE Scenario.
  • For batteries, the latest announcements continue to add to the huge increase in manufacturing capacity embodied by project announcements over the past year. If all announced projects are realised, total manufacturing capacity by 2030 would reach 7 500 GWh, almost five-times current installed capacity, which reached 1 550 GWh per year at the end of 2022. At the global level, announced battery manufacturing capacity would be sufficient to meet deployment needs for both mobility and stationary applications in the NZE Scenario in 2030.
  • Heat pump manufacturing capacity additions tend to be less prominently announced than those for other technologies, but announcements have slowed down compared to 2022 in the face of uncertainty about demand. In some countries, this results from the downgrading of subsidy schemes, or – conversely – from consumers postponing investment decisions in anticipation of forthcoming incentives. The downward trend could therefore be reversed in the near term.
  • There has been very limited activity in the project pipeline for wind energy, and capacity remains significantly below the deployment levels required in the NZE Scenario. Newly announced facilities for manufacturing onshore wind components only just outweighed others that were cancelled.
  • The successful completion of manufacturing capacity additions for offshore wind energy projects depends on the financial stability of original equipment manufacturers, which is itself strongly affected by the tendering and contracting process for new sites. Any delays or cancellations can therefore have a direct effect on manufacturing facilities.
  • There is a strong degree of regional concentration in manufacturing for all five technologies considered here, and on the basis of project announcements, the same countries and regions will continue to dominate manufacturing through to 2030. The relative shares of the different countries and regions in capacity for each technology will nevertheless undergo a small shift.
  • China is expected to continue to account for the majority of manufacturing capacity for wind, batteries, and especially solar PV, as well as for their key components. Announced projects suggest that the manufacturing base for heat pumps and electrolysers will broaden out slightly, with no country or region accounting for more than 50% of capacity.
  • Ensuring that clean energy technology supply chains are secure and resilient are an important aim of public policy. Major policy announcements of recent years, including the US Inflation Reduction Act, the EU Net Zero Industry Act and India’s Production Linked Incentive scheme are already starting to ripple through the manufacturing sector.
  • For some technologies – notably electrolysers in the United States and heat pumps in several European countries – ongoing policy changes have resulted in uncertainty and delays with regards to demand. To increase confidence in the reliability of future demand, it is essential to ensure that delays in policy implementation are minimised.