Global new investment in renewable power and fuels (not including hydropower projects larger than 50 megawatts, MW) reached a record high of an estimated USD 622.5 billion ⁱ in 2023. ¹ Investment increased 8.1% from 2022, due largely to the global rise in solar photovoltaic (PV) installations. ² These estimates do not include investment in renewable heating technologies, for which data are not collected systematically. Global investment in heat pumps ⁱⁱ fell 3.7% in 2023 to USD 63.1 billion, linked in part to consumer uncertainty around government policies and subsidies as well as to falling natural gas prices. ³ (See Buildings section in Energy Demand module.)

Factors contributing to rising renewable energy investment in recent years include the global energy crisis, ongoing recovery from the COVID 19 pandemic, as well as alignment across climate change policy ambition, energy security goals and industrial strategies. ⁴ Together with declining unit costs, this has created a supportive investment environment for renewables. However, challenges that complicated the market in 2023 included high interest rates (outside of China) and higher input costs for key raw materials, including critical minerals. ⁵

Declining costs for renewables in the last decade have meant that a dollar invested today translates into higher capacity installed than it did in years past. ⁶ Without these cost reductions, much more investment would be needed to bring the same level of capacity online. ⁷

Investment by Technology

Solar PV and wind power continued to dominate new investment in renewables, with solar PV accounting for 63% of the 2023 total and wind power for 35%, almost mirroring the shares of 2022. ⁸ Solar PV investment increased 12.5% to reach USD 392.7 billion, showing much slower growth compared to 2021 (39%) and 2022 (44%). ⁹ (See Figure 12.) Nearly half (47.4%) of solar PV investment was in China. ¹⁰ Wind power investment increased 2.3% to USD 216.6 billion, down from more robust growth in 2021 (11%) and 2022 (7%). ¹¹ Investment in offshore wind power surged 79% to USD 76.7 billion, offsetting a 17% decline in onshore wind power investment. ¹² China, the United States and the United Kingdom together accounted for 66.5% of global wind power investment in 2023. ¹³

FIGURE 12.Global Investment in Renewable Power and Fuels, by Technology, 2019-2023

Investment in geothermal energy expanded nearly 27-fold in 2023 to USD 8.0 billion, with more than half of this in the United States (USD 4.3 billion). ¹⁴ Investment in biofuels fell 82.7% to USD 1.0 billion and in biomass and waste fell 52.5% to USD 2.0 billion. ¹⁵ Investment in small hydropower continued its downward trend of the past five years, falling 69.5% to USD 0.2 billion, due mainly to slowdowns in projects in China, Latin America and Europe. ¹⁶ Large hydropower investment (including projects above 50 MW) has hovered at around USD 8 billion for several years, although data remain limited. ¹⁷

The private sector (mainly commercial financial institutions and corporations) has been the primary source of global investments in renewable energy in recent years, although the balance between public and private investments varies depending on the technology and context. ¹⁸ The private sector accounted for the bulk of investment in solar PV technologies (around 83% in 2020, the latest data available), as these technologies are commercially viable and highly competitive. ¹⁹

In contrast, geothermal and hydropower technologies relied mostly on public finance, with private finance representing only around 32% and 3%, respectively. ²⁰ Hydropower investments often need public finance because of the large upfront investments, the need for long-tenor loans (as construction can take more than a decade), high construction risks, complex and lengthy permitting procedures, and high social costs and environmental risks, all of which hamper private sector investments. ²¹

The link between investment and installed capacity reflects these differences in technology. Solar PV investments track fairly closely with the capacity installed, whereas investments for many other renewable technologies, such as offshore wind power, geothermal and hydropower installations, have a greater time lag (of one to several years depending on the technology and project specifics) from initial investment to project commissioning.

Investment by Economy

Investment in renewable power and fuels varied by region in 2023, increasing dramatically in Europe, the United States, and the Middle East and Africa, but falling in China and Brazil. ²² (See Figure 13.) China continued to account for the largest share of global renewable energy investment (excluding hydropower larger than 50 MW) at 44%, followed by Europe (20.9%) and the United States (15%). ²³ All other world regions accounted for 7% or less of the total. ²⁴

China's overall investment in renewables fell 10.3% to USD 273.2 billion in 2023. ²⁵ Although the country's investment in solar PV capacity rose 8.9% to USD 186.2 billion, its investment in wind power fell 34.5% to USD 86.6 billion, and investment in all other renewable energy technologies was marginal by comparison. ²⁶ Renewable energy investment in China is driven in part by the country's long-term decarbonisation goals and by rising electricity demand. ²⁷ Investment in solar PV has been supported by Chinese provincial and local governments, as well as by growing commercial and industrial interest in distributed solar PV. ²⁸ In 2023, in response to a slowdown in the real estate sector, the central government introduced a policy to encourage the use of solar power on unused and existing construction lands, further bolstering investment in the technology. ²⁹

In Europe, investment in renewable energy projects jumped 42.9% in 2023 to USD 134.4 billion. ³⁰ Many countries showed remarkable investment growth: in the United Kingdom, renewable energy investment increased more than six-fold to USD 23.2 billion, the highest level in the region. ³¹ Most of this increase was in wind energy, which received a boost during the year when the government announced a 66% increase in the maximum prices for offshore wind auctions. ³² Germany came in second in investment (up 35% to reach USD 20.4 billion), followed by Spain (up 14.4% to reach USD 18.5 billion). ³³ The highest growth rates in renewable energy investment in Europe were in the Czech Republic (up 246%), Denmark (up 172%), and Bulgaria (up 145%), although starting from lower levels. ³⁴

The United States continued to attract the most renewable energy investment among developed economies. ³⁵ Reversing the decline of the previous year, investment in renewables in the country jumped 60% in 2023 to reach USD 92.9 billion. ³⁶ Investment in solar PV dominated (up 41.2% to USD 50.6 billion), although wind power experienced much higher growth (up 174.3% to USD 37.1 billion). ³⁷ Investment also supported renewable energy manufacturing facilities and facility expansions, including 6 planned offshore wind turbine component facilities (ranging from USD 100 million to USD 1.7 billion in investment), 11 new onshore wind component facilities (ranging from USD 20 million to USD 60 million) and 50 new solar PV manufacturing plants (ranging from USD 11.25 million to USD 2.5 billion). ³⁸ (See Economic and Social Value Creation module.) Policy support from the federal Inflation Reduction Act and accompanying tax credits was a key driver of the boom in US renewable energy investment. ³⁹ Geothermal investment grew substantially in 2023, supported by new investment and production tax credits on the federal level. ⁴⁰

FIGURE 13.Global Investment in Renewable Power and Fuels, by Country and Region, 2014-2023

In Asia-Oceania (excluding China and India), the decline in renewable energy investment continued in 2023 but fell only 0.8% to USD 45.4 billion. ⁴¹ Investment in wind power in the region increased 4% to USD 14.8 billion, whereas solar PV investment was down a slight 1.2% to USD 29.3 billion. ⁴² A contributing factor to the negative solar PV trend was the ongoing decline in PV investment in Viet Nam, the region's largest PV market, following the discontinuation of the country's feed-in tariff at the end of 2020. ⁴³ In Japan, where investment in renewables had been declining since 2020, investment again increased in 2023, rising 3.2% to USD 10.5 billion. ⁴⁴

In India, total new investment in renewables increased a moderate 1.4% to USD 12.4 billion. ⁴⁵ Investment in solar PV fell 17.7% to USD 7.9 billion, but investment in wind power surged 85.6% to USD 4.8 billion. ⁴⁶ The stark change in solar PV investment in India from 2022 (when investment rose 19%) is linked to land acquisition challenges, transmission and connectivity issues, and policy uncertainty, including the introduction of facilitation charges for open access projects. ⁴⁷

Brazil's total investment in renewables fell 8.1% to USD 25.4 billion, with investments declining in both wind energy (down 39.4% to USD 4.5 billion) and solar power (down slightly to USD 19.7 billion). ⁴⁸ Despite legislation as of June 2023 that gradually introduces grid-use charges for residential and commercial system owners, investment in small-scale PV has remained robust and has grown substantially from very low levels just five years ago. ⁴⁹ Investment in wind energy has declined in large part due to transmission constraints and bottlenecks. ⁵⁰ To combat this, Brazil has hosted regular transmission auctions, which have driven around USD 43 billion in investment in the transmission infrastructure in the past decade, and USD 7.5 billion in 2023. ⁵¹

Outside Brazil and the United States, renewable energy investment in the Americas was down 16.3% to USD 12.9 billion. ⁵² Investment fell in both solar PV (down 15.8% to USD 8.0 billion) and wind power (down 18.8% to USD 4.3 billion). ⁵³ Investment in renewables was impacted by inflation, the discontinuation of COVID-19 stimulus packages, weak local currencies and slow economic growth. ⁵⁴

In Argentina, renewable energy projects have struggled to secure investment in recent years in the face of macroeconomic turmoil. With limited auctions and severe transmission bottlenecks, the development of renewables in the country is now driven mainly by the MATER mechanism, which awards priority dispatch to renewable plants holding corporate power purchase agreements (PPAs). ⁵⁵

In Chile, where renewable energy investment has been limited by rising transmission constraints, the country has facilitated investments in utility-scale batteries and become a regional leader in storage. ⁵⁶ In Mexico, investment in renewables has stalled in recent years due mainly to political resistance. ⁵⁷

Investment in renewables in the Middle East and Africa jumped 59% to reach USD 22.5 billion in 2023. ⁵⁸ Saudi Arabia became the region's new leader with a marked 691% increase in investment to reach USD 6.6 billion. ⁵⁹ In second place, South Africa saw a slight 1.7% increase in renewable energy investment to USD 5.3 billion. ⁶⁰ Kenya also emerged as a regional leader, with investment in renewables rising nearly 28-fold to USD 3.3 billion. ⁶¹ In the Middle East and Africa, public funds from multilateral development banks have played a more substantial role in renewable energy investment than in other world regions, and also help facilitate private investments. ⁶²

Many developing and emerging economies face unique challenges in financing renewable energy projects, compared to the developed world. Investment in these countries may be complicated by political instability, macroeconomic uncertainty (related to inflation and exchange rates), policy and regulatory issues (such as poorly designed or implemented processes for obtaining licences, permits, rights and other approvals to build), institutional weaknesses and a lack of transparency. ⁶³ Country-related risks and underdeveloped local financial systems also can directly affect the cost of capital. ⁶⁴ As recently as 2021, nominal financing costs could be up to seven times higher in emerging and developing countries than in developed countries, such as the United States and countries in Europe. ⁶⁵ (See Global Overview module.)

Renewable Energy Investment in Perspective

Renewable power installations attracted far more investment than fossil fuel power plants did in 2023. ⁶⁶ Investment in new renewable power capacity accounted for 82% of the total global investment in new power generation, including fossil fuels and nuclear but excluding grids and storage. ⁶⁷ (See Figure 14.) Capital expenditures on fossil fuel-based power declined by 10% to USD 90 billion during the year, due largely to decreased spending on coal-fired power. ⁶⁸ Investments in fossil fuels, such as oil and gas, were impacted by geopolitical uncertainty reflecting the evolving situation in Europe and the Middle East, as well as inflation and high interest rates. ⁶⁹

Countering the trend seen in power infrastructure, when both upstream and downstream oil, gas and coal and related infrastructure investments are considered, the combined total annual investment in fossil fuels dwarfs that in renewable power and fuels. ⁷⁰ Investment in upstream oil and gas increased 9% in 2023 to around USD 538 billion; national oil companies in the Middle East and Asia were responsible for nearly all of the increase. ⁷¹ Investment in fuel supply increased 6% to USD 162 billion in 2023, led by China, India and South-East Asia. ⁷² More than three-quarters (76%) of the financing for coal projects worldwide was in China, despite the country's pledges to reduce coal consumption by mid-decade. ⁷³ The Chinese government began supporting more coal- and gas-fired power investment following a severe electricity supply crisis in late 2021 and continued market strains amid a heatwave in 2022. ⁷⁴

FIGURE 14.Global Investment in New Energy Supply Infrastructure by Type, 2023