This is an extract from a recent report “Global landscape of energy transition finance 2025” published by IRENA.
In 2024, global investments in energy transition technologies reached a record high of USD 2.4 trillion, up 20% compared with the average annual levels of 2022/2023. Growth in relatively mature technologies – renewable energy, energy efficiency, grids and electrified transport – continued in 2024, albeit at a slower pace than in previous years. Investment in nascent technologies – green hydrogen and CCS – declined in 2024. Battery storage remains a notable exception, sustaining robust growth through 2024.
Since 2019, the share of investments going to renewable energy has stayed largely consistent, at about one-third (35% in 2024), but this share has evolved considerably for other energy transition technologies. The share of investments going to EVs and charging infrastructure expanded from 13.6% to 31.6% between 2019 and 2024. However, the share of investments going to power grids and energy efficiency shrank from 26% and 20%, respectively, to a combined 29%, split almost equally between the two technologies.
Investment trends and gaps across energy transition technologies
Renewable power
In 2024, global investments (based on final investment decisions of projects) in renewable energy reached USD 807 billion, up 22% from the annual average of 2022/2023. About 96% of FIDs in 2024 were in the power sector (USD 773 billion), and only 1% (equivalent to USD 10 billion) went to projects for direct use of renewables in heating and transport. Current investment levels in renewable power are around half what is needed to be in line with the call to triple renewable power capacity to 11.2 TW by 2030. Solar PV is the only renewable energy technology for which current investment levels are almost in line with IRENA’s 1.5°C Scenario, with 2024 investment levels within close distance of the annual average needed through 2030. These levels are driven by solar PV’s rapid cost declines over the past decade as well as widespread policy support globally.
In many EMDEs, PV adoption has been further driven by distributed systems (e.g. rooftop solar) as an alternative to grid-based power in contexts where grid-based power is unreliable, unavailable or unaffordable. Off-grid solar solutions are key in this regard, helping provide access to electricity to millions of people globally, particularly in Sub-Saharan Africa. Annual investments in concentrated solar power (CSP) need to be scaled up by 32 times during 2025-30 compared with current levels. In some cases, CSP investments are looking less attractive than solar PV and storage hybrids. In countries such as Morocco and the United Arab Emirates, the combination of solar PV and storage is being considered as a cheaper alternative to CSP.
Onshore and offshore wind require significant investment growth; current levels (2024) need to be scaled up by three times and eight times, respectively. Wind projects have faced issues such as longer permitting processes, grid connection challenges, and public push-back in some countries, which has slowed the pace of deployment. Some recent offshore wind tenders have had unsuccessful outcomes, highlighting the importance of well-designed policies and auction frameworks in ensuring sufficient investments going forward. Investment across other renewable technologies, including marine energy,geothermal power, bioenergy and hydropower, remains far below what is needed.
For hydropower, there is significant untapped potential in Africa, Asia and South America, but projects often face high construction risks, require extensive environmental and social impact assessments and long loan tenors. Policy volatility, increasing levelised electricity costs and rising feedstock costs continue to be the main challenges for bioenergy. For marine and geothermal power in particular, the less established supply chains and more limited policy support compared with solar and wind have led to slower deployment and more cautious investor appetite. Dedicated policy support and tailored financing solutions are needed for each technology and context to address the global investment shortfall.
Power grids
Investment in power grids, including both transmission and distribution, grew by 14% in 2024, compared with the 2022/2023 average, reaching USD359 billion. To support the integration of renewables and the adoption of technologies such as EVs and heat pumps in line with IRENA’s 1.5°C Scenario, annual grid investment needs to reach USD 671 billion between 2025 and 2030, requiring an increase of 1.9 times current investment levels. Based on recently announced plans, global spending on grids is expected to continue rising, but most of these plans have been made in China; in advanced economies such as Australia, the European Union, Japan, the Republic of Korea and the United States; and in EMDEs such as Brazil, India and Indonesia.
However, for many countries – particularly EMDEs and LDCs – the core challenge in financing grids lies in the limited resources of governments and utilities, as well as the inability to recover costs from consumers due to the presence of non-cost reflective tariffs, while simultaneously needing to both upgrade grid quality and meet rapidly growing electricity demand. While two-thirds of total transmission spending in EMDEs came from public sources in 2022, this share may be shifting towards the private sector in some economies. Countries like Brazil and India are increasingly relying on private capital to expand their grids, mainly through independent transmission projects tendered to private developers.
In economies where grid investments have occurred, only 16% of overall investment in 2024 was directed towards new connections, 44% went into the replacement of ageing assets, and the remaining 40% went into grid reinforcements. Globally, more than 1,650 GW of wind, solar PV and hydropower projects were waiting in grid connection queues – up from around 1,500 GW in 2023, and five times the amount of new capacity commissioned in 2022. Large queues are due to a mix of factors, including constraints related to grid capacity, planning and permitting processes, which could deter future investment in renewables. While some grid operators have taken measures to alleviate queue blockages, their benefits may not come into effect for a few years.
In 2023, 65% of global grid investments were financed through market rate debt, mainly from commercial financial institutions and corporations; project-level equity made up 33%, and the remaining 2% was funded through grants. Only one-quarter of global grid investment in 2023 (USD86 billion) serves renewable energy generation, as fossil fuels still produce the majority of the world’s electricity despite their declining role in the power mix. Although not immediately serving renewable energy integration, the remaining three-quarters of investments still contribute to energy efficiency through reduced losses, enhanced flexibility (including facilitating the management of power supply and demand), and resilience. In addition, these investments will facilitate future investment in renewables and their integration.
Battery storage
Global investments in energy storage (batteries) reached USD54 billion in 2024, a 73% increase over the average investment in 2022/2023, and more than 11 times the 2019/2020 levels. To align with a 1.5°C pathway, annual investments would need to triple, enabling further integration of renewables while ensuring a reliable, flexible and resilient power system. Recent growth in battery storage investments is underpinned by a 94% cost decline between 2010 and 2024, driven by a scale-up in manufacturing, improved materials efficiency and advancements in manufacturing processes. Targeted policy support has further enabled deployment in certain markets.
China – the world’s largest battery manufacturer – accounted for 40% of global investments in energy storage projects in 2024 and installed the most capacity, at 84 gigawatt-hours (GWh; 36 GW), representing an increase of 80% compared with the additions in 2023 and accounting for half of total global addition. This growth is driven by co-location mandates, provincial subsidies and the domestic availability of battery technology. In the United States, incentives under the Inflation Reduction Act positioned it as the second largest destination of battery storage investments, making up 29% in 2024 and adding 41 GWh (13 GW), almost a quarter of global newly added capacity.
Germany is the third largest destination for energy storage investments, making up 11% of such investments globally. Investments in battery storage in developing economies such as Chile, India, the Philippines and South Africa are also growing, making up 3% of the total global investments. In the Philippines, construction is set to begin on a USD3.3 billion project to develop one of the world’s largest integrated solar-plus-battery facilities, combining 3.5 GW of solar generation with a 4.5 GWh battery energy storage system, spanning 3 500 hectares. Some countries, such as India and Indonesia, are also making efforts to support deployment by localising battery production.
Electrified transport (electric vehicles and charging infrastructure)
Global investment in EVs – including battery EVs (BEVs), plug-in hybrid EVs and fuel-cell EVs – surged to USD763 billion in 2024, up 33% from 2022/2023. This increase was driven by strong policy incentives for EVs, widespread rollout of public charging infrastructure and expanding availability of EV models from major automakers. The EV share of total car sales worldwide has increased from 4.4% in 2020 to 22% in 2024, catering to a wide range of consumer preferences, with 784 EV models available in the market as of 2024. Investments in EV charging infrastructure grew 27% over the same period, reaching USD39 billion in 2024, three-quarters of which was for public charging. The number of public chargers in the global network reached 5.6 million in the first quarter of 2025, an increase of 1.7 million connectors compared with end-2023.
China and advanced economies combined accounted for more than 95% of global BEV investment in 2024; this has remained largely unchanged over the past five years. Europe accounted for nearly a quarter (23%) of global BEV investment in 2024 (down slightly from 27% in 2022/2023), reaching USD 97 billion. The United States accounted for 19% of BEV investments in 2024, a steady share compared with 17% in 2022/23. Investment grew 35%, from USD 59 billion in 2022/2023 to USD 80 billion in 2024. Federal incentives, such as tax credits, and a range of state-level programmes had supported widespread adoption, but many incentives have since been rolled back. India and Australia saw BEV investments rise by approximately 87% and 33%, respectively, between 2022/2023 and 2024, reaching USD 8 billion and USD 4 billion, respectively. India’s share of total BEV investment reached 2% in 2024 (up from 1.2% in 2022/2023), while Australia’s share in 2024 was 1%, unchanged from 0.9% in 2022/23.
Governments provided 75% of global investment in charging infrastructure in 2024. The remainder was provided by private entities, of which three-quarters came from households and individuals, and the remainder from corporations. Demographic factors and housing patterns can influence the source of capital. In China, where high-density urban living and limited access to home chargers prevail, public investment accounted for 89% of total EV charging infrastructure funding in 2024. In China’s major cities, where most residents live in high-rise apartments without private parking, home charging is often unfeasible, making EV adoption heavily dependent on public charging infrastructure, particularly DC fast-charging. In Europe and the United States, the public sector makes up 60% and 62% of investments, respectively. US public investment in charging infrastructure has increased more than 200% between 2022/2023 and 2024, from USD 1 billion to USD 3.3 billion, driven by programmes like the USD 5 billion National EV Infrastructure Program. However, the rollout of further funding has been disrupted following Executive Order 14154 issued in early 2025, which paused further disbursements.
Green hydrogen
After significant growth in the previous four years, annual investments in green hydrogen declined by 20% in 2024 compared with 2023. The sector faces significant economic, policy and technology related barriers, including high production costs, uncertain demand and limited infrastructure for transport and storage. This exposes projects to a range of risks, which have materialised in the form of many high-profile projects facing cancellations, for example Ørsted A/S in Germany and the United Kingdom in 2023; Woodside’s 1.7 GW Project in Tasmania, Australia, in 2024; Fortescue’s Coyote project in Canada in 2024; and two ArcelorMittal projects in Germany in 2025. Even projects that reached financial close are facing significant challenges; for example, Fortescue cancelled two green hydrogen projects in Australia and the United States after reaching financial close in 2023 and having already started construction. The Saudi Neom project (2.2 GW) is struggling to find offtakers two years after reaching financial close.
Investments in fossil fuels, renewables, grids and batteries
Investments in renewable power, grids and battery storage – which are essential to meet the pledge to triple renewable power capacity by 2030 in line with IRENA’s 1.5°C Scenario – exceeded fossil fuel investments in 2024. However, vast resources are still allocated to carbon-intensive activities. Fossil fuel investments, including upstream, downstream and infrastructure investments, have been increasing since hitting a low in 2020. By 2023, they had almost returned to pre-pandemic levels, approaching levels seen in 2018/2019. Growth continued in 2024, although the increase was relatively modest at just 3%. This expansion in fossil fuel investment can be partly attributed to Europe’s efforts to secure alternative oil and gas supplies following the Ukraine conflict.
Fossil fuel investment is also driven by public financial support, which is still strongly skewed towards coal, oil and gas. In 2023, government support for fossil fuels reached at least USD1.5 trillion, the second highest annual total on record after 2022. Public support consists of subsidies, capital investments made by state-owned enterprises (SOEs), and public finance. Globally, fossil fuel subsidies totalled USD 1.1 trillion in 2023, the majority of which supported consumption, driven by higher international energy prices. Consumption subsidies distort markets: they encourage consumers to use more fossil fuels than they otherwise would and reduce input costs for electricity and industry, which disincentivises energy efficiency and a shift to low-carbon alternatives. Untargeted subsidies mainly benefit wealthy individuals, who use more energy. Instead, governments can phase out these subsides and redirect revenues towards targeted social protection to reduce poverty and inequality and towards the provision of clean energy alternatives.
However, subsidies for clean energy alternatives should be similarly targeted to deliver equitable benefits. Around one-third of public financial support for fossil fuels (USD 447 billion in 2023) locks in new fossil fuel production through subsidies (USD 36 billion), capital investments by SOEs (USD 368 billion) and international public finance (USD 29 billion). These subsidies perpetuate dependence on price-volatile fossil fuels, undermining energy security objectives. The G20 governments provided around USD 168 billion in public financial support for renewable power in 2023, less than one-third of G20 fossil fuel subsidies that year. Since 2009, G20 countries have pledged to gradually eliminate fossil fuel subsidies that promote inefficient and wasteful consumption – a commitment echoed by all parties to the 2015 Sustainable Development Goals (target 12c) and reinforced in the 2023 Global Stocktake under the Paris Agreement, which urged governments to accelerate subsidy phase-out. While some nations have referenced fossil fuel subsidies in their climate pledges, few have committed to clear timelines, and only the G7 has set a formal deadline of 2025 – though it is unlikely to be met.
Access the report here
