Global Power Generation Forecasts, 2024–2035

Global Power Generation Forecasts, 2024–2035

The Industry is Seeing Record-breaking Investment Levels as Power Decarbonization Accelerates Globally

2023 was a record-breaking year for power generation investment, with $864.6 billion committed to global projects. Climate obligations and supportive regulations are the mainstays of global growth. While China has significantly increased its renewable targets in recent years (partly to support domestic technology companies), the US' Inflation Reduction Act, which was passed in 2022, provides a degree of investor certainty never seen before and incentives for investment in domestic supply chains. Furthermore, Russia’s invasion of Ukraine in 2022 galvanized Europe to take action, as energy security has become a global megatrend.

Inflationary pressures were a major challenge in 2022 and 2023, but they have now abated and project costs have peaked. In the case of solar PV, module prices are at record lows, which is helping to reduce prices gradually. For wind power, the journey to lower project costs will take longer, particularly for offshore wind; nevertheless, significant demand growth continues as many governments have increased policy support. Approximately $1 trillion per annum will be invested in the decade ahead to 2035, with solar PV and wind power accounting for 78% of the total, on average. Investment in fossil fuels will continue, albeit at a much lower scale. Coal and natural gas projects will continue to receive $1.5 trillion in investment during the forecast period (from 2024 to 2035).