Energy Companies Should Not Give Up on Clean Energy Technologies
by Bob Shively, Enerdynamics President and Lead Facilitator
A new U.S. administration is poised to redirect U.S. energy and international policy, and the news headlines seem to be all about the barriers to the growth of renewables and electric vehicles. Energy companies may be tempted to redirect investments from clean energy to more traditional fossil fuel-based technologies. But, in the long term, this strategy may be a losing proposition. The International Energy Agency's latest Energy Technology Perspectives report delivers crucial insights for energy professionals considering strategies to transform global manufacturing and trade in clean energy technologies. The report focuses on six key technologies: electric vehicles, batteries, solar PV, wind turbines, heat pumps, and electrolyzers. Together, these technologies represent a $700 billion market and half of the global clean energy investment. Those who fail to lead in implementing these technologies risk being left behind in a coming industry transformation.
The Six Key Technologies
Investment in these six clean technology supply chains reached $235 billion in 2023, up from $160 billion in 2022. China currently dominates production, but the landscape is shifting. The U.S. and E.U. are implementing aggressive policies to build domestic manufacturing capabilities while emerging markets like India are positioning themselves as future manufacturing hubs.
Strategic considerations
Three critical policy dimensions that countries and organizations must balance are supply chain security, affordability, and people-centered transitions. For energy companies, this creates opportunities and challenges that require strategic positioning.
The report highlights several key strategies that countries and companies should consider:
- Innovation focus: Governments and companies need to invest in R&D to reduce production costs and improve technology performance. This creates opportunities for utilities to partner with manufacturers on demonstration projects and early adoption of new technologies.
- Regional integration: Success in clean technology manufacturing requires building integrated industrial ecosystems. Utilities can play a crucial role by providing reliable and clean power, serving as anchor customers for new technologies, and developing rate structures that foster growth of companies involved in the six technologies.
- Strategic partnerships: International cooperation remains vital. Energy companies should consider cross-border partnerships to secure supply chains and access new markets.
- Infrastructure development: The transition will require significant new investment in energy infrastructure. This presents opportunities for utilities to expand their asset base.
Future outlook
The IEA report projects that trade in clean energy technologies will grow significantly, reaching $575 billion by 2035 in the Stated Policies Scenario and over $1 trillion in the Net Zero Scenario. For energy companies, success will require careful navigation of this changing landscape. Key actions include:
- Developing strong relationships with multiple suppliers across regions
- Investing in workforce development to handle new technologies
- Engaging with policymakers on industrial strategy
- Planning for infrastructure needs to support manufacturing growth
- Building partnerships with emerging market players and learning from companies with early successes
The transition to clean energy represents a fundamental shift in the global energy landscape. Current headwinds may tempt energy companies to postpone moving aggressively to implement new technologies. But companies that proactively position themselves in this new ecosystem while maintaining flexibility to adapt to changing conditions will be best positioned to thrive in the next decade.
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