Green investments go RED in 2023. Is this an exception? Or is it the norm?

In Opinion



Inflation and soaring prices in raw materials are lowering the Investment in green projects in 2023 by 50%

It is estimated that investment in low-emission CO2 projects will only increase by 10% this year, cumulating 620 billion dollars. Although it is a very significant figure for the sector and global transition energy objectives, the fact is that this percentage is notably lower than the investment growth between 2021 and 2022. Specifically, last year’s investment in green projects increased by more than 20% compared to the previous year, cumulating 560 billion dollars.

This is a huge step back to achieving the NZE goals, not only because it is a 50% reduction YoY, but because it separates us from the planned path to reduce emissions globally. In the following years, low-carbon investments will have to grow as much as expected plus the gap we are leaving, at least, in 2023.

In the following years, low-carbon investments will have to grow as much as expected plus the gap we are leaving, at least, in 2023.

The total investment, including the value of materials, construction, and services, includes the sectors of solar energy, wind (onshore and offshore), geothermal, carbon capture, utilization, and storage (CCUS) technologies, hydrogen production, hydroelectric and nuclear energy.

The investment in low-carbon projects during 2023 will be led by the wind energy sector, closely followed by hydrogen production and carbon capture technologies, which are the sectors where the investment will increase the most compared to 2022.

These figures indicate that in 2023 there will be a significant slowdown in investment in green projects. Among other reasons, the main factor that has caused this trend is the rise in raw material prices. Last year’s inflation caused investors to slow down the increase in investment from previous periods and become more cautious when assessing costs.

[You can access the original article by Rystad Energy HERE]

Although this trend will likely change in the coming years and we will see consecutive increases in investment in green projects, the fact is that we have to be aware that the transition to 100% green energy sources will not occur in the short or medium term. We still have many years in which we will have to live with non-clean energy sources such as natural gas.

It is in this context that one of the main goals of the sector must be the flexibility of thermal power plant operations. Thus, we should prepare ourselves for years in which the coexistence between renewable and non-renewable sources has to be as efficient as possible, and renewable curtailment must be a factor to avoid.

Thanks to its artificial intelligence technology, ADEX, a leader in energy transition, enables this coexistence to be achieved as quickly and efficiently as possible. Its cutting-edge technology allows thermal power plants to act more flexibly, making their intervention in the electricity mix essential to achieve a complete transition to renewable energy.