5 key trends shaping renewable power investments in 2024

2024 has already cemented itself as a key turning point in the march toward energy transition. The challenges facing renewables investors related to supply chain bottlenecks and cost inflation have stabilized, and much of the industry is looking forward to a steady expansion.

Opportunities are abundant globally with over 3.8 TW of new renewables additions expected over the next decade. Even as technological hurdles to integrate higher proportions of renewables and regulatory uncertainty continue to challenge investors, record levels of investment continue to flow into this industry segment as more and more markets plot their journey to net zero.

S&P Global Commodity Insights provides a deep dive into 37 global power markets, and compares and contrasts them across 18 individually weighted scoring parameters in its annual Global Renewable Attractiveness Rankings. Rankings are developed for both the renewables market segment as a whole, and also for specific technologies including solar PV, onshore wind and offshore wind. Individual scoring parameters, including market size, expected return, competitive landscape and 15 other market attributes were analyzed by our global team of experts. This is the fifth iteration of the renewables attractiveness index and is updated on an annual basis.

Here are the key trends observed from Commodity Insights’ 2024 Global Renewable Attractiveness Ranking:

• The flight to core markets continues and, for many, intensifies. The days of aggressive international expansion are firmly in the rearview mirror with most major developers shrinking their geographic footprint. In this context, market selection takes on even more importance and not all players unanimously value the same market opportunities. Matching attractive market characteristics with individual company strengths and values has become an essential skill.
• The implementation phase exposes many challenges for ambitious policies around the world. In the previous iteration of the attractiveness index, supply chain constraints and rapidly rising costs were the primary challenges for renewables investors to overcome. In 2024, the market saw many of the previously mentioned challenges stabilize. However, questions regarding how landmark policies like the US Inflation Reduction Act and Europe’s REPowerEU will be implemented weigh on the minds of investors selecting market opportunities.
• Despite challenges, the top destinations for most renewables developers remain mostly unchanged. The US, Germany and China have all been top five renewables markets for several iterations of the renewables attractiveness index. All of these markets are characterized by significant renewables growth, mature renewables development ecosystems and strong and predictable financial performance. On the back of its especially strong distributed solar industry, Australia moved into the third spot as it seeks to develop a similarly strong solar technology and manufacturing base.
• Solar PV is set to grow significantly faster than wind. This benefits markets that are favorable for solar developers. Solar’s relatively rapid development timeline and low supply chain complexity significantly reduce risks during the development process. While offshore wind has overcome some of its supply chain and cost inflation hurdles, markets that depend on a significant offshore wind expansion face much higher investment hurdles.
• High financing costs and limited government financial incentives make emerging markets essentially long-term plays. Large emerging renewables markets, such as mainland China, India and Brazil, retain high attractiveness scores. Issues such as access to financing and domestic supply chains have been largely mitigated in these markets. However, higher interest rates and weaker currencies are still challenges.