# Investors Bet $2 Trillion on the Energy Transition

An episode of [Switched On](https://invisiblenetwork.ai/podcast/1469286286), 27 Feb 2025, 24 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/01a10738-3608-4dec-883c-ae3c00026b36/b5736a46-f7cc-458b-9605-b29100797ef7/audio.mp3?utm_source=Podcast&in_playlist=6d114f63-833d-4b78-bbf5-ae3c00026b44

Annual investment in the energy transition has surpassed $2 trillion for the first time. Investors placed bets on renewable energy, power grids and energy storage, while buzzy emerging technologies fell out of favor. On this episode, Dana Perkins is joined by Meredith Annex, BNEF’s head of clean power, to discuss the report ‘Energy Transition Investment Trends 2025.’ Complementary BNEF research on the trends driving the transition to a lower-carbon economy can be found at BNEF<GO> on the Bloomberg Terminal, on bnef.com or on the BNEF mobile app. Links to research notes from this episode: A publicly available summary report of Energy Transition Investment Trends 2025 can be found at - https://about.bnef.com/energy-transition-investment/ BNEF subscribers can find the whole report at - https://www.bnef.com/flagships/clean-energy-investment See omnystudio.com/listener for privacy information.

## Transcript

[0:00] Speaker 1: This is Dana Perkins and you're listening to Switched on,
[0:03] Speaker 1: the podcast brought to you by BNF, and today we're
[0:06] Speaker 1: looking into the investment trends that defined the energy transition
[0:10] Speaker 1: in twenty twenty four, where investment levels exceeded two trillion
[0:13] Speaker 1: dollars globally for the first time. While this represented an
[0:16] Speaker 1: eleven percent year on year increase when compared with twenty
[0:20] Speaker 1: twenty three, unsurprisingly, these investments were not distributed evenly. For example,
[0:25] Speaker 1: one technology mainstay of renewable energy, came out on top,
[0:28] Speaker 1: and one newer technology that has had a lot of
[0:31] Speaker 1: buzz surrounding it in recent years is now losing popularity
[0:34] Speaker 1: when it comes to putting money where your mouth is.
[0:37] Speaker 1: I'm joined by b and EF's head of Clean Power,
[0:39] Speaker 1: Meredith Annex, and our conversation doesn't end with new clean
[0:43] Speaker 1: energy capacity. She also shares insight into the investments made
[0:46] Speaker 1: into the grid and energy storage, which have traditionally been
[0:50] Speaker 1: considered bottlenecks but now might be improving. The show pulls
[0:53] Speaker 1: from information found in BNF's twenty twenty five edition of
[0:57] Speaker 1: the Energy Transition Investment Trends Report. If your client, you'll
[1:00] Speaker 1: be able to find the full report at BNF go
[1:02] Speaker 1: on the Bloomberg terminal or once logged into BNAF dot com.
[1:06] Speaker 1: If you're not yet a client, you can download an
[1:08] Speaker 1: executive summary at about dot BNAF dot com. Forward slash
[1:12] Speaker 1: Energy Dash Transition Dash Investment. Now let's get to talking
[1:17] Speaker 1: about what those investment trends were. Meredith, thank you for
[1:30] Speaker 1: coming on the show today.
[1:31] Speaker 2: Thank you so much for having me. Dana.
[1:33] Speaker 1: We're here to talk about the Energy Transition Investment Trends Report.
[1:37] Speaker 1: And before we get into that, I think it's important
[1:39] Speaker 1: just to highlight the fact that you know, when you're
[1:40] Speaker 1: working with your team on the research, that they're covering
[1:43] Speaker 1: so much of how we approach our research, not every
[1:46] Speaker 1: single time, but often we're thinking about is it technology,
[1:49] Speaker 1: is it policy? Is it economics? And this one really
[1:52] Speaker 1: encapsulates this. Looking back on the previous year and what
[1:56] Speaker 1: happened on where the money's moving so really big part
[1:59] Speaker 1: of the part of what we cover at BNF. So
[2:03] Speaker 1: invariably that means we know that it has value. Let's
[2:05] Speaker 1: look at energy investment trends. Let's see what it tells us.
[2:09] Speaker 1: How many times have we done this? And is once
[2:12] Speaker 1: a year often enough or too often, and why.
[2:15] Speaker 2: I think it's a report that we've been producing those
[2:17] Speaker 2: since the foundation of BNIF, so even before we were
[2:20] Speaker 2: acquired by Bloomberg, we were tracking the investments going in.
[2:23] Speaker 2: We didn't call it Energy transition investment trends at the time,
[2:26] Speaker 2: but we've been looking at this for a very very
[2:28] Speaker 2: long time now. This particular report, as you said, it's
[2:31] Speaker 2: our attempt to look bottom up at all of the
[2:33] Speaker 2: investments that have happened within the energy transition over the
[2:36] Speaker 2: past year. It's the fifth iteration of that report in
[2:38] Speaker 2: its current form. We've been adding to it steadily over time,
[2:41] Speaker 2: so a couple of years back we added things like
[2:44] Speaker 2: electrified heat and grids news sectors that are becoming important
[2:48] Speaker 2: to the transition to make sure that it stays comprehensive
[2:51] Speaker 2: in scope and is it's a hugely impactful piece. As
[2:53] Speaker 2: you said, this is the real money, This is the
[2:55] Speaker 2: real things that are happening a lot of the time
[2:58] Speaker 2: at BANIF we are looking forward, but having this kind
[3:01] Speaker 2: of once a year point where we sense check that
[3:04] Speaker 2: and see how it's playing out in reality, it has
[3:06] Speaker 2: been a very valuable exercise.
[3:07] Speaker 1: And you say bottom up, so where along this investor
[3:11] Speaker 1: community continuum do we look Is it everything from venture
[3:14] Speaker 1: capital all the way up to big banks and lending,
[3:18] Speaker 1: you know, what does encapsulate?
[3:20] Speaker 2: So the report has four sections. The one part of it,
[3:23] Speaker 2: which is the part that I work most closely with,
[3:25] Speaker 2: is the Energy Transition Investment that's looking at spending into
[3:29] Speaker 2: physical assets, so that is going to be points of
[3:31] Speaker 2: electricity generation, low carbon molecule production, consumption that is low
[3:37] Speaker 2: carbon as well. All of that. We've also got a
[3:40] Speaker 2: supply chain section which is looking at investments into the
[3:44] Speaker 2: factories that help make the clean technology equipment. And then
[3:47] Speaker 2: we've got two sections that are looking at the fund
[3:49] Speaker 2: raising side of things, whether that is, you know, the
[3:51] Speaker 2: sustainable finance side of things, what's happening with corporate bonds,
[3:55] Speaker 2: debt raising issuances, or whether that's looking at more of
[3:59] Speaker 2: the VC side of things, what's happening with climate tech
[4:02] Speaker 2: investments around the world.
[4:04] Speaker 1: So, given this is a fifth iteration, and my first
[4:07] Speaker 1: question really was around also is this often enough once
[4:12] Speaker 1: a year? Does that tell us enough of a story
[4:14] Speaker 1: that we can compare apples to apples and really see
[4:16] Speaker 1: some trends emerge? Were we able to actually see some
[4:20] Speaker 1: trends emerge and is year long enough for us to
[4:22] Speaker 1: really be able to say, you know, twenty twenty four
[4:24] Speaker 1: had a theme.
[4:25] Speaker 2: Absolutely, I think the year point tends to be better,
[4:28] Speaker 2: especially because a lot of these are chunky investments, especially
[4:32] Speaker 2: when you're looking at newer sectors things like hydrogen CCUS
[4:35] Speaker 2: low carbon industry. These will be not very frequent, but
[4:39] Speaker 2: big volumes of money that come out, and so looking
[4:41] Speaker 2: at it on an annual basis might tell you more
[4:43] Speaker 2: than looking at it a smaller timeline, because that might
[4:46] Speaker 2: just have been oh well, a deal closed in July
[4:48] Speaker 2: instead of June. On the renewable side, because there's a
[4:51] Speaker 2: lot more activity there, it's a more mature sector. We
[4:53] Speaker 2: actually do look at that twice a year, so in
[4:55] Speaker 2: the summer we also put out a report that's the
[4:58] Speaker 2: Renewable Energy Investment TRACKERBLISH alongside the Energy Transition Investment Trends
[5:02] Speaker 2: Report as a biannual publication just looking at clean energy
[5:06] Speaker 2: and renewable electricity specifically, as well as biofuels, and that's
[5:09] Speaker 2: just to reflect the nature of that market. You get
[5:12] Speaker 2: more transactions throughout the year, there's more things for us
[5:14] Speaker 2: to track and we can use that as kind of
[5:16] Speaker 2: like a midway point to see if we're on track
[5:19] Speaker 2: for the trends that we were expecting. So as you
[5:21] Speaker 2: zoomed out, what were some of the trends that emerged.
[5:24] Speaker 2: I think there are two really big trends from the
[5:28] Speaker 2: Energy Transition Investment Trends Report this year. First of all,
[5:31] Speaker 2: before we get into those trends, there's just a huge
[5:32] Speaker 2: milestone number this year, which is that we exceeded two
[5:35] Speaker 2: trillion dollars for the first time, which I think is
[5:38] Speaker 2: an incredibly exciting thing to remember, especially right now when
[5:41] Speaker 2: a lot of the language and political tension around clean
[5:46] Speaker 2: energy and the energy transition is quite high in many
[5:49] Speaker 2: parts of the world. Despite all of that, this stuff
[5:51] Speaker 2: is economical. We invested two trillion across the energy transition
[5:54] Speaker 2: space last year. Now, there are two trends, as we said,
[5:57] Speaker 2: that are coming out of this. One is that the
[5:59] Speaker 2: investment rate is slowing, so we saw a much slower
[6:02] Speaker 2: rate of growth last year. We saw growth, but it
[6:04] Speaker 2: was less immense than it was over the past two
[6:07] Speaker 2: year period. That's one trend that we're seeing, and that's
[6:10] Speaker 2: you know, driven a lot by what's happening with renewable energy.
[6:13] Speaker 2: Some of that comes down to just cheaper equipment for solar,
[6:16] Speaker 2: and some of it has to do with other challenges.
[6:18] Speaker 2: And then the other trend that we're seeing is this
[6:21] Speaker 2: almost two stage transition that's underway. So if we look
[6:25] Speaker 2: at the traditional areas of investment, renewables, electrified transport, and grid,
[6:30] Speaker 2: those accounted for over ninety percent of the total investment
[6:34] Speaker 2: over the course of twenty twenty four, and those are growing,
[6:37] Speaker 2: whereas we actually saw a drop in the newer areas
[6:40] Speaker 2: of investment, things like hydrogen CCUS, clean shipping, electrified heat,
[6:44] Speaker 2: and clean industry. So those only accounted for seven point
[6:47] Speaker 2: four percent of our total investment in twenty twenty four
[6:49] Speaker 2: and represented a twenty three percent year on your decline
[6:53] Speaker 2: as well compared to twenty twenty.
[6:54] Speaker 1: Three, which is a really important distinction to make because
[6:57] Speaker 1: I feel like the emerging tech conversation dominate. It's so
[7:00] Speaker 1: much of conversation, whether it's at our summits or even
[7:03] Speaker 1: just a Friday night with my friends. Everybody wants to
[7:05] Speaker 1: talk about the emerging tech. But if that's only representing
[7:09] Speaker 1: seven point four percent of the investment, the conversation around
[7:12] Speaker 1: what we actually are pouring money into and the solutions
[7:15] Speaker 1: that are getting real traction. I think should be just
[7:19] Speaker 1: as interesting for us to discuss. So let's do that.
[7:22] Speaker 1: Let's make them as interesting as possible for people who
[7:24] Speaker 1: are listening looking at renewables, what technologies really stood out
[7:29] Speaker 1: to you?
[7:29] Speaker 2: Twenty twenty four was once again a story of solar.
[7:32] Speaker 2: A renewable energy investment in general attracted seven hundred and
[7:36] Speaker 2: twenty eight billion of investment in twenty twenty four. That
[7:38] Speaker 2: was up eight percent from the previous year. As I mentioned,
[7:41] Speaker 2: as a slower growth rate. Over twenty twenty to twenty
[7:43] Speaker 2: twenty three, we saw nearly twenty one percent annual rise
[7:46] Speaker 2: in investments, So this is a slower growth, but when
[7:49] Speaker 2: we're looking at what's driving that growth, it is solar.
[7:52] Speaker 2: Solar was seventy two percent of the total investment that
[7:56] Speaker 2: we saw over the course of last year, a total
[7:58] Speaker 2: of over five hundred billion dollars being spent on that
[8:02] Speaker 2: across residential, utility and commercial scale applications, and a lot
[8:06] Speaker 2: of this is just driven by really cheap modules. Does
[8:10] Speaker 2: that have a geographic focus, because you know, on this show,
[8:13] Speaker 2: for those who listen to it regularly, they know a
[8:15] Speaker 2: lot of the conversation in particular about solar has to
[8:18] Speaker 2: do with Chinese manufacturers and how cheap those panels have become.
[8:21] Speaker 2: And even then, when you're looking at the sort of
[8:24] Speaker 2: industries they're trying to build up in the US with
[8:26] Speaker 2: the Inflation Reduction Act, solar is one of them, semiconductors.
[8:30] Speaker 2: Then sitting right in between all of this is this
[8:32] Speaker 2: story of cheap solar being financed, something that's happening all
[8:36] Speaker 2: over the world, or is it something that's really been
[8:39] Speaker 2: swayed by some very specific markets. It's a global story.
[8:43] Speaker 2: Those cheap Chinese modules benefit everybody, and what we're seeing
[8:47] Speaker 2: is a couple of specific stories. In general, newer markets
[8:51] Speaker 2: are rising, so there's a lot of activity in Central Asia,
[8:54] Speaker 2: Southeast Asia, Middle East, North Africa, probably the markets that
[8:57] Speaker 2: we would consider less mature for solar, but those are
[9:00] Speaker 2: growing immensely. We're seeing a strong reaction and consumer uptake
[9:04] Speaker 2: to blackouts. So if you look at South Africa has
[9:07] Speaker 2: actually been more stable with its power great over the
[9:10] Speaker 2: past year, so it saw a decline in solar installation
[9:13] Speaker 2: solar investment last year compared to twenty twenty three, but
[9:16] Speaker 2: in twenty twenty three, the blackouts that we saw in
[9:18] Speaker 2: that market were really driving sales of solar, and in
[9:21] Speaker 2: twenty twenty four we saw a very similar story playing
[9:23] Speaker 2: out with in Pakistan. So you're getting all of these
[9:25] Speaker 2: markets where consumers are now able to afford solar modules
[9:30] Speaker 2: who may not have been able to otherwise before, and
[9:32] Speaker 2: they're taking them, and they're using that to build their
[9:35] Speaker 2: own resiliency and to service their own power consumption.
[9:39] Speaker 1: Which then leads us to another place in energy investment
[9:43] Speaker 1: trends that we saw maybe benefiting over the course of
[9:46] Speaker 1: this past year, which was the storage space, perhaps intrinsically
[9:50] Speaker 1: linked to the blackouts in solar, enabling us to get
[9:53] Speaker 1: through those periods where you don't have power coming from
[9:56] Speaker 1: the sun. Tell me a bit more about the story
[9:58] Speaker 1: in storage and and how positive is it really or
[10:02] Speaker 1: have I taken a look at a few charts and
[10:04] Speaker 1: maybe built it up to be bigger than it is.
[10:06] Speaker 2: Storage is growing immensely. It's still a small industry compared
[10:09] Speaker 2: to solar or wind. You know, we're talking about fifty
[10:12] Speaker 2: three point nine billion of investment across utility, commercial and
[10:16] Speaker 2: residential scale assets over the course of twenty twenty four,
[10:19] Speaker 2: but that easily surpassed the twenty twenty three record of
[10:22] Speaker 2: thirty nine point six billion, and we really see that
[10:25] Speaker 2: momentum continuing for storage. There's a couple of drivers to that.
[10:29] Speaker 2: First of all, kind of similar to solar's the story
[10:31] Speaker 2: of cost declines. Lithium ion battery pack prices fell twenty
[10:35] Speaker 2: percent over the course of last year. They're now at
[10:37] Speaker 2: around one hundred and fifteen dollars per kilowatt hour based
[10:39] Speaker 2: off of our most recent price survey, and that's creating
[10:43] Speaker 2: again new opportunities to deploy this technology. It's making it
[10:46] Speaker 2: much more affordable. The biggest challenge for storage these days
[10:49] Speaker 2: is not so much the cost of that equipment. It's
[10:52] Speaker 2: more around the revenue and where the revenue is going
[10:54] Speaker 2: to come from. And on that side, we're also seeing
[10:56] Speaker 2: some gains. So you're seeing more adoption alongside residential commercial
[11:00] Speaker 2: solar because it's a way to increase self consumption from
[11:03] Speaker 2: that solar generation. But you're also seeing more markets that
[11:07] Speaker 2: are launching capacity markets and contracts for procuring energy storage,
[11:13] Speaker 2: and so that's been a growing trend as.
[11:14] Speaker 1: Well around the world. Now, in order to plug all
[11:17] Speaker 1: this new capacity online, there have to be transmission, distribution
[11:21] Speaker 1: lines and that has lagged. Can you talk about whether
[11:25] Speaker 1: or not the investment is actually going in that direction
[11:27] Speaker 1: in order to enable the rest of new capacity to
[11:30] Speaker 1: actually come online, or if maybe a slow down in investment
[11:34] Speaker 1: on that side has actually led to this overall slow
[11:36] Speaker 1: down in that one of those kind of more macro
[11:38] Speaker 1: themes that you saw over the course of the last year,
[11:40] Speaker 1: and that might be part of the problem.
[11:42] Speaker 2: So grid investment also hit a record last year. This
[11:44] Speaker 2: is in one of those you know, kind of core
[11:46] Speaker 2: markets that are continuing to grow stories that we were
[11:49] Speaker 2: talking about at the start. So we saw three hundred
[11:51] Speaker 2: and ninety billion invested in the power grid, at least
[11:54] Speaker 2: on capital expenditure. Obviously there's a lot of operational expenditure
[11:58] Speaker 2: in the grid as well, but this report is tracking
[12:00] Speaker 2: capital expenditure, and on top of that, you know, this
[12:03] Speaker 2: is a trend that's been going on for a while.
[12:05] Speaker 2: It's been about a thirteen percent compound annual growth rate
[12:08] Speaker 2: since twenty twenty one. This year was a record in
[12:10] Speaker 2: twenty twenty four. But overall, while that's being driven by
[12:15] Speaker 2: rising needs to connect more renewable energy and more consumers,
[12:18] Speaker 2: it's still not enough necessarily to meet the amount of
[12:23] Speaker 2: renewables that are planned to be built. So if we
[12:26] Speaker 2: look at announced renewable energy pipelines or the amount of
[12:29] Speaker 2: capacity that's waiting in the queue to connect to the grid,
[12:32] Speaker 2: those are still significantly outsized. The grid's going to have
[12:35] Speaker 2: a long way to go to get past the bottlenecks
[12:37] Speaker 2: that are in the markets right now. It's clear that
[12:39] Speaker 2: a lot of those investment plans are taking this into account,
[12:42] Speaker 2: that we're starting to get there. But I think we'll
[12:44] Speaker 2: be talking about the story about grid capacity constraints for
[12:47] Speaker 2: a while.
[12:47] Speaker 1: Okay, so it's a potential bottleneck, but there is money
[12:50] Speaker 1: going into it, and it looks like everyone's going into
[12:52] Speaker 1: it with their eyes wide open. Let's point out the
[12:56] Speaker 1: renewables omission that you have not yet discussed. If this
[12:59] Speaker 1: was the year of solar, that means it was not
[13:01] Speaker 1: the year of wind. What's happening with wind?
[13:03] Speaker 2: Yes, So WIN investment reached one hundred and ninety five
[13:07] Speaker 2: billion in twenty twenty four. But within that you've got
[13:09] Speaker 2: kind of two different tales. Onshore wind we think grew
[13:12] Speaker 2: about five percent. It's been relatively stable for the past
[13:15] Speaker 2: few years. There's a couple of cool stories within there,
[13:18] Speaker 2: but the real story of the decline in wind investment
[13:21] Speaker 2: came from offshore investments, which fell fifty seven percent from
[13:24] Speaker 2: twenty three to twenty twenty four. With offshore, the investment
[13:28] Speaker 2: opportunities are very chunky again, kind of like what we
[13:31] Speaker 2: were talking about with those new sectors. These are extremely
[13:34] Speaker 2: large projects. The ability to have an investable asset often
[13:38] Speaker 2: depends on pre set timelines that are determined by government
[13:42] Speaker 2: auction schedules or seabed lea schedules. So some of that
[13:46] Speaker 2: decline that we saw in twenty twenty four might just
[13:48] Speaker 2: be down to timing, maybe just been less availability, but
[13:51] Speaker 2: certainly the sector's also been under a lot of pressure
[13:54] Speaker 2: last year.
[13:55] Speaker 1: So, as we mentioned when we started the show, there's
[13:57] Speaker 1: these three lenses with which we often look at progress
[14:00] Speaker 1: in the energy transition. So economics we've discussed, Technology, we've
[14:04] Speaker 1: discussed and how that's actually we've seen a difference this
[14:07] Speaker 1: year in terms of the investment that's gone into the
[14:10] Speaker 1: more mature versus the emerging tech. So then that leads
[14:12] Speaker 1: us to that last one policy. It certainly is an
[14:15] Speaker 1: actively moving space, and by the time we actually published
[14:18] Speaker 1: this show, many more things may have changed in the
[14:20] Speaker 1: policy sphere, but over the course of twenty twenty four,
[14:23] Speaker 1: one of the really important themes was the Inflation Reduction
[14:26] Speaker 1: Act in the US, and we talked about it many times.
[14:29] Speaker 1: So as we head into a year in twenty twenty
[14:32] Speaker 1: five of uncertainty when it comes to US clean power policy,
[14:36] Speaker 1: maybe you can talk a little bit about how those
[14:38] Speaker 1: policy targets in the year that has gone by played
[14:41] Speaker 1: into the numbers that we are seeing, so that we
[14:43] Speaker 1: can consider where we might be in a year's time.
[14:46] Speaker 1: Should there be big changes on that side.
[14:49] Speaker 2: Absolutely, so, the Inflation Reduction Act has led to a
[14:52] Speaker 2: step change in the level of investment that we're seeing
[14:55] Speaker 2: within the US market. That's undeniable if we look at
[14:57] Speaker 2: the amounts of invested before its existence versus is more recently,
[15:01] Speaker 2: they're just it's much higher now. That said, the US
[15:03] Speaker 2: did contract last year. It fell about twelve percent. A
[15:06] Speaker 2: lot of that was there were a couple of reasons
[15:08] Speaker 2: for that. Some was down to election uncertainty, Some of
[15:11] Speaker 2: that was around interest rates rising. Some of that was
[15:14] Speaker 2: because twenty twenty three was a particularly high year because
[15:17] Speaker 2: we were overcoming supply chain bottlenecks and projects were just
[15:20] Speaker 2: able to move forward more quickly. So there's a number
[15:22] Speaker 2: of reasons there. Overall, though, we do find that the
[15:26] Speaker 2: US market is going to be pretty resilient to the
[15:30] Speaker 2: changes that are coming or could be coming around renewal
[15:33] Speaker 2: energy policy at a federal level. So at those point
[15:35] Speaker 2: in time, the recording of this podcast, as far as
[15:37] Speaker 2: we're where the Inflation Reduction Act tax credits will still
[15:40] Speaker 2: be available, could all change. As you said, the main
[15:42] Speaker 2: sector that's been affected so far is offshore wind, where
[15:45] Speaker 2: we have significantly reduced our forecast. That's driven not just
[15:50] Speaker 2: by uncertainty around the Inflation Reduction Act, but also the
[15:53] Speaker 2: second Trump presidency's attitude towards seabed leasing and saying that
[15:57] Speaker 2: they're not going to permit new sites. That's been one factor.
[16:00] Speaker 2: If we look at entrwind that would be significantly affected
[16:03] Speaker 2: by a removal of tax credits. Essentially, what it would
[16:07] Speaker 2: do is it would make some areas less economically attractive
[16:10] Speaker 2: than they would be with those tax credits, and so
[16:12] Speaker 2: you're more more affected by your location around what your
[16:15] Speaker 2: expected project return would be, whereas with the tax credits
[16:18] Speaker 2: you might be able to choose locations from a couple
[16:21] Speaker 2: of different places because just more things will be economically competitive.
[16:24] Speaker 2: On solar, we expect less of an impact. Sol there's
[16:27] Speaker 2: a lot cheaper, it's less capex intensive than wind is,
[16:30] Speaker 2: and so it's it's a bit easier to site as well.
[16:32] Speaker 2: And so we find that cetera to be the most
[16:34] Speaker 2: resilient to any changes in federal tax credit policy. But overall,
[16:38] Speaker 2: the biggest reason why we think the US is resilient
[16:40] Speaker 2: is because we look at corporate energy demand and this
[16:42] Speaker 2: year we just published our corporate power Purchase Agreement Outlook.
[16:45] Speaker 2: Twenty twenty four was the eighth straight record year for
[16:48] Speaker 2: off take agreements. A lot of those are coming out
[16:50] Speaker 2: of the US, A lot of those are coming from
[16:51] Speaker 2: large tech companies who strong needs to procure energy quickly.
[16:56] Speaker 2: Solar and wind is a way to do that. And
[16:58] Speaker 2: because we look at that, because we're looking at utility
[17:01] Speaker 2: procurement plans as well, we have a lot of optimism
[17:04] Speaker 2: that demand will remain for US clean energy even with
[17:09] Speaker 2: changes potentially happening or uncertainty remaining within the federal policy landscape.
[17:13] Speaker 1: And one of the things that we've learned over the
[17:15] Speaker 1: course of the past couple of decades is that the
[17:17] Speaker 1: energy system is not becoming more simple with single sources
[17:22] Speaker 1: of energy, but actually much more complex with solutions that
[17:26] Speaker 1: are really fit for a specific market. And this potentially
[17:29] Speaker 1: is a opportunity for domestic manufacturing in the US. So
[17:32] Speaker 1: whether or not it is renewable energy is potentially beside
[17:35] Speaker 1: the point in that it actually does feed in quite
[17:38] Speaker 1: closely with tariffs and domestic manufacturing objectives of this administration.
[17:43] Speaker 1: So perhaps twenty twenty five we also not be the
[17:46] Speaker 1: year of wind, but it may continue to be the
[17:47] Speaker 1: year of solar.
[17:48] Speaker 2: And it's worth saying as much as you know, the
[17:50] Speaker 2: overall wind story was a pretty hard one with the
[17:54] Speaker 2: declines that we saw in twenty twenty four, there are
[17:56] Speaker 2: really positive cases in there. So we saw a lot
[17:59] Speaker 2: of growth from new markets for wind. This is kind
[18:01] Speaker 2: of true across renewable energy in general, but with when
[18:05] Speaker 2: in particular. We saw growth in markets like Romania and
[18:09] Speaker 2: markets that just may not have come across your radar
[18:12] Speaker 2: before if you were active in the wind industry. The
[18:14] Speaker 2: other thing that we saw is mature markets that actually grew,
[18:17] Speaker 2: So a lot of mature arkets contracted over the course
[18:20] Speaker 2: of twenty twenty four, but Germany we're starting to see
[18:22] Speaker 2: the impacts of permitting reform. There we actually saw a
[18:24] Speaker 2: growth investment. In Australia, we saw more supportive policy and
[18:27] Speaker 2: strong corporate energy demand, so again we saw an investment growth.
[18:30] Speaker 2: And in Korea where we actually saw growth across AFTRA, wind,
[18:33] Speaker 2: solar and ONTRA win for various reasons.
[18:36] Speaker 1: You've mentioned a few countries that are worth really focusing on,
[18:39] Speaker 1: and let's continue on with this part around the world.
[18:41] Speaker 1: I mean it really when we look at trends, I
[18:44] Speaker 1: think back to when I first moved to the UK,
[18:46] Speaker 1: which is about two decades ago, and when people ask
[18:49] Speaker 1: me why I came to London, the answer is really well,
[18:51] Speaker 1: I wanted to work in the renewable space, and the
[18:53] Speaker 1: UK had an emissions target and Germany couldn't throw solar
[18:57] Speaker 1: panels on their roofs fast enough. So this was the
[18:59] Speaker 1: center of gravity. That center of gravity keep shifting every year,
[19:02] Speaker 1: as we see in the energy transition investment trends, it
[19:05] Speaker 1: does move around. So tell me a bit about where
[19:08] Speaker 1: you're seeing the center of gravity shift in some of
[19:10] Speaker 1: those markets that maybe stood out as not the bog
[19:15] Speaker 1: standard one year after the next. So specifically within the
[19:18] Speaker 1: renewable energy investment side of this, we have to talk
[19:21] Speaker 1: about mainland China. You can't not talk about mainland China
[19:23] Speaker 1: when you're talking about global investments and renewables. Mainland China
[19:26] Speaker 1: made up forty percent of our global total this year.
[19:29] Speaker 1: It was only a six percent year on your rise,
[19:31] Speaker 1: which is slightly unusual for that market. A lot of
[19:35] Speaker 1: that is because you had cheaper equipment that was offsetting
[19:38] Speaker 1: some of the growth in new investment that you had
[19:41] Speaker 1: in terms of capacity. So it's basically your each dollar
[19:45] Speaker 1: was going further in terms of the amount that it
[19:47] Speaker 1: could build in that market. Now, that's the one that
[19:49] Speaker 1: you have to talk about forty percent of total growth.
[19:52] Speaker 1: But there's a couple of markets that we talked about
[19:53] Speaker 1: just within wind But if we'd look even more globally,
[19:56] Speaker 1: you have to talk about Pakistan. Pakistan saw sixty billion
[20:00] Speaker 1: of investment last year, twelve point three billion more than
[20:03] Speaker 1: in twenty twenty three. That was almost entirely driven by solar.
[20:06] Speaker 1: We saw India investment grow fifteen percent, Southeast Asia's investment
[20:09] Speaker 1: grow thirty seven percent. A lot of that was driven
[20:12] Speaker 1: by the Philippines, which has just been a real growth
[20:15] Speaker 1: market within that region, and even within the US where
[20:18] Speaker 1: you did see an overall decline, as we discussed, there
[20:21] Speaker 1: are markets that were growing. So if we look at
[20:23] Speaker 1: like Texas and California, we're seeing a lot more utility
[20:26] Speaker 1: scale storage deployment, for instance, and that has been another
[20:29] Speaker 1: story within the overall energy space. So I actually am
[20:33] Speaker 1: not sure whether this falls into emerging tech or mature tech.
[20:37] Speaker 1: And what I want to ask is this kind of
[20:39] Speaker 1: overrated underrated nuclear question because a small modular is something
[20:44] Speaker 1: people talk about much more on the emerging tech side,
[20:47] Speaker 1: But then we see nuclear in countries like France as
[20:49] Speaker 1: a very mature part of baseload power. Where does nuclear
[20:52] Speaker 1: investment fit into this? Because it has been discussed much
[20:56] Speaker 1: more and there is more money going into R and
[20:58] Speaker 1: D on that side, So do we expect to see
[21:00] Speaker 1: that feature? Will there be a year in the future
[21:02] Speaker 1: where you can say it was the year the nuclear
[21:04] Speaker 1: featured in the energy transition investment trends? So a lot
[21:07] Speaker 1: of ways to answer that one.
[21:09] Speaker 2: There's a lot to say on nuclear. Overall nuclear investment
[21:11] Speaker 2: in twenty twenty four was roughly flat with twenty twenty three.
[21:14] Speaker 2: There were more reactors, just slightly that were under construction
[21:19] Speaker 2: last year. But I think when we're talking about nuclear,
[21:21] Speaker 2: we have to separate out kind of the conventional restarts,
[21:24] Speaker 2: that sort of side of it from the newer technology
[21:27] Speaker 2: like small modular reactors. The other big thing to note
[21:30] Speaker 2: about nuclears, of course, data centers. We saw a huge
[21:34] Speaker 2: rise in conversation around nuclear over the course of twenty
[21:37] Speaker 2: twenty four, a lot of interest in using nuclear as
[21:39] Speaker 2: a way to provide baseload power to these power hungry
[21:43] Speaker 2: data center sites. The ones that are successfully doing that
[21:46] Speaker 2: are the ones that can utilize a existing nuclear reactor,
[21:50] Speaker 2: conventional nuclear reactor and simply just restart it or purchase
[21:54] Speaker 2: that power. We saw the first nuclear power purchase agreements
[21:56] Speaker 2: for off site supply signed over the course of twenty
[21:59] Speaker 2: twenty four as well. But when we're talking about small
[22:01] Speaker 2: modular reactors, these aren't commercially viable yet right they're still
[22:06] Speaker 2: being proven out. We don't think that they're going to
[22:08] Speaker 2: be a big part of the story until the mid
[22:10] Speaker 2: twenty thirties. So the timelines that we're talking about for
[22:13] Speaker 2: things like data center load growth, you're probably going to
[22:15] Speaker 2: want those data centers online before that small modular reactor
[22:19] Speaker 2: is available.
[22:19] Speaker 1: So nuclear does fit into both of these buckets, but
[22:22] Speaker 1: you would consider it one to watch.
[22:23] Speaker 2: Yeah, I think it's worth watching. Whether it goes or
[22:26] Speaker 2: not uncertain, but it's definitely worth watching.
[22:28] Speaker 1: So one last overrated underrated heat pumps.
[22:32] Speaker 2: So underrated heat pumps had a very challenging year in
[22:36] Speaker 2: twenty twenty four. We saw significant drop in sales in Europe,
[22:40] Speaker 2: for instance, largely on the back of challenges around consumer
[22:44] Speaker 2: spending and policy changes. But they're so important to the
[22:49] Speaker 2: energy transition, whether we're looking at low temperature industrial heat
[22:53] Speaker 2: or the residential and commercial building segments. We think heat
[22:56] Speaker 2: pumps are going to be a huge part of the
[22:58] Speaker 2: energy transition into decarbonization of those two sectors. And so
[23:02] Speaker 2: I'll say underrated, even though the investment fell over the
[23:05] Speaker 2: course of twenty twenty four.
[23:07] Speaker 1: Meredith, thank you for walking us through these trends over
[23:10] Speaker 1: the course of the last year and for joining us
[23:11] Speaker 1: on the show.
[23:12] Speaker 2: Thank you so much for having me, Dana, it was
[23:13] Speaker 2: great to be here.
[23:23] Speaker 1: Today's episode of Switched On was produced by cam Gray
[23:26] Speaker 1: with production assistance from Kamala S. Shelling. Bloomberg NIF is
[23:30] Speaker 1: a service provided by Bloomberg Finance LP and its affiliates.
[23:33] Speaker 1: This recording does not constitute, nor should it be construed,
[23:36] Speaker 1: as investment a vice, investment recommendations, or a recommendation as
[23:39] Speaker 1: to an investment or other strategy. Bloomberg anif should not
[23:42] Speaker 1: be considered as information sufficient upon which to base an
[23:45] Speaker 1: investment decision. Neither Bloomberg Finance LP Nor any of its
[23:49] Speaker 1: affiliates makes any representation or warranty as to the accuracy
[23:52] Speaker 1: or completeness of the information contained in this recording, and
[23:55] Speaker 1: any liability as a result of this recording is expressly disclaimed.

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