Clean-tech factories outpace demand as IEA urges more selective industrial policy
Market Overview
The global market for six leading clean energy technologies—solar panels, wind turbines, batteries, electric vehicles, heat pumps, and electrolysers—surpassed $1.1 trillion in 2025, according to the International Energy Agency (IEA). Despite falling equipment prices (e.g., solar module prices dropped ~50% and battery pack prices ~30% between 2023 and 2025), the market's value grew by ~20% annually over the past decade due to increased deployment.
Manufacturing Challenges
- Investment in new production facilities declined from nearly $220 billion in 2023 to below $200 billion in 2025.
- Battery and EV plants accounted for over 75% of manufacturing investment in 2024, while solar investment halved due to surplus capacity and price competition.
- Installed solar manufacturing capacity was more than twice global demand in 2024; battery cell capacity was three times demand.
- China dominated cumulative manufacturing investment (~70% since 2020) and exported over $160 billion of these technologies in 2025.
Regional Responses
- EU manufacturing investment nearly doubled between 2023 and 2024; Korea and India saw 25% and 65% increases, respectively.
- Average tariffs/duties on solar supply chains rose ninefold in 2024 to ~36%, raising deployment costs.
Future Projections
Under current policies, the IEA expects the clean energy technology market to reach $1.9 trillion by 2035. With full implementation of government commitments, it could exceed $2.6 trillion, with electric cars representing ~75% of the total.
Strategic Recommendations
The IEA warns governments to prioritize domestic production only where strategically valuable, avoiding duplication of commoditized sectors (e.g., solar modules, standard battery cells). For the UK, sustainable strategies include focusing on offshore systems, advanced materials, power electronics, nuclear technology, and system integration—areas where the country has established strengths.