This year could witness a watershed moment for the global energy industry with investments in cleantech energy supply set to surpass spending on upstream oil and gas for the first time.

This transition, according to a recent report from S&P Global Commodity Insights, confirms the ascendancy of renewable energy; and Asia, a critical player in this seismic shift, stands at its forefront.

With its manufacturing prowess, Asia’s role in the cleantech energy revolution is undeniable; and with the region’s proven innovation in distributed energy systems and rapid adoption of new technologies, it is well positioned to lead the transition to a low-carbon economy.

Global spending on cleantech energy – encompassing renewable power generation, energy storage, green hydrogen production, and carbon capture and storage – is projected by S&P to reach US$670 billion in 2025.

As cleantech energy investments begin to eclipse fossil fuel spending, Asia is also poised to lead the world in shaping a low-carbon energy paradigm.

Solar photovoltaic ( PV ) technology alone will account for half of all cleantech energy investments, with Asia leading in capacity expansion. By the end of 2024, an anticipated 620 gigawatts of new solar and wind capacity, equivalent to the total power systems of India, Pakistan and Bangladesh combined, will have been added.

Battery energy storage systems are also transforming the market, overtaking traditional hydro storage in installed capacity. The growing reliance on distributed energy investments, such as behind-the-meter solar and storage systems, will further highlight the region’s commitment to decentralized and sustainable solutions.

Asia’s cleantech energy role

Asia dominates in a number of global cleantech energy sectors, particularly in solar PV modules and battery cell production; and China, a cleantech energy manufacturing powerhouse, is expected to produce 65% of the world’s solar modules and 61% of battery cells by 2030. However, its dominance faces challenges due to geopolitical tensions and local sourcing incentives in the US and Europe.

India and Southeast Asia, however, are steadily emerging as alternative new growth centres. India’s production-linked incentive schemes are accelerating domestic manufacturing capabilities, with the country also looking to position itself as a key exporter to the US amid potential Trump-led trade tensions with China.

Southeast Asia too is growing into a critical player, though anti-dumping tariffs on exports to the US from countries like Vietnam and Malaysia could yet be a factor in shaping future clean energy developments in the region.

Key trends, challenges

Asia’s dense urban centres and remote rural areas are fuelling investments in distributed solar and behind-the-meter storage. These systems account for nearly a third of global energy spending, catering to the region’s rising energy demand.

With battery costs under pressure due to Chinese oversupply, regional manufacturers are now exploring advanced technologies like long-duration storage to meet Asia’s unique grid challenges. These innovations are essential to support Asian regions while intermittent renewable energy sources increase.

Asia is also leveraging artificial intelligence to optimize functions like grid management and renewable energy forecasting. This adoption is helping ensure grid stability while accommodating rapid renewable growth.

However, despite progress, cleantech energy investments remain below the levels needed to meet climate goals, such as tripling global renewable capacity by 2030.

Capital efficiency varies significantly across regions in Asia, with China maintaining cost leadership. However, diversifying supply chains and bolstering local manufacturing in emerging markets like India and across Southeast Asia could mitigate dependency risks while unlocking even more new opportunities.