The International Energy Agency has released the latest edition of its ‘World energy Investment’, an annual publication that provides key insights on the latest investment trends across the global energy landscape.
The report finds that global energy investment is set to increase in 2025 to a record $3.3 trillion despite headwinds from elevated geopolitical tensions and economic uncertainty.
Investment in clean energy technologies – renewables, nuclear, grids, storage, low-emissions fuels, efficiency and electrification – is on course to hit $2.2 trillion this year, reflecting not only efforts to reduce emissions but also the growing influence of industrial policy, energy security concerns and the cost competitiveness of electricity-based solutions. Investment in oil, natural gas and coal is set to reach $1.1 billion.
“The fast-evolving economic and trade picture means that some investors are adopting a wait-and-see approach to new energy project approvals, but in most areas we have yet to see significant implications for existing projects,” notes IEA executive director Fatih Birol.
Major changes
In addition to its assessment of the current investment landscape across fuels, technologies and regions, this 10th edition of the report explores some of the major changes over the past decade.
Key takeaways:
- Today, China is by far the world’s largest overall energy investor, spending twice as much on energy as the European Union – and almost as much as the EU and United States combined. Over the past decade, China’s share of global clean energy spending has risen from a quarter to almost a third, underpinned by strategic investments in a wide range of technologies, including solar, wind, hydropower, nuclear, batteries and EVs.
- Today’s investment trends clearly show a new Age of Electricity is drawing nearer. A decade ago, investments in fossil fuels were 30% higher than those in electricity generation, grids and storage. This year, electricity investments are set to be some 50% higher than the total amount being spent bringing oil, natural gas and coal to market.
- Globally, spending on low-emissions power generation has almost doubled over the past five years, led by solar PV. Battery storage investments are also climbing rapidly, to more than $65 billion this year.
- Capital flows to nuclear power have grown by 50% over the past five years and are on course to reach around $75 billion in 2025.
Worrying signs
Rapid growth in electricity demand is underpinning continued investment in coal supply, mainly in China and India. China started construction on nearly 100 GW of new coal-fired power plants, pushing global approvals of coal-fired plants to their highest level since 2015.
A worrying sign for electricity security, investment in grids, now at $400 billion per year, is failing to keep pace with overall spending on generation and electrification.
Lower oil prices and demand expectations are set to result in the first year-on-year fall in upstream oil investment since the Covid slump in 2020. The 6% drop is driven mainly by a decline in the US shale sector.
By contrast, investment in new LNG facilities is on a strong upward trajectory as new projects in the United States, Qatar, Canada and elsewhere prepare to come online.
Energy spending patterns remain very uneven globally, with many developing economies, especially in Africa, struggling to mobilise capital for energy infrastructure. Today, Africa accounts for just 2% of global clean energy investment, despite being home to 20% of the world’s population and rapidly growing energy demand.
For more information, read the full report
