Global energy investment trends surge to $3.3 trillion in 2025: IEA
Global energy investment is projected to reach a record $3.3 trillion in 2025, according to a report from the International Energy Agency (IEA), despite ongoing geopolitical and economic uncertainties. This significant increase highlights a notable shift towards sustainable energy solutions, with clean energy technologies expected to attract double the capital investment compared to fossil fuels.
This year, investments in clean technology are forecasted to hit an unprecedented $2.2 trillion, driven by emission reduction goals, industrial policies, energy security concerns, and the competitive pricing of electricity-based technologies. In contrast, fossil fuel investments are anticipated to total $1.1 trillion.
Among the various technologies, solar photovoltaic (PV) is leading the charge, with investments projected to reach $450 billion by 2025. Additionally, battery storage investments are also on the rise, surpassing $65 billion this year. The latest edition of the IEA’s annual World Energy Investment report emphasizes China’s growing influence in clean energy investments, which now account for nearly one-third of the global total. China’s diverse portfolio includes investments in batteries, electric vehicles (EVs), hydropower, nuclear, solar, and wind energy.
IEA Executive Director Fatih Birol stated, “Today, China is by far the largest energy investor globally, spending twice as much on energy as the European Union—almost as much as the EU and the United States combined.” The transition towards an ‘Age of Electricity’ is evident, with investments in electricity generation, grids, and storage now surpassing those in fossil fuels by 50%. Capital flows into nuclear power have increased by 50% over the past five years, with projections estimating around $75 billion in 2025.
However, concerns remain regarding ongoing investments in coal supply from both China and India, particularly with China planning to construct nearly 100 gigawatts of new coal-fired power plants. Birol remarked, “Amid the geopolitical and economic uncertainties that are clouding the outlook for the energy world, we see energy security emerging as a key driver of the growth in global investment this year, reaching a record $3.3 trillion, as countries and companies work to safeguard themselves against a range of risks.”
The report also cautions about potential electricity security issues, noting that annual investments in grids, currently at $400 billion, are not keeping pace with the growing needs for generation and electrification. To ensure electricity security, grid investments must increase to match generation spending by the early 2030s—an objective complicated by lengthy permitting processes and strained supply chains.
Furthermore, significant investment disparities persist globally, particularly in developing economies like those in Africa, which face difficulties in mobilizing capital for energy infrastructure. Despite being home to 20% of the global population, Africa accounts for only 2% of worldwide clean energy investment, experiencing a one-third reduction in total investment over the past decade.
The IEA report suggests that to address the financing gap in African countries and other emerging markets, there needs to be an increase in international public finance that is strategically deployed to leverage more private capital.
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