Global energy investment is expected to increase to a record $3.3trn in 2025, despite geopolitical and economic uncertainty, according to an International Energy Agency (IEA) report.
Clean energy technologies are projected to attract twice as much capital as fossil fuels, indicating a shift towards more sustainable energy solutions.
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Clean technology investment is set to reach an unprecedented $2.2trn this year, driven by a combination of emission reduction goals, industrial policies, energy security and the competitive pricing of electricity-based technologies.
In contrast, fossil fuel investments are anticipated to total $1.1trn.
Solar PV leads the way, with investments expected to hit $450bn in 2025, while battery storage investment is also rising sharply, surpassing $65bn this year.
The 2025 edition of the IEA’s annual World Energy Investment report highlights China’s increasing dominance in clean energy investments, which now account for nearly one-third of the global total, with a diverse portfolio that includes batteries, electric vehicles (EVs), hydropower, nuclear, solar and wind.
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By GlobalDataIEA executive director Fatih Birol said: “Today, China is by far the largest energy investor globally, spending twice as much on energy as the European Union – and almost as much as the EU and United States combined.”
The shift towards an ‘Age of Electricity’ is evident as investments in electricity generation, grids and storage now surpass those in fossil fuels by 50%.
Nuclear power has seen a 50% increase in capital flows over the past five years, which are projected to reach around $75bn in 2025, the report states.
Despite this, China and India’s continued investment in coal supply, particularly with China’s recent construction of nearly 100GW of new coal-fired power plants, remains a concern.
Birol added: “Amid the geopolitical and economic uncertainties that are clouding the outlook for the energy world, we see energy security coming through as a key driver of the growth in global investment this year to a record $3.3trn as countries and companies seek to insulate themselves from a wide range of risks.
“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.”
The report also warns of potential electricity security issues, as investment in grids, currently at $400bn annually, is not keeping pace with generation and electrification needs.
To maintain electricity security, grid investment must rise to match generation spending by the early 2030s, a goal hindered by protracted permitting processes and strained supply chains.
Investment disparities persist globally, with developing economies, particularly in Africa, facing challenges in mobilising capital for energy infrastructure. Africa, home to 20% of the global population, accounts for only 2% of worldwide clean energy investment. The continent has experienced a one-third reduction in total investment over the past decade.
The IEA report suggests that to bridge the financing gap in African countries and other emerging markets, international public finance must be increased and strategically deployed to leverage more private capital.
