Global Energy Investment Dropped 8% In 2015 Despite Strong Interest In Renewables

A new “first-ever” analysis report published by the International Energy Agency found that investment in the global energy system dropped 8% despite continued and strong investment in renewable energy, electricity networks, and energy efficiency.

The new report, World Energy Investment 2016, was published by the International Energy Agency (IEA) this week and represents what it calls a “first-ever detailed analysis of investment across the global energy system” and “provides a comprehensive and detailed picture of the current investment landscape” of the global energy sector. The report revealed the global electricity sector “leading a broad reorientation of energy investment.” Specifically, investment in oil and gas upstream spending dropped significantly, even outweighing the continued and robust investment in renewable energy technologies, electricity networks, and energy efficiency.

In the end, total investment in the global energy sector reached $1.8 trillion in 2015, down 8% from $2 trillion in 2014.

“We see a broad shift of spending toward cleaner energy, often as a result of government policies,” said IEA Executive Director Fatih Birol.

“Our report clearly shows that such government measures can work, and are key to a successful energy transition. But while some progress has been achieved, investors need clarity and certainty from policy makers. Governments must not only maintain but heighten their commitment to achieve energy security and climate goals.”

China led the world as the largest energy investor in 2015 with $315 billion. The United States’ energy investment dropped nearly $75 billion down to $280 billion, due primarily to low oil prices and cost deflation — and representing half of the total decline in global energy spending for the year. The IEA identified the Middle East and Russia as the two regions most resilient to spending cuts.

With $313 billion, investments in renewable energy accounted for nearly a fifth of the total spending in 2015, and solidifying renewables’ position as the largest source of power investment in the world — to the surprise of no one in particular. Interestingly, digging into the figures further shows that spending on renewable power capacity was relatively flat between 2011 and 2015, while electricity generation from new installed capacity rose by a third — representing the steep decline of energy costs for renewable energy technologies such as wind and solar PV.

Investment in electricity networks was again impressive in 2015, with investment in technology innovations for smart grids and energy storage leading the way, and expected to continue to be a critical component to the integration of ever-increasing levels of wind and solar.

Investment in gas-fired power generation declined by nearly 40% in 2015, with Asian markets continuing to favor investment in coal power over gas — though it is the Asian markets which are responsible for significant slices of the renewable energy investment pie.