Global energy investment fell by 8% in 2015, with a drop in oil and gas upstream spending outweighing continued robust investment in renewables, electricity networks and energy efficiency, the International Energy Agency (IEA) said in a new report.
The World Energy Investment 2016 (WEI 2016) report, a detailed analysis of investment across the global energy system, shows that the total investment in the energy sector reached USD 1.8 trillion in 2015, down from USD 2.0 trillion in 2014, with the global energy system undergoing a broad reorientation toward low-carbon energy and efficiency.
However, the investment in key clean energy technologies needs to be further ramped up to put the world economy on track for climate stabilisation, IEA said.
“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.”
Renewable energy investments of USD 313 billion accounted for nearly a fifth of total energy spending last year, establishing renewables as the largest source of power investment.
While spending on renewable power capacity was flat between 2011 and 2015, electricity generation from the new capacity rose by one third, reflecting the steep cost declines in wind turbines and solar PV. The investment in renewable power capacity in 2015 generates more than enough to cover global electricity demand growth.
Technology innovations boosted investment in smart grids and storage, which are expected to play a crucial role in integrating large shares of wind and solar. While grid-scale battery storage investment expanded tenfold since 2010, their value is predominantly to complement the grid, which continues to absorb much larger investment.