Global energy investment to reach $3.3 trillion this year

Explosive spending on clean energy will push global energy investment to a record $3.3 trillion this year, despite economic uncertainty and geopolitical tensions, the International Energy Agency (IEA) said on Thursday, Reuters reported.

Investment in clean energy, including renewables, nuclear power and energy storage, will reach $2.2 trillion, double the expected investment in fossil fuels, the IEA said in its World Energy Investment report.

“Rapid changes in the economy and trade are making some investors cautious about approving new energy projects, but in most areas we have not yet seen significant impacts on existing projects,” IEA Director Fatih Birol said, according to Agerpres.

According to the Paris-based agency, photovoltaics are set to be the main beneficiary, with investments forecast to reach $450 billion this year, while investments in battery storage are expected to “explode” to about $66 billion. Batteries are seen as a way to counterbalance the intermittent nature of renewable energy by storing electricity during peak production periods and releasing it during peak consumption periods, but so far investment in this technology has lagged behind that for photovoltaic and wind capacity.

In contrast, investment in oil and gas is expected to decline, with upstream investment forecast to decline by 6% in 2025, driven by lower oil prices and expectations of the first drop in oil demand since the Covid crisis in 2020. Overall, investment in oil, gas and coal is expected to reach $1.1 trillion this year, with spending on oil and gas exploration concentrated in the Middle East. On the other hand, investment in new liquefied natural gas facilities is set to grow strongly.

“Between 2026 and 2028, the global LNG market is expected to see its largest capacity increase ever,” the IEA estimates.

However, the agency warns that investment in electricity networks, which amounts to $400 billion a year, is not keeping pace with spending on generation and electrification, posing a risk to electricity security. Investment in networks will need to increase to reach parity with generation spending by the early 2030s, but this is being held back by bureaucratic procedures and problems in the supply chains of transformers and cables, the IEA says.

Energy investment remains very uneven geographically, with many emerging economies struggling to mobilize capital for energy infrastructure while China dominates global clean energy investment, accounting for almost a third of the total.

The International Energy Agency is the main energy advisory body for the 29 most developed countries. The agency was established in response to the first oil shock of 1973–1974, to coordinate the release of oil from reserve stocks.