Global energy investment dropped by 8% last year. This was mainly due to low oil and gas prices. However, interest in renewables continues to increase.
A report by the International Energy Agency shows that global investment in energy fell to $ 1.8tn in 2015. The drop reflects low oil and gas prices as well as low costs within the sector, which experiences „a broad reorientation of energy investment”, the report states. The United States made up for nearly half of the decline. There plunging oil prices and a boom in shale gas have played a significant role.
The world’s biggest investor in energy worldwide continues to be China. The investment champion spent $315bn in 2015, despite a slow-down of its headlong economic growth.
Government policies important for energy transition
Despite the overall decrease, renewable energy investment remains strong, says the International Energy Agency, global energy watchdog and author of the report. As countries are pursuing a low-carbon growth, government policies have driven investors further towards clean energy projects. “We see a broad shift of spending toward cleaner energy, often as a result of government policies,” said IEA Executive Director Fatih Birol. Government measures „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”, he continues.
Renewables make up for a fifth of total energy investment
Investment reached a mark of $313bn last year – all going into renewable and other low-carbon forms of energy. This makes up for about a fifth of the total energy spending. Much of it went into electricity generation, in which renewable power takes the lion’s share of available investment funds. Steep falls in the cost of wind turbines and solar panels have aided the process.
By contrast, global investment in gas-fired power generation, promoted as a transition technology between coal renewables, fell by almost 40%.
Interestingly, investment in renewable power capacity was relatively flat between 2011 and 2015, while electricity generation from new installed capacity rose by a third. This represents the decline of energy costs for renewable energy technologies such as wind and solar PV. A great amount of money went into electricity networks in 2015 and boosting technology innovations for smart grids and energy storage.