Investment in the electricity sector is projected to reach USD 1.5 trillion by the end of 2025, which is 50% higher than the total amount being spent on bringing oil, natural gas, and coal to market, according to the International Energy Agency’s (IEA) World Energy Investment 2025 report.
The report notes that spending on low-emissions power generation has nearly doubled over the past five years.
“Led by solar, investment in both utility-scale and rooftop solar is expected to reach USD 450 billion in 2025, making it the single largest item in our inventory of global energy investment,” the IEA stated.
Regarding nuclear power, the report highlights a notable resurgence, with investment rising by 50% over the past five years. Approvals of new gas-fired power plants are also increasing. Investment in new nuclear plants and refurbishment is set to exceed USD 70 billion, with expectations for further growth driven by rising interest in emerging technologies, such as small modular nuclear reactors (SMRs).
However, the report warns that investment in electricity grids is struggling to keep pace with power demand and the accelerated deployment of renewables.
“Each year, around USD 400 billion is now spent on grids worldwide, compared with around USD 1 billion on generation assets,” it noted.
On the oil sector, the report emphasizes that investment is largely driven by oil prices and demand expectations. It projects a 6% decline in upstream investment in 2025, continuing the year-on-year downward trend that began with the COVID-19 slump in 2020.
In contrast, investment in Liquefied Natural Gas (LNG) facilities is on an upward trajectory.
The report also highlights that investment in low-emissions fuels is set to reach a new high in 2025.
However, at less than USD 30 billion, it remains relatively small in absolute terms and is highly dependent on supportive policy and regulatory frameworks.
When discussing the cost trends for clean technologies, the report noted a resumption of strong downward pressure on prices. While supply chain pressures persist, particularly for grid materials and in the oil and gas sectors, prices for clean energy equipment have fallen significantly.
The IEA’s Clean Energy Equipment Price Index reached a record low in early 2024, showing a 60% decline compared to a decade ago. Prices for Chinese solar panels and wind turbines have fallen by 60% and 50% respectively since 2022. In contrast, wind turbine costs in Europe have risen.
Despite elevated geopolitical tensions and economic uncertainty, this tenth edition of the IEA’s World Energy Investment report shows that total capital flows into the energy sector are set to rise to USD 3.3 trillion in 2025, a 2% real-term increase over 2024.
Of this, around USD 2.2 trillion is going collectively to renewables, nuclear, grids, storage, low-emissions fuels, energy efficiency, and electrification — twice as much as the USD 1.1 trillion going into oil, natural gas, and coal.
Source:https://energynewsafrica.com
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