Jubilee Post News & Views
Dr. Seema Javed
The energy world has changed dramatically since the release of the first World Energy Investment Report a decade ago. Nonetheless, some of the trends of that first report echo in the 2025 edition.
There is a “major shift in investment towards low-carbon sources of power generation.” The need for adequate, timely investment remains as important as ever for energy security, sustainability, and affordability. Today’s energy decision-makers are facing new geopolitical tensions, and the risk of energy shocks remains high. However, they have at their disposal a much broader range of highly competitive new technologies than was the case in 2015, and an accumulated wealth of policy experience on how to accelerate their deployment.
This year’s World Energy Investment Report marks its 10th edition and provides a full update on the investment picture for 2024, as well as an emerging picture for 2025. The report provides a global benchmark for tracking capital flows in the energy sector and examines how investors are assessing risks and opportunities across all areas of fuel and electricity supply, critical minerals, efficiency, research and development, and energy finance.
The report highlights several key aspects of the current investment landscape in the context of recent policy and macroeconomic developments and a heightened focus on energy security. It explores the different drivers of energy investments and identifies emerging trends and priorities.
This year’s edition also reflects on energy investment trends over the last decade, highlighting major milestones and lessons from different energy sectors and regions. It also includes an expanded regional analysis, as well as extensive analysis on the sources of investment and sources of finance in the energy sector, including insights on the role of development finance institutions in energy investments across emerging and developing economies. It will also look at how investment trends in clean energy compare with those in fossil fuels, as well as the geographic distribution of these investments.
Despite elevated geopolitical tensions and economic uncertainty, this tenth edition of the IEA’s World Energy Investment shows that capital flows to the energy sector are set to rise in 2025 to USD 3.3 trillion, a 2% rise in real terms over 2024. Around USD 2.2 trillion is going collectively to renewables, nuclear, grids, storage, low-emissions fuels, efficiency, and electrification, twice as much as the USD 1.1 trillion going to oil, natural gas, and coal.
Rapid growth in spending on energy transitions over the past five years was kicked off by post-pandemic recovery packages and then sustained by a variety of economic, technology, industrial, and energy security considerations, not solely by climate policies. Some 70% of the increased spending came from net fossil fuel importers. This was led by China’s drive to reduce reliance on oil and gas imports and exert leadership in new technology areas; Europe’s push to accelerate spending on renewables and efficiency gains after Russia’s full-scale invasion of Ukraine and the consequent cut to pipeline gas deliveries; and a pick-up in spending on solar in India. Another 20% of the increase came from the United States, where supportive policies were motivated in part by the desire to challenge China’s position in emerging clean technology supply chains. Emissions reductions provide a powerful reason to invest, but are often not the primary driver for investment in technologies that are increasingly mature and cost-competitive.
Investment trends are being shaped by the onset of the ‘Age of Electricity’ and the rapid rise in electricity demand for industry, cooling, electric mobility, data centers, and artificial intelligence (AI). Ten years ago, investments in fossil fuel supply were 30% higher than those for electricity generation, grids, and storage. Today, these positions are reversed. Investment in the electricity sector is set to reach USD 1.5 trillion in 2025, some 50% higher than the total amount being spent on bringing oil, natural gas, and coal to market.
There is also increasing expenditure on the electrification of end-uses, largely reflecting the additional cost of buying an electric vehicle (EV) versus an internal combustion engine model, even though many EV models being sold in China – the leading market for sales – are now competitive on an up-front basis with their conventional equivalents.
Spending on low-emissions power generation has almost doubled over the past five years, led by solar PV. Investment in solar, both utility-scale and rooftop, is expected to reach USD 450 billion in 2025, making it the largest single item in our inventory of the world’s investment spending. Fierce competition among suppliers and ultra-low costs are seeing imported solar panels, often paired with batteries, become an important driver of energy investment in many emerging and developing economies. Chinese solar exports to developing economies surpassed those to advanced economies in early 2025, with countries such as Pakistan having imported a reported 19 GW in 2024 alone (equivalent to about half the country’s grid-connected electrical capacity). Global spending on batteries for power sector storage is set to reach USD 66 billion this year.
Nuclear investment is making a comeback, rising by 50% over the past five years. Spending on new nuclear plants and refurbishments is set to exceed USD 70 billion, with the promise of further growth given the burgeoning interest in new technologies such as small modular reactors. The United States and the Middle East accounted for nearly half of a resurgent level of Final Investment Decisions (FID) for natural gas power.
Fast-growing electricity use and concerns about electricity security underpinned a wave of coal plant approvals in China. China gave the green light to almost 100 GW of new coal-fired plants in 2024, and India a further 15 GW, pushing global approvals to their highest level since 2015. By contrast, for the first time on record, there were no new steam turbine orders for coal-fired power plants in advanced economies in 2024.
Investment in grids is struggling to keep pace with the rise in power demand and renewables deployment. Each year, some USD 400 billion is now spent on grids worldwide, compared with around USD 1 trillion on generation assets. Maintaining electricity security amid rising electricity use requires a rapid increase in grid spending, moving towards parity with the amount spent on generation. However, this is being held back by lengthy permitting procedures, tight supply chains for transformers and cables, and – especially in developing economies – by the poor financial condition of many utilities.
Lower oil prices and demand expectations are set to result in a 6% fall in upstream oil investment in 2025, the first year-on-year decline since the Covid slump in 2020 and the largest since 2016. Lower expenditure on oil brings our expectation for overall upstream oil and gas investment for 2025 to just under USD 570 billion, a decline of around 4%. Of this, 40% is dedicated to slowing down production declines at existing fields. Global refinery investment in 2025 is set to fall to its lowest level in the past 10 years.
