The World Energy Investment 2016 has announced that the overall energy investment has fallen to US$1.8 trillion in 2015 from US$2 trillion in 2014
In a first ever detailed analysis of investment across the global energy system, the International Energy Agency (IEA) said on 14 September that global investment fell by eight per cent, with a drop in oil and gas upstream spending outweighing continued robust investment in renewables, electricity networks and energy efficiency. In 2014, overall investment was US$2 trillion but it had fallen to US$1.8 trillion in 2015.
The report does have very positive news for renewables as there is a broad shift towards cleaner energy, as chief executive Fatih Birol stated at the press conference in London. The reasons for this, the IEA report says, is that most of this is because of government policies. The European Union were seen as a key driver in this whilst the USA car market detracted from this.
Once again, China was the world’s largest energy investor, spending US$315bn in 2015. This is due to robust efforts in building up low carbon generation and electricity networks, as well as implementing energy efficiency policies. The USA is second investing US$280bn, with the EU, Russia and India following, investing US$140bn, US$85bn and US$65bn respectively.
Investment in the USA’s energy sector declined to US$280bn, mainly due to low oil prices and cost deflation, meaning there investment fell by about US$75bn. According to the report, the Middle East and Russia emerged as the most resilient regions to the global spending cuts, due to currency movements and lower production costs. In conclusion, national oil companies accounted for 44 per cent of overall upstream investments, an all time high.
Renewable energy has established itself as the largest source of power investment, resulting nearly a fifth of total energy spending last year. The investment in renewable power capacity in 2015 generates more than enough to cover global electricity demand growth.
Technology innovations boosted investments 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 10-fold since 2010, its value is predominately to complement the grid, which continues to absorb much larger investment.
Global gas-fired power generation investment declined by nearly 40 per cent. Asian markets continued to favour investment in coal power. Investment activity in European gas power remained muted despite large retirements anticipated in the next decade.
With investment rising six per cent, energy efficiency spending was robust in 2015 due to government policies such as minimum standards that cover a rising share of new buildings, appliances and motor vehicles. In certain countries, lower prices slowed the trend towards more fuel-efficient vehicles, most notably in the USA where the rate of improvement in efficiency was two thirds lower than that in recent.
