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A mixed picture regarding global investments in energy

2017 saw a fall of overall global investment in the energy sector. Coal and lignite, nuclear energy and hydropower were affected the most. By contrast, solar and wind energy saw an increase in investments. These are findings by the International Energy Agency (IEA).

Last year saw an overall fall in global investments in the energy sector. In fact, investments in energy systems across the world fell to 1.8 billion dollars, a figure that corresponds to a 2% decrease year-on-year. These are findings published by the International Energy Agency (IEA) in its report entitled ‘World Energy Investment 2018’, which was presented to the public this summer.

Only solar and on-shore wind energy see rise in investment

The main reason for the decrease is to be found in the electricity sector. Here, investment in coal and lignite-fired power plants and nuclear plants, in particular, has fallen. At the same time, investments in renewables also saw a marked decrease of approx. 7% in 2017, following strong growth in the preceding years. Much of this decrease can be attributed to hydropower and offshore wind power. By contrast, investment in solar energy and onshore wind power is at a new record high.

Level of investment too low to protect the climate

Executive Director Fatih Birol of the IEA says he is disappointed by the fall in global investments in renewables. He says more clean energy investments are needed for the targets on climate protection, clean air and energy security to be met. Global investments in fossil energies, by contrast, have risen – albeit by a small margin. The main driver here has been the oil and gas sector, and in particular the growing shale gas market in the U.S.

Positive trend in eMobility and energy efficiency

The report highlights the role of China. The People’s Republic accounts for around a fifth of the global investment volume, with most of this investment being used to decarbonise the electricity sector and boost energy efficiency. In contrast to this, the second-largest investor, the United States, continues to heavily rely on oil and gas.

There is positive news on electric mobility. It is true that electric cars account for only a small share in the overall market, but it also true that almost half of the global growth in the automotive sector can be attributed to them. This development is driven largely by subsidies and public-sector premiums.

With regard to energy efficiency, the picture is also fairly positive. Public-sector programmes, in particular, drove a small increase in investments in energy efficiency in buildings, transport and industry last year. Global public and private-sector investment in this field totalled approx. 236 billion dollars.

Last, but not least, it is also important to highlight the record in investment in solar energy. Given that implementation costs for PV projects have fallen by almost 15%, the increase in investments shows that solar energy really is conquering the global energy markets.

Report serves as guidance for policy-makers ad energy industry

‘World Energy Investment 2018’ is the third report of this series. It provides detailed information on annual investments in fossil and renewable energy. For this reason, it can serve as guidance for decision-makers in the political sphere and in the energy and financial sectors. They can use this information to drive the global energy transition and ensure that the agreed climate targets are met in time.

The Federal Ministry for Economic Affairs and Energy will soon publish recent and detailed information on investment and turnover in the German renewable energy sector. This newsletter will also cover this information.