Update |
World energy investment: China and PV dominate
China is cementing its position as the world’s single largest investor in energy, by a large margin, while solar PV is attracting more capital than any other technology. These are among key findings reported in the recently published tenth edition of the IEA’s annual World energy investment report
Global energy investment is set to increase in 2025 to a record $3.3 trillion despite headwinds from elevated geopolitical tensions and economic uncertainty, the IEA’s report says, with clean energy technologies attracting twice as much capital as fossil fuels.
Investment in “clean” technologies – renewables, nuclear, grids, storage, low- emissions fuels, efficiency and electrification – is on course to hit a record $2.2 trillion this year, the IEA estimates, reflecting not only efforts to reduce emissions but also the growing influence of industrial policy, energy security concerns and the cost competitiveness of electricity-based solutions, according to the report. Investment in oil, natural gas and coal is set to reach $1.1 trillion.
“Amid the geopolitical and economic uncertainties that are clouding the outlook for the energy world, we see energy security coming through as a key driver of the growth in global investment this year…as countries and companies seek to insulate themselves from a wide range of risks,” said IEA Executive Director Fatih Birol. “The fast-evolving economic and trade picture means that some investors are adopting a wait-and- see approach to new energy project approvals, but in most areas we have yet to see significant implications for existing projects.”
“When the IEA published the first ever edition
of its World energy investment report nearly ten years ago, it showed energy investment in China in 2015 just edging ahead of that of the United States,” Dr Birol added. “Today, China is by far the largest energy investor globally, spending twice as much on energy as the European Union – and almost as much as the EU and United States combined.”
Over the past decade, China’s share of global clean energy spending has risen from a quarter to almost a third, underpinned by strategic investments in a wide range of technologies, including solar, wind, hydropower, nuclear, batteries and EVs. At the same time, global spending on upstream oil and gas is gravitating towards the Middle East.
Today’s investment trends clearly show a new Age of Electricity is drawing nearer, says the report. A decade ago, investments in fossil fuels were 30% higher than those in electricity generation, grids and storage. This year, electricity investments are set to be some 50% higher than the total amount being spent bringing oil, natural gas and coal to market. Globally, spending on low-emissions power generation has almost doubled over the past
Evolution of global energy investment, billion USD. Source: IEA World energy investment report, 10th edition. Licence CC BY 4.0
five years, led by PV. Investment in solar, both utility-scale and rooftop, is expected to reach $450 billion in 2025, making it the single largest item in the global energy investment inventory. Battery storage investments are also climbing rapidly, surging above $65 billion this year. Capital flows to nuclear power have grown by 50% over the past five years and are on course to reach around $75 billion in 2025. Rapid growth in electricity demand also underpins continued investment in coal supply, mainly in China and India. Remarkably, in 2024, China started construction on nearly 100 GW of new coal-fired power plants, pushing global approvals of coal-fired plants to their highest level since 2015, the IEA report notes. In what it describes as a worrying sign for electricity security, investment in grids, now at $400 billion per year, is failing to keep pace with spending on generation and electrification. Maintaining electricity security would require investment in grids to rise towards parity
14 | September 2025|
www.modernpowersystems.com
with generation spending by the early 2030s. However, this is being held back by lengthy permitting procedures and tight supply chains for transformers and cables.
Energy spending patterns remain very uneven globally – with many developing economies, especially in Africa, struggling to mobilise capital for energy infrastructure, the report finds.
Today, Africa accounts for just 2% of global clean energy investment. Despite being home to 20% of the world’s population and rapidly growing energy demand, total investment across the continent has fallen by a third over the past decade due to declining fossil fuel spending and insufficient growth of clean energy. To close the financing gap in African countries and other emerging and developing economies, international public finance needs to be scaled up and used strategically to bring in larger volumes of private capital, the report suggests.
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