After three years of decline, the global energy investment managed to achieve stability in 2018. The International Energy Agency (IEA) highlighted in its annual report World Energy Investment 2019 that out of the $1.8 trillion investment growth took place in higher upstream oil & gas and coal supply spending. Investment in energy efficiency remained consistent with past years but renewables faced a decline in investment.
As the world population grows and emerging economies increase their power consumption, significant dollars are being spent to build up power infrastructure. According to the report, power remained largest investment sector ahead of oil and gas supply on the back of a phenomenal increase in electricity demand which grew twice as fast as overall energy demand.
However, when it comes to renewables there was a fall in global investment even as some technologies saw a reduction in costs. There were no net additions to global renewable capacity with lower solar PV investment by China which has invested massively over the previous years.
Investment in upstream oil and gas witnessed an increase on the back of higher oil prices with a focus on shorter cycle projects and shale. However, the IEA notes that project approvals are below the required level to meet robust demand in the sector.
The global energy body also highlighted the challenges in energy efficiency spending which despite being stable saw little progress in expanding policy coverage. Even though the electric vehicles boom has taken off across the globe, this has not resulted in higher transport efficiency which seems to have plateaued according to the IEA.
According to the report the annual energy investment that is required for 2025-30 requires a significant increase despite a fall in costs. This will be the major challenge for countries with different sectors and scenarios requiring concerted planning and investments. More on this in the coming days.