Global energy investment is set to rise to USD 3.3 trillion in 2025, with twice as much investment in clean energy as in fossil fuels, the International Energy Agency outlines in its World Energy Investment 2025 report.
Total energy investment rose 2% compared to last year, despite the biggest drop in upstream oil investments since 2016, excluding the COVID pandemic. Solar is now the largest single item in the IEA’s inventory of world investment spending, outpacing investment in oil production.
Dr Fatih Birol, Executive Director of the IEA (and former IIGCC keynote speaker), made a point to emphasise the rising influence of electricity demand:
“Ten years ago fossil fuel investment was higher than investment [in] electricity. Now, it is exactly the opposite.” The push for national energy security has also become a new, key driver of global energy investment, he added.
A continued trend
Clean energy technologies continue the trend of attracting around twice as much capital as oil, natural gas and coal combined. Around USD 2.2 trillion will go towards renewables, nuclear, grids, storage, low-emissions fuels, efficiency and electrification in 2025.
“Electricity investments are significantly higher than all fossil fuel investments put together. Capital is moving to the electricity sector. It is a clear trend because electricity consumption is growing and so are the needs to generate electricity."
Solar energy remains the dominant technology, outperforming all other energy types, with combined spending on utility-scale and rooftop solar projected to reach USD 450 billion in 2025.
Nuclear investment continues its resurgence, growing 50% over the past five years. Spending on new plants and upgrades is expected to top USD 70 billion, with growing interest in newer technologies such as small modular reactors.
In contrast, lower prices and demand expectations have led to a projected 6% fall in global upstream oil investment this year: though natural gas investment has increased to meet strong demand from data centres. Total oil and gas investment is estimated at just under USD 570 billion.
“Electricity investments are significantly higher than all fossil fuels investments put together. Capital is moving to the electricity sector. It is a clear trend because electricity consumption is growing and so are the needs to generate electricity,” IEA Executive Director Fatih Birol said.
However, growth across the energy sector is uneven. Grid infrastructure is not keeping pace with the rapid expansion in power generation, raising concerns about long-term energy security and transition planning. Supply shortages of critical components like transformers and cables are also pushing up costs and causing delays.
Serious regional shortfalls
Despite this surge in investment, spending patterns remain uneven. Many emerging markets and developing economies (EMDEs) – particularly in Africa – struggle to mobilise capital for energy infrastructure.
Currency depreciation and higher interest rates have made it harder to access and service debt. In Africa, total debt servicing costs are expected to be equivalent to more than 85% of all energy investment in 2025. Energy investment in the region is now one-third lower than a decade ago.
Though it represents 20% of the global population, the continent attracts just 2% of clean energy investments, the IEA reports. This underscores a critical need to scale up renewable and supportive financing mechanisms across EMDEs, as outlined in our latest guidance.
China is the largest global energy investor by a wide margin, with an almost one-third share in global clean energy investment; almost as much as the United States and European Union combined.
India and Brazil stand out among developing economies, supported by a stronger policy environment. India is set to reach its 2030 target of 50% non-fossil generation capacity ahead of schedule, while Brazil is balancing significant bioenergy investment with large offshore oil development.
South Asia lags in deploying emerging technologies but is becoming a key energy supply chain hub, especially in solar and nickel, the latter of which is a vital commodity for advanced batter storage amongst other uses.
Expanding priorities
While climate change mitigation was the main reason for energy investment between 2015 and 2020, the focus is now expanding. New policy priorities such as securing critical minerals, improving battery manufacturing, and maintaining industrial competitiveness are adding to and reshaping the energy landscape.
In this context energy security, supply chain resilience, leadership in AI, reliable electricity (‘firm power’) for industries, and improved energy access are all key drivers behind investment trends.
This shift is visible not only in supply-side investment but also in rising demand-side spending. Over the past decade, the IEA has tracked significant growth in investment across buildings, transport and industry. Annual investment in these sectors has nearly doubled to around USD 800 billion, driven by the rise of electric vehicles (EVs) and the need to renovate buildings and electrify industrial processes.
Together, these are important trends for investors considering climate risks and opportunities. The transition is well underway – how investors individually navigate this will be one of the defining trends for the investment community over the next few decades.
Be the first to access our working groups, resources and guidance as an IIGCC member. Interested in finding out more? Get in touch today.