A surge in clean energy spending is projected to drive global energy investments to a record $3.3 trillion (€2.89 trillion) in 2025, despite economic uncertainty and geopolitical tensions, according to the International Energy Agency (IEA).
Clean energy technologies, encompassing renewables, nuclear power, and energy storage, are anticipated to attract $2.2 trillion in investments, double the amount expected for fossil fuels, the IEA stated in its annual World Energy Investment report.
“The rapidly evolving economic and commercial landscape means that some investors are adopting a cautious approach to new energy project approvals, but in most areas, we have not yet seen significant impacts on existing projects,” said IEA Executive Director Fatih Birol.
Solar energy is poised to be the largest beneficiary, with investments forecast to reach $450 billion in 2025, while spending on battery energy storage is projected to rise to approximately $66 billion, the report indicates. Batteries are seen as a critical solution to mitigate the intermittency of renewable energy projects, storing power during peak supply and discharging it during peak demand. However, investments in battery technology have lagged behind solar and wind power.
In contrast, investments in oil and gas are expected to decline, with oil investments specifically projected to fall by 6% in 2025, driven by lower oil prices and demand expectations. This marks the first decline since the Covid crisis in 2020.
The IEA also cautioned that a $400 billion per year investment in electricity grids is insufficient compared to spending on generation and electrification, which could pose a risk to electricity security. Grid investments will need to nearly match generation spending by the early 2030s to maintain electricity security, but this is currently hampered by bureaucracy and tight supply chains for transformers and cables.
Spending patterns globally remain highly uneven, with many developing economies struggling to mobilize capital for energy infrastructure, while China dominates global clean energy investments with nearly one-third of the total.
