An International Energy Agency (IEA) report says that global investment in energy is expected to rise to $3.3 trillion in 2025, despite concerns over geopolitical and economic uncertainties. The report also shows a shift towards more sustainable solutions with clean technologies being projected to attract twice as much capital as fossil fuels.
Clean technology investment is set to reach an unprecedented $2.2 trillion this year, according to the report. Solar PV leads the way with investments expected to hit $450 billion in 2025, while battery storage investment is also rising sharply, surpassing $65 billion this year. Investment in fossil fuels, on the other hand, is expected to reach $1.1 trillion in investment.
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Globally, current flows are insufficient to meet the goals agreed upon at the 28th Conference of Parties to the United Nations Framework Convention on Climate Change (COP28) held in 2023. At COP28, countries committed to tripling renewable energy capacity and doubling the rate of energy efficiency improvements by 2030. The IEA report indicated that annual investments must double to achieve a tripling of installed renewable capacity by 2030.
China is expected to drive much of the global investment surge in energy with the country having more than doubled its investment in energy since 2015. The country’s contribution to global clean energy spending including solar, wind, hydropower, nuclear, batteries and electric vehicles rose from a quarter to a third. However, in 2024, China also approved nearly 100 gigawatts of new coal-fired plants, contributing to the highest global approvals for coal since 2015.
“China’s total energy investments equal the United States and European Union combined. Ten years back, it was only equal to the US. China today is the number one investor in fossil fuels and clean energy infrastructure,” IEA Executive Director Fatih Birol said.
Africa, on the other hand, has seen a decline in energy investments. Energy investments in Africa are expected to fall by a third in 2025 compared to 2015. This could be attributed to a decline in oil and gas spending, which has been only partially offset by higher investments in renewable power. Africa’s fossil fuel investments dropped from $125 billion in 2015 to $54 billion in 2025, while renewable energy investments saw a slight rise from $13 billion to $21 billion during the same period.
The report also highlighted India’s and Brazil’s energy investments among developing nations. India has significantly increased its investment in renewable energy which went from $13 billion in 2015 to $37 billion in 2025. Over the same decade, its fossil fuel investments also rose, from $41 billion to $49 billion. However, India still faces several challenges with the country’s cost of capital for grid-scale renewable energy being 80% more than for advanced economies.
IEA urged the world to include the cost of capital problem in the “Baku to Belem Roadmap,” launched at COP29 last year. This aims to mobilize at least $1.3 trillion in finance for low-emissions projects in developing economies like India by 2035.
There has been a downward trend for investment in grids and storage for India, Southeast Asia, West Asia, and Latin America. In contrast, global grid investment is projected to exceed $400 billion in 2025, driven primarily by China, Europe, and North America which together account for over 50% of this spending.