IEA: Global Energy Spending Fell 8% in 2015

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Investment in global energy projects dropped 8% in 2015 but remained strong in the electricity sector.

According to the International Energy Agency (IEA) the electricity sector led a broad reorientation in spending, but there was a larger decline in oil and gas upstream spending. Total investment in the energy sector reached $1.8 trillion in 2015, down from $2 trillion in 2014, according to its first ever World Energy Investment 2016 report.

China was the world's largest energy investor again in 2015 with energy supply spending of $315 billion, thanks to robust efforts in building up low-carbon generation and electricity networks, alongside the implementation of energy efficiency programmes. The U.S. came second, with spending of $280 billion, which was down significantly by $75 billion on 2014 due to low oil prices and cost deflation. This represented the largest proportion of the total decline in global energy spending. Russia and the Middle East remained the most resilient to spending cuts because of lower production costs and currency movements.

"We see a broad shift of spending toward cleaner energy, often as a result of government policies," said IEA Executive Director Fatih Birol. "Our report clearly shows that such government measures can work, and are key to a successful energy transition. But while some progress has been achieved, investors need clarity and certainty from policy makers. Governments must not only maintain but heighten their commitment to achieve energy security and climate goals."

Global gas-fired power generation investment declined by nearly 40% last year while investment activity in European gas power was "muted" despite the fact that there will be widespread plant retirements in the coming decade. Asian markets favoured investment in coal-fired power.

Renewable energy investment hit $313 billion, accounting for nearly a fifth of total energy spending last year. This established renewables as the largest source of power investment. The IEA noted that while spending on renewable power capacity was flat between 2011 and 2015, electricity generation capacity jumped by one-third, reflecting the steep declines in the cost of wind turbines and solar PV.

The report also noted that there was increased spending in technology innovation like smart grids and storage, which are expected to play a crucial role in integrating large shares of wind and solar. Investment in grid-scale battery storage has expanded ten-fold since 2010.

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