A decline in global renewable investment has highlighted the importance of national energy policies, according to new data from the International Energy Agency (IEA).
The IEA’s World Energy Investment 2018 report found after several years of growth, combined global investment in renewables and energy efficiency declined by 3 per cent in 2017 and there is a risk that it will slow further this year.
Global energy investment totalled $2.4 trillion (US$1.8 trillion) in 2017, a 2 per cent decline in real terms from the previous year.
Investment in renewable power, which accounted for two-thirds of power generation spending, dropped 7 per cent in 2017.
Recent policy changes in China linked to support for the deployment of solar PV raise the risk of a slowdown in investment this year.
As China accounts for more than 40 per cent of global investment in solar PV, its policy changes have global implications.
This confirms past IEA reports that have highlighted the critical importance of policies in driving investment in renewable energy.
While energy efficiency showed some of the strongest expansion in 2017, it was not enough to offset the decline in renewables.
Moreover, efficiency investment growth has weakened in the past year as policy activity showed signs of slowing down.
“Such a decline in global investment for renewables and energy efficiency combined is worrying,” IEA executive director Dr Fatih Birol said.
“This could threaten the expansion of clean energy needed to meet energy security, climate and clean-air goals.
“While we would need this investment to go up rapidly, it is disappointing to find that it might be falling this year.”
The report found the electricity sector attracted the largest share of energy investments in 2017, sustained by robust spending on grids, exceeding the oil and gas industry for the second year in row, as the energy sector moves toward greater electrification.
The share of fossil fuels in energy supply investment rose last year for the first time since 2014, as spending in oil and gas increased modestly.
Meanwhile, retirements of nuclear power plants exceeded new construction starts as investment in the sector declined to its lowest level in five years in 2017.
Final investment decisions for coal power plants to be built in the coming years declined for a second straight year, reaching a third of their 2010 level.
However, despite declining global capacity additions, and an elevated level of retirements of existing plants, the global coal fleet continued to expand in 2017, mostly due to markets in Asia.
And while there was a shift towards more efficient plants, 60 per cent of currently operating capacity uses inefficient subcritical technology.