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IEA shows renewables input costs on decline and output on the rise

Global renewable energy investments are increasingly showing low capital input with a high generation output, according to a newly released report by the International Energy Agency (IEA).

“Renewable energy investments of $313 billion accounted for nearly a fifth of total energy spending last year, establishing renewables as the largest source of power investment. While spending on renewable power capacity was flat between 2011 and 2015, electricity generation from the new capacity rose by one third, reflecting the steep cost declines in wind turbines and solar PV,” the IEA said in statement.

IEA captures investment trend

According to the Agency, global energy investment fell by 8% in 2015, with a drop in oil and gas upstream spending outweighing continued robust investment in renewables, electricity networks and energy efficiency.

Total investment in the energy sector reached $1.8 trillion in 2015, down from $2.0 trillion in 2014, according to the World Energy Investment 2016 (WEI 2016).

IEA Executive Director Fatih Birol, said: “We see a broad shift of spending toward cleaner energy, often as a result of government policies.

“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.”

Birol added: “Governments must not only maintain but heighten their commitment to achieve energy security and climate goals.”

The Agency further noted: “Technology innovations boosted investment in smart grids and storage, which are expected to play a crucial role in integrating large shares of wind and solar. While grid-scale battery storage investment expanded tenfold since 2010, their value is predominantly to complement the grid, which continues to absorb much larger investment.

“Global gas-fired power generation investment declined by nearly 40%. Asian markets continued to favour investment in coal power. Investment activity in European gas power remained muted despite large retirements anticipated in the next decade.”

The Agency added: “With investment rising 6%, energy efficiency spending was robust in 2015 due to government policies such as minimum standards that cover a rising share of new buildings, appliances and motor vehicles.

“In certain countries, lower prices slowed the trend towards more fuel-efficient vehicles, most notably in the United States where the rate of improvement in efficiency was two-thirds lower than that in recent years.”

Highlighted regions

Identifying the most active regions, China was once again the world’s largest energy investor last year thanks to robust efforts in building up low-carbon generation and electricity networks, as well as implementing energy efficiency policies. The country spent an estimated $315 billion in energy investments, according to the IEA.

“Investment in the United States’ energy supply declined to about $280 billion in 2015, falling nearly $75 billion, due to low oil prices and cost deflation, representing half of the total decline in global energy spending.

“The Middle East and Russia emerged as the most resilient regions to spending cuts, thanks respectively to lower production costs and currency movements. As a result, national oil companies accounted for 44% of overall upstream investments, an all-time high.”


Ashley Theron
Ashley Theron-Ord is based in Cape Town, South Africa at Clarion Events-Africa. She is the Senior Content Producer across media brands including ESI Africa, Smart Energy International, Power Engineering International and Mining Review Africa.