The International Energy Agency (IEA) has released its latest report on ‘World Energy Investment 2021’. According to the report, the annual global energy investment is set to rise to $1.9 trillion in the current year, rebounding nearly 10% from 2020 and bringing the total volume of investments back towards pre-pandemic levels.
The report also noted that investment prospects have improved greatly along with economic growth, although country-to-country variation remains. Global energy demand is set to increase by 4.6% in 2021, more than offsetting the 4% contraction in 2020, it said.
The study noted that the rise in investments in 2021 is due to a cyclical response to recovery and a structural shift in capital flows towards cleaner technologies. The energy investment composition will continue to shift towards the power sector for the sixth consecutive year instead of the conventional oil and gas supply.
According to the IEA, the global power sector investment would increase by 5% in 2021 and exceed $820 billion – a substantial peak after staying relatively flat in 2020. Meanwhile, renewables dominate investment in new power generation capacity and are expected to account for 70% of the total share this year.
Fresh investments are financing clean electricity, with a dollar spent on solar photovoltaic (PV) deployment today resulting in four times more electricity than ten years ago, thanks to greatly improved technology and falling costs.