Investment in new renewables outpaces demand for first time

The International Energy Agency (IEA) has released a report showing that investment in new renewables has covered the global electricity demand in 2015.

The World Energy Investment Report explains a “reorientation of the energy system” with investments starting to divest from fossil fuels, which currently still dominate energy supplies.

According to the IEA, 2.4 per cent of global GDP was invested in energy last year, which represents $1.8 trillion, half of which went to fossil fuels – mostly oil and gas – and 17 per cent of which went to renewables – $300 billion.

Oil and gas prices dropped last year, causing investment in energy to go down by 8 per cent year-on-year.

Clean energy cost reductions, on the other hand, means that more capacity could be bought for the money invested in renewables – which remained steady.

Less money was invested in solar power compared with 2011 but, thanks to cost reductions, 60 per cent more capacity had been added.

The IEA says: “For the first time, investment in renewables-based capacity generates enough power to cover global electricity demand growth in 2015.”

Last year – partly due to the need to expand electricity access and replace aging kits – the new renewables that were commissioned amounted to a capacity of 350 terawatt hours (TWh), which surpasses the 250 TWh demand.

Despite the rise of low-carbon sources of power and the decrease in fossil fuels investment, low-carbon investment will need to increase quicker in the next few years for the world to achieve its climate goals.

IEA’s report concludes: “Globally, energy investment is not yet consistent with the transition to a low-carbon energy system envisaged in the Paris Climate Agreement reached at the end of 2015.”

 

These topics and more will be discussed at the Sustainable Investment Forum, taking place on September 20th 2016 in New York. For more information and to register, visit the website at http://www.sustainableinvestmentforum.org/.