By Adewale Sanyaolu
The International Energy Agency (IEA) has projected that global energy investments will soar to $3.3 trillion in 2025, driven largely by accelerated spending on renewable energy, particularly wind and solar.
According to the agency, the surge reflects growing global momentum towards clean energy transitions, as governments and private sector players ramp up funding in response to climate commitments, energy security concerns, and the declining cost of renewable technologies.
The IEA in its latest World Energy Investment report said that China will cement its position as the top energy investor globally this year.
Nigeria is equally not a pushover in the investment analysis, as a United Nations agency recently set a $500 million target for a fund that would be accessed by local developers of renewable energy.
The fund is aimed at expanding access to renewable energy through solar home systems and mini-grids, especially for people in rural areas.
The initiative, backed by the Nigerian Sovereign Investment Authority and the UN’s Sustainable Energy for All (SEforALL), will be managed by Africa50, an infrastructure investment platform established by the African Development Bank (AfDB).
The Chief Executive Officer of SEforALL, Damilola Ogunbiyi, said the fund would be accessible to local developers and available in local currency to boost investment in Nigeria’s renewable energy sector.
Ogunbiyi, while speaking on the sidelines of a global development finance conference in Cape Town, South Africa, emphasised the importance of financial accessibility for small-scale energy providers.
The IEA noted that the surge in energy investments will materialise despite significant challenges such as muted economic growth and uncertainty related to geopolitics and trade policies.
The IEA believes that spending on non-hydrocarbon energy, besides wind and solar, nuclear, grid upgrades, energy storage, new fuels and efficiency, will be twice the amount spent on oil and gas this year. At $2.2 trillion, the total for what the IEA calls clean energy certainly seems impressive.
“Amid the geopolitical and economic uncertainties that are clouding the outlook for the energy world, we see energy security coming through as a key driver of the growth in global investment this year to a record $3.3 trillion as countries and companies seek to insulate themselves from a wide range of risks,” the IEA’s chief, Fatih Birol said.
While investment in wind, solar, and storage rises, the IEA expects investment in oil and gas to fall by 6 per cent this year. The decline will be driven by lower oil prices, the IEA believes, as well as by weaker demand. Demand for oil this year, according to the IEA, is set to decline for the first time since the pandemic lockdowns of 2020.
In the non-hydrocarbon segment, solar is going to see the biggest chunk of investments, at $450 billion this year, the IEA has predicted. This will also make solar the biggest investment magnet in energy as a whole. In what looks like a closely related trend, investment in storage is set to rise significantly this year, to $65 billion.