The global electricity sector attracted the largest share of energy investments in 2017, sustained by robust spending on grids and exceeding the oil and gas industry for the second year in row. The reason behind this surge is the energy sector’s movement toward greater electrification, according to the International Energy Agency’s 2018 review of global energy spending.
The electricity sector was the largest recipient of global energy investment for the second year running, reflecting the ongoing electrification of world’s economy and supported by robust investment in networks and renewable power.
Global spending on energy efficiency in heating, ventilation, and air conditioning experienced
double-digit growth, with sales of heat pumps in particular rising by 30%. Like EVs, heat
pumps are more efficient than their traditional alternatives and can help low-carbon
electricity to penetrate higher shares of energy demand, yet they make up only around
2.5% of total sales of heating equipment.
Power companies are modernizing electricity grids by spending more on, and acquiring businesses related to, so-called smart grid technology, including smart meters, advanced distribution equipment and EV charging, which accounted for over 10% of networks spending.
Electric batteries are increasingly being deployed across the energy sector, but their
impact will largely depend on cost trends, which will be strongly influenced by
investments outside the energy sector.
Global Electricity Investment is Up, But Other Energy Sectors Didn’t Fare as Well
2017 was the third consecutive year of decline in global energy investment with energy efficiency the lone sector of growth. Despite a 6% decline in spending, the electricity sector again attracted the largest share of energy sector investments, exceeding the oil and gas industry for the second year in row, as the energy sector moves toward greater electrification.
Across all power sector investments, more than 95% of investment is now based on regulation or contracts for remuneration. Investment in energy efficiency is particularly linked to government policy, often through energy performance standards.
Understanding the International Energy Agency Annual Report
The IEA examines the full spectrum of energy issues including oil, gas and coal supply
and demand, renewable energy technologies, electricity markets, energy efficiency, access
to energy, demand side management and much more. Through its work, the IEA advocates
policies that will enhance the reliability, affordability and sustainability of energy in its 30 member countries, 7 association countries and beyond.
The four main areas of IEA focus are:
- Energy Security: Promoting diversity, efficiency, flexibility and reliability for all fuels
and energy sources;
- Economic Development: Supporting free markets to foster economic growth and
eliminate energy poverty;
- Environmental Awareness: Analysing policy options to offset the impact of
energy production and use on the environment, especially for tackling
climate change and air pollution; and,
- Engagement Worldwide: Working closely with association and partner countries, especially major emerging economies, to find solutions to shared energy and environmental concerns.
The IEA has evolved and expanded over the decades. It is today at the heart of global dialogue on energy, providing authoritative statistics and analysis and examining the full spectrum of energy issues, advocating policies that will enhance the reliability, affordability, and sustainability of energy in its 30 members countries and beyond.