Renewables lead the way in new power investment

Global investment in energy is set to rebound by nearly 10 per cent in 2021 to $1.9tn, reversing most of last year’s drop caused the Covid-19 pandemic, but spending on clean energy transitions needs to accelerate much more rapidly to meet climate goals, according to a new report from the International Energy Agency.

With energy investment returning to pre-crisis levels, its composition is continuing to shift towards electricity: 2021 is on course to be the sixth year in a row that investment in the power sector exceeds that in traditional oil and gas supply, according to theWorld Energy Investment 2021report.

Global power sector investment is set to increase by around 5 per cent in 2021 to more than $820bn, its highest ever level, after staying flat in 2020. Renewables are dominating investment in new power generation capacity and are expected to account for 70 per cent of the total this year. And that money now goes further than ever in financing clean electricity, with a dollar spent on solar PV deployment today resulting in four times more electricity than ten years ago, thanks to greatly improved technology and falling costs.

“The rebound in energy investment is a welcome sign, and I’m encouraged to see more of it flowing towards renewables,” said Fatih Birol, the IEA’s executive director. “But much greater resources have to be mobilised and directed to clean energy technologies to put the world on track to reach net-zero emissions by 2050. Based on our new Net Zero Roadmap, clean energy investment will need to triple by 2030.”

While renewables dominate new power investment, and approvals for coal-fired plants are some 80 per cent below where they were five years ago, coal is not out of the picture. There was even a slight increase in go-aheads for coal-fired plants in 2020, driven by China and some other Asian economies.