Global energy investment set to rise to $3.3 trillion in 2025 amid economic uncertainty and energy security concerns

Global energy investment is projected to reach a record $3.3 trillion in 2025, driven by energy security concerns and the increasing competitiveness of clean energy technologies, which are attracting twice the capital of fossil fuels at $2.2 trillion. China is now the world's largest energy investor, spending twice as much as the EU, while solar PV is attracting the most capital of any single technology at $450 billion; however, grid investments are lagging, posing a risk to electricity security, and spending patterns remain uneven, with Africa accounting for only 2% of global clean energy investment.

Analysis

Global energy investment is projected to reach a record $3.3 trillion in 2025, significantly driven by energy security concerns and an accelerated shift towards clean energy technologies, which are attracting $2.2 trillion in the current projection period—double the $1.1 trillion allocated to fossil fuels. This surge underscores the increasing influence of industrial policy and the cost-competitiveness of electricity-based solutions. China has firmly established itself as the world's largest energy investor, with its expenditure nearly equalling the combined total of the EU and the US, and its share of global clean energy investment approaching one-third. Solar PV is projected to attract $450 billion in 2025, making it the single largest investment category, while battery storage investments are surging above $65 billion in the current period, and nuclear power investment is on course for approximately $75 billion in 2025, a 50% increase over the past five years.

Despite these positive trends, critical challenges persist. Investment in electricity grids, at $400 billion annually, significantly lags the rapid expansion in generation capacity, creating a potential bottleneck for electricity security due to lengthy permitting processes and supply chain constraints for essential components. Upstream oil investment is anticipated to decline by 6% year-over-year, primarily due to reduced spending on US tight oil, contrasting with robust investment in new LNG facilities, which are set for their largest ever capacity growth between 2026 and 2028. Furthermore, investment patterns remain highly uneven globally, with Africa accounting for a mere 2% of clean energy capital, and the continent's total energy investment has contracted by a third over the past decade. Paradoxically, the drive for energy security and rising electricity demand has also led to China approving nearly 100 GW of new coal-fired power plants in 2024, pushing global coal plant approvals to their highest level since 2015, highlighting the complex energy needs in major developing economies.

Key Decisions for Investors

• Investors should prioritize opportunities within the clean energy value chain, particularly in solar PV, battery storage, and nuclear power, while closely monitoring the significant underinvestment in grid infrastructure which presents both systemic risks and potential for targeted, high-demand investments.
• Geographic allocation strategies must account for China's continued dominance in overall energy investment and its substantial strategic investments in clean technologies, alongside the pronounced underfunding in developing economies, especially Africa, which could influence long-term growth trajectories and resource competition.
• Portfolio adjustments may be warranted to reflect the projected 6% decline in upstream oil investment, particularly in US tight oil, versus the strong growth trajectory for LNG facility investment, indicating a major capacity expansion and potential shifts in gas market dynamics from 2026 to 2028.
• The notable increase in global approvals for coal-fired power plants, driven primarily by China and India, signals persistent reliance on coal for baseload power in key regions, necessitating a nuanced investment approach that acknowledges the complexities and varied timelines of the energy transition across different economies.