Investment in the electricity sector has been higher than that in the oil and gas sector two consecutive years 2016 and 2017, driven by investments in the grid, says the International Energy Agency, IEA. More than US $750 billion was reported to have gone into the electricity sector while US $715 billion was spent on oil and gas supply, with the total global energy investment reaching US $1.8 trillion in 2017.
News sources also quoted the IEA as saying that the overall energy spending was down 2 percent over the previous year, and renewables and energy efficiency investments put together fell 3 percent from 2016 numbers and that investments in energy efficiency and renewables could fall again this year.
News sources also reported that Investment in renewable power which accounted for two-thirds of power generation spending, dropped 7 percent in 2017, attributing it to the recent policy changes in China that gave support for the deployment of solar PV. Adding that with China’s more than 40 percent of global investment in solar PV, policy changes are bound to have global implications, IEA said.
Dr. Fatih Birol, the IEA’s Executive Director says such a decline in global investment for renewables and energy efficiency combined is worrying.
“This could threaten” he was quoted, “the expansion of clean energy needed to meet energy security, climate and clean-air goals. While we would need this investment to go up rapidly, it is disappointing to find that it might be falling this year.”
Electric vehicles, EV though still a small part of the market as report said, now account for much of the growth in global passenger vehicle sales, spurred by government purchase incentives. Nearly one quarter of the global value of EV sales in 2017, says report came from the budgets of governments, who are allocating more capital to support the sector each year.
It was also reported that the share of fossil fuels in energy supply investment rose last year for the first time since 2014, as spending in oil and gas increased modestly, says IEA. Again, retirements of nuclear power plants exceeded new construction starts as investment in the sector declined to its lowest level in five years in 2017.
The share of national oil companies in total oil and gas upstream investment remained near record highs, a trend that could continue even beyond 2018.
The global coal fleet continued to expand in 2017 due to markets in Asia inspite of the declining global capacity additions brought about by global investment indifference that got a third of their 2010 levels.
According to the report, the prospects of the US shale industry are improving that between 2010 and 2014, companies spent up to US $1.80 for every dollar revenue. The industry also has almost halved its breakeven price thereby providing a more sustainable basis for future expansion, underpinning a record increase in US light tight oil production of 1.3 million barrels a day in 2018.
“The United States shale industry is at turning point after a long period of operating on a fragile financial basis,” Birol was quoted as saying.
He was further quoted as saying, “The industry appears on track to achieve positive free cash flow for the first time ever this year, turning into a more mature and financially solid industry while production is growing at its fastest pace ever.”