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© OECD/IEA 2016 © OECD/IEA 2016
London 14 September 2016
© OECD/IEA 2016
The context
Investment is the lifeblood of the energy system, which determines long-term trends of supply, emissions and fuel demand
Investors face new challenges and opportunities from recent trends
Macroeconomic uncertainty and structural change affects demand patterns
The energy sector faces accelerated technological change
Lower energy prices and increasing inter-fuel competition reshape investment
Global energy investment declined in 2015, mainly due to lower oil and gas spending
Share of renewables in investment boosted by technology progress, strong policy support and growth in good resource markets
© OECD/IEA 2016
Power Generation
23% Biofuels and Solar
Heat 1%
USD 1.8 trillion
Investment flows signal a reorientation of the global energy system
An 8% reduction in 2015 global energy investment results from a $200 billion decline in fossil fuels, while the share of renewables, networks and efficiency expands
Oil & Gas 46%
Coal 4%
Electricity Networks
14%
Energy Efficiency
12%
Global Energy Investment, 2015
© OECD/IEA 2016
Renewables 17%
USD 1.8 trillion
Investment flows signal a reorientation of the global energy system
An 8% reduction in 2015 global energy investment results from a $200 billion decline in fossil fuels, while the share of renewables, networks and efficiency expands
Oil & Gas 46%
Coal 4%
Electricity Networks
14%
Energy Efficiency
12%
Global Energy Investment, 2015
Thermal Power
7%
© OECD/IEA 2016
USD (2015) billion
0 50 100 150 200 250 300 350
India
Russia
European Union
United States
China
Energy supply investment in 2015, selected markets
Top five markets comprised over half of global energy supply investment
Boosted by record power sector spending, China regains its position as top investment market, while the US declines due to sharply lower oil and gas investment
© OECD/IEA 2016
Energy efficiency investment rose 6%, bucking the trend despite lower energy prices
Lower oil prices can reduce energy efficiency spending. But government policies remain the key driver, a warning against complacency
Annual improvements in average fuel economy of new vehicles
0%
1%
2%
3%
US W. Europe China
2008 to 2013 2014 to 2015
© OECD/IEA 2016
0
100
200
300
400
500
600
700
800
9002
01
0
20
11
20
12
20
13
20
14
20
15
20
16
20
17
USD
(2
01
5)
bill
ion
Unprecedented wave of investment cuts in the upstream oil and gas industry
Global upstream capital spending 2010-2017
Cost deflation, efficiency improvements and reduced activity levels might lead for the first time to three consecutive years of investment decline
-24%
-25%
© OECD/IEA 2016
The share of NOCs in global upstream investment reaches an all time high
Share of upstream oil and gas investment, by company type
Upstream investment remains robust in the Middle East and Russia while North American shale and global offshore spending have been hit most severely
10% 16% 8%
27% 21% 24%
27% 27% 24%
36% 36% 44%
0%
20%
40%
60%
80%
100%
2007 2014 2016
Majors US Independents NOCs Other private
© OECD/IEA 2016
Renewables investment buys much more electricity
Investment in renewables-based capacity more than covers 2015 global electricity growth. Wind leads, surging 35% in 2015 on economics and record offshore growth
0
50
100
150
200
250
300
350
2011 2013 2015
USD (2015) billion
Hydropower Solar PV Wind Other renewables
0
50
100
150
200
250
300
350
400
2011 2013 2015
TWh +33%
+0%
Global renewable power investment Generation from investment in capacity
© OECD/IEA 2016
0.0
0.2
0.4
0.6
0.8
1.0
1.2
2010 2011 2012 2013 2014 2015
USD
(2
01
5)
bill
ion
0
50
100
150
200
250
300
2015
USD
(2
01
5)
bill
ion
In electricity networks, batteries accelerate though grids comprise most investment growth
Global grid-scale battery storage investment Total networks investment
x10
0.4%
Grid-scale battery storage spending has expanded tenfold since 2010. Their value lies most in complementing grids that constitute the bulk of investment
© OECD/IEA 2016
0
10
20
30
40
50
60
70
Gas Coal
20
15
(U
SD)
bill
ion
Subcritical
High efficiency
Infrastructure investment cost for a 1 GW power plant in Asia Coal and gas-fired power investment in Asian markets (2015)
Infrastructure costs favour coal power over gas in Asian energy importers
Asian markets comprised 85% of global coal power investment, while N. America and Middle East, with robust infrastructure, favoured gas for new fossil fuel power
© OECD/IEA 2016
0
200
400
600
800
1 000
1 200
Gas Coal
20
15
(U
SD)
mill
ion
Infrastructure investment cost for a 1 GW power plant in Asia
Infrastructure costs favour coal power over gas in Asian energy importers
Asian markets comprised 85% of global coal power investment, while N. America and Middle East, with robust infrastructure, favoured gas for new fossil fuel power
© OECD/IEA 2016
Global nuclear investment remains robust due to China
Economics and public concerns remain a challenge to significant nuclear expansion
Nuclear construction starts, 2000-2015
0
2
4
6
8
10
12
14
16
18
202
00
0
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
GW
Rest of world China
© OECD/IEA 2016
Conclusions
Global energy investment in 2015 is 8% lower. The share of oil & gas declined, while that of renewables, efficiency and nuclear rose
Massive cost deflation across the entire energy spectrum is reshaping competition between fuels and technologies
Unprecedented cuts in upstream investment are shifting the geography of oil production
Renewables investment accounts for more than two-thirds of power generation and more than covers global electricity demand growth
The IEA will continue to measure investment flows and assess their implications for the global energy sector