China Leads Global Energy Investments In 2025

India has significantly increased its investments in renewable power, from $13 billion in 2015 to $37 billion in 2025

China is set to account for over 25 per cent of global energy investment in 2025, a stark contrast to developing countries that struggle to mobilise capital for energy infrastructure, according to a new report released on June 5, 2025, by the International Energy Agency (IEA).

The IEA’s 10th edition of its Global Energy Investment report 2025 highlighted that global clean energy investments are projected to reach $2.2 trillion in 2025, double the investment in oil, natural gas, and coal combined. Clean energy technologies encompass renewables, nuclear, grids, storage, low-emissions fuels, efficiency, and electrification.

Further, globally, current flows are insufficient to meet the goals agreed upon at the 28th Conference of Parties to the United Nations Framework Convention on Climate Change (COP28) held in 2023. At COP28, countries committed to tripling renewable energy capacity and doubling the rate of energy efficiency improvements by 2030. The IEA report underscored that annual investments must double to achieve a tripling of installed renewable capacity by 2030.

Much of the global investment surge has been driven by China, which has more than doubled its clean energy investments to over $625 billion since 2015. In the last decade alone, China’s contribution to global clean energy spending rose from a quarter to almost a third due to investments in solar, wind, hydropower, nuclear, batteries and electric vehicles.

At the same time, in 2024, China approved nearly 100 GW of new coal-fired plants, contributing to the highest global approvals for coal since 2015. This trend is likely driven by energy security concerns, which have become a major investment driver, particularly given China’s past experiences with blackouts, especially during peak summer demand and dry seasons impacting hydropower generation.

“China’s total energy investments equal United States and European Union combined. Ten years back, it was only equal to the US. China today is the number one investor in fossil fuels and clean energy infrastructure,” IEA Executive Director Fatih Birol said during the press briefing on June 5.

Africa, on the other hand, has seen a worrying decline in energy investments. Energy investments in Africa are expected to fall by a third in 2025 compared to 2015. This could be attributed to a decline in oil and gas spending, which has been only partially offset by higher investments in renewable power.

The continent accounts for only two per cent of clean energy investment despite supporting 20 per cent of the world population, the report highlighted.

Africa’s fossil fuel investments dropped from $125 billion in 2015 to $54 billion in 2025, while renewable energy investments saw a slight rise from $13 billion to $21 billion during the same period.

“Currency depreciation and higher interest rates have made it more difficult to access and service debt: in Africa, overall debt servicing costs are equivalent to over 85 per cent of total energy investment in 2025,” the report highlighted.

Indian scenario

Among emerging and developing countries, India and Brazil are notable for their energy investments, as highlighted in the report.

India has significantly increased its investments in renewable power, from $13 billion in 2015 to $37 billion in 2025. Over the same decade, its fossil fuel investments also rose, from $41 billion to $49 billion.

However, the country faces some roadblocks. India’s cost of capital for grid-scale renewable energy is 80 per cent higher than in advanced economies. This is despite the cost of capital being one of the lowest among its emerging market and developing economy counterparts. When cost of capital is high, financing costs also rise, making it much more difficult to generate attractive risk-adjusted returns, especially for clean technologies that are capital-intensive.

IEA urged that world should include the cost of capital problem in ‘the Baku to Belem Roadmap’, launched at COP29 last year. The roadmap aims to mobilise at least $1.3 trillion in finance for low-emissions projects in developing economies like India by 2035. India is promoting investment in renewables and nuclear to diversify its energy mix and to meet its rising electricity demand. The country’s spending on nuclear and other clean energy source was $1 billion in 2015, increasing to $6 billion in 2025. These steps are being taken to reduce fossil fuel import reliance, suggesting that energy security has played a role in its investment.

Over the past five years, India’s investment in solar photovoltaic generation has averaged USD 16 billion per year, which is 70 per cent higher than the average of the previous five years. The country has also committed USD 245 million to nuclear projects for the current financial year to increase nuclear capacity to 100 GW by 2047 — up from less than 10 GW today.

“For these reasons, ten years ago, for every rupee India invested in fossil sources of power generation, there was one rupee invested in non-fossil sources (renewables and nuclear),” IEA told Down To Earth (DTE), adding that today, for every rupee invested in fossil sources of power generation, India invests four rupees in non-fossil sources.

India’s investment in grids and storage has declined since 2015, falling from $31 billion to an expected $25 billion in 2025. This downward trend is mirrored in Southeast Asia, Latin America, and West Asia.

“We expect investment to gradually pick up again as India approved a major USD 110 billion transmission infrastructure plan covering the period until 2032,” IEA told DTE.

In contrast, global grid investment is projected to exceed $400 billion in 2025, driven primarily by China, Europe, and North America, which together account for over 50 per cent of this spending.

Globally, a significant disparity exists between investments in renewable energy deployment and grid infrastructure, particularly in developing countries. Approximately $1 trillion is spent annually on generation assets, while grids receive only $400 billion worldwide.

Several factors hinder investments in grid. These include lengthy permitting procedures, tight supply chains for transformers and cables, and by the poor financial condition of many utilities, especially in developing economies, according to IEA.

The price for grid materials have nearly doubled over the last five years due to rising demand for cables and transformers, it noted.

(Courtesy: Down To Earth)