According to the International Energy Agency’s annual World Energy Investment report, global investment in the energy sector contracted for the second year in a row in 2016, reaching US$1,700bn. This corresponds to a 12% fall compared to 2015 and to 2.2% of global GDP. This drop is linked to lower capital costs - especially in upstream oil and gas and in solar PV - and to reduced drilling and investments in thermal power capacities.
For the first time, investments in the power sector exceeded the combined investments in oil, gas and coal supply. Investment in the oil and gas sector fell by 26% to US$649bn (2/3 in upstream and 1/3 in downstream); they are expected to rebound in 2017 (+3%), thanks to an expected 53% rise in US shale investments. In 2016, investments in electricity remained broadly stable (-1%), with 41% (US$297bn) invested in renewables, 39% in networks and only 20% in thermal power generation. Despite low energy prices, investments in energy efficiency rose by 9% to US$231bn, with China accounting for 27% of this amount.
China was the largest investor in energy in 2016, accounting for 21% of the total, despite a 25% fall in investments in new coal-fired power plants; China mainly invested in renewable energies, electricity networks (it accounted for 30% of global investments) and energy efficiency. The United States ranked second with 16% of global investments, despite a strong decline in oil and gas investments. Investments rose in India (+7%, third largest country in terms of investments), thanks to the country's electrification programme, but declined in Europe, the third largest investor, due to lower investments in renewables.
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