Global investments in the energy sector are set to reach a record $3.3 trillion in 2025, a 2% increase from 2024, according to the International Energy Agency’s (IEA) World Energy Investment 2025 report.

Approximately $2.2 trillion is being invested collectively in renewables, nuclear energy, grids, storage, low-emission fuels, efficiency, and electrification. This investment is twice the $1.1 trillion allocated to oil, natural gas, and coal.

Over one-quarter of the worldwide energy investments occur in China. In recent years, fossil fuel-importing nations aiming to enhance their energy security have accounted for much of the spending growth.

Power sector investments reached a new high in 2024 with $1.5 trillion in investments. This growth was driven primarily by record investments in low-emission generation sources, the grid, and battery storage.

Advanced economies (39%) and China (45%) remain the largest markets for renewable power. However, in 2024, solar investment accelerated in emerging markets and developing economies (EMDEs), including India, the Middle East and North Africa, and Central Asia.

The growing competitiveness of solar panels, batteries, and distributed systems became a key driver of new investments in EMDE.

Solar

Spending on low-emission power generation has nearly doubled over the past five years, primarily driven by solar energy. Investment in solar, both utility-scale and rooftop, is expected to reach $450 billion in 2025.

Fierce competition among suppliers and ultra-low costs are driving imported solar panels, often paired with batteries, to become an important driver of energy investment in many emerging and developing economies. Global spending on batteries for power sector storage is set to reach $66 billion this year.

Imports of Chinese solar cells and modules are rising quickly, with Pakistan importing 19 GW in 2024 alone.

Manufacturers, ranging from polysilicon producers to module assemblers, incurred significant losses in 2024 as companies competed for market share.

Solar cell output among Chinese manufacturers hit record levels in March 2025, suggesting that efforts to curb oversupply are having mixed success. Lower-tier companies may struggle to survive in an environment of intense competition and innovation if prices remain at very low levels in 2025.

Nevertheless, solar companies are facing challenges due to differing price trends in solar and wind energy. The year 2024 concluded with another record low for solar module prices, driven by intensified competition from Chinese manufacturers amid significant overcapacity.

According to the report, declining returns are disincentivizing new investments. However, efforts to onshore production are having some impact.

Last year, module manufacturing in the U.S. experienced a threefold increase. Meanwhile, tariffs are already resulting in decreased imports from targeted Southeast Asian nations, which hit record levels in 2024.

In India, the Approved List of Models and Manufacturers’ mandate aims to ensure that all government project cells are made locally by 2026. This development will further limit export prospects for Chinese firms.

Price pressures have eased significantly for wind energy system manufacturers since 2023. Despite this decrease, western manufacturers are looking to shore up their finances by maintaining higher prices for new turbine orders.

The 2024 margins for these manufacturers have improved as more lucrative project pipelines replace cheaper legacy orders. The year ended with European turbine orders in the fourth quarter surging by 140% to 7.8 GW.

Grid and Storage

Grid investment also reached a new high in 2024. The year saw global investments of $390 billion and is expected to surpass $400 billion for the first time in 2025.

Overall, grid investment grew by 9% in 2024 from 2023. China experienced a 10% growth in grid investments. It accounted for one-fifth of the global investment in this sector.

Worldwide investments in battery storage continued to maintain a steady and strong growth trajectory in 2024, with a 45% year-over-year increase.

The U.S., Europe, and China remained the dominant markets, accounting for over 90% of total investment. This market share can be attributed mainly to government policies, the design of these economies’ business models, and increasing volatility in the wholesale market.

In China, the requirements for integrating energy storage in new renewable projects have driven ongoing growth in utility-scale battery storage. However, policy reforms are anticipated to slow this growth in the latter half of the year.

Electric Vehicles

Annual investments in electric vehicles (EVs) have more than doubled over the past decade, reaching nearly $800 billion annually by 2025. This growth was driven by rapid EV rollouts and widespread recognition of the need to renovate buildings and electrify industrial processes.

The U.S., China, and the European Union (EU) account for approximately two-thirds of the investment on the demand side. However, the recent uptick in EV demand in EMDEs outside China means their investment share has risen above 15% of the total.

Almost two-thirds of the EV sales were in China, with Europe and North America accounting for 18% and 11%, respectively.

While EV penetration remains significantly lower in EMDEs (excluding China), the sales in these markets grew at over twice the rate of sales in advanced economies, reaching 55%.

The report estimates that global transport investment is set to reach a record high in 2025, at around $330 billion, with electrification leading the way.

Clean Energy Finance

Access to long-term and affordable debt is essential for the energy transition, given the high upfront costs typical for clean energy projects.

In 2024, 80% of total investment into utility-scale solar and wind projects was met through debt financing, compared to 56% in 2015.

IEA believes that the rising share of debt finance should be acknowledged as a welcome development for EMDE, given the comparatively lower cost of debt.

The annual clean energy investment has grown from $1.2 trillion in 2015 to $2 trillion in 2024. EMDEs other than China have captured less than 10% of this growth. Therefore, their share of global investment has gradually declined over this period.

Since 2016, banks have provided approximately $500 billion in primary project finance to the clean energy sector, compared with just over $100 billion from institutional investors.

During this period, a surge in public financial support for clean energy in the U.S. and the EU, combined with the declining cost of renewables and, in 2024, a reduction in benchmarking rates, created a strong investment case for clean energy.

China’s clean energy investment has doubled since . In 2024, the country’s clean energy investment was over $625 billion. It achieved its 2030 wind and solar capacity target six years ahead of schedule.

While renewable installations are expected to continue, investment growth is anticipated to slow in 2025. Investment growth in solar energy may even decline slightly.

Clean energy research and development spending continued to grow in 2024. However, the report urges innovators to adjust to higher capital costs and policy uncertainty, particularly those reaching the scale-up stage.

According to the IEA’s Global Critical Minerals Outlook 2025 report, China was also the key supplier of battery metals in 2024, including lithium, nickel, cobalt, and graphite.

India Ranking

India’s electricity demand has been rising sharply due to several factors, including increases in commercial and residential space, a surge in air conditioner and appliance ownership, and rising industry demand.

Over the past five years, the country has experienced the third-largest growth in power generation capacity in the world, after China and the U.S.

In 2024, 83% of power sector investment went to clean energy. India was also the world’s largest recipient of development finance institution funding this year, receiving around $2.4 billion in project-type interventions in clean energy generation.

This investment helped increase the share of non-fossil power generation capacity to 44%, bringing India closer to its target of 50% by 2030.

The report noted that India will need to invest a cumulative $1.3 trillion in non-fossil power generation capacity by 2035 to meet these targets and stay on track to achieve net zero by 2070.

India has also committed $245 million to nuclear power projects for the current year, with a long-term vision of achieving 100 GW of nuclear capacity by 2047, up from the current level of less than 10 GW.

According to the IEA, electric car sales worldwide surged by 25% in 2024, reaching 17 million units, pushing annual battery demand beyond the 1 TWh mark for the first time.