Global Energy Sector Investments: Embracing Clean and Renewable Sources, Highlights World Solar Investment Report by ISA

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In recent years, the global economy has faced significant disruptions, including the Covid-19 pandemic, supply-demand imbalances, and regional energy flow disruptions due to conflicts such as the Russia-Ukraine war. These events have led to concerns about energy security and the need for countries to accelerate their energy transition and reduce emissions to mitigate the adverse effects of climate change.


According to WORLD SOLAR INVESTMENT REPORT BY INTERNATIONAL SOLAR ALLIANCE (ISA), Global investments in the energy sector reached USD 2.2 trillion in 2021, showing a 14% increase compared to the previous year. However, overall investment in the energy sector has remained stagnant over the last 6-7 years. The Covid-19 pandemic caused a major dip in investments in 2020, but it is projected that energy sector investment growth will rebound by 8% in 2022, reaching an expected investment of USD 2.4 trillion.


Power sector investments accounted for over 40% of total energy investments in 2021, followed by investments in fuels at 36%. Within fuel investments, almost all (98%) can be attributed to fossil fuels, while clean fuels only make up 2% of the total. Investments in renewable energy capacity and transmission and distribution infrastructure have driven the growth in power sector investments, with a 13% increase since 2015, says the report.

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Investments in end-use efficiency have also grown by 25% since 2015. However, investments in fossil fuels have declined by 25% but remain high at nearly USD 778 billion. Unfortunately, the declining trend is expected to reverse due to current geopolitical instabilities, leading to an anticipated 7% year-on-year growth in fuel investments in 2022.

Renewable energy investments have been a major focus in the power sector, accounting for nearly 50% of global power sector investments in 2021. Solar energy has emerged as one of the most attractive options for investment, with over 40% growth between 2015 and 2021. Investments in wind and hydro energy have also seen significant growth. Solar energy has consistently commanded the largest share of overall investments (40-55%) in the sector over the past 6-7 years, and it is projected to continue growing, surpassing USD 250 billion in 2022.

Overall, the global energy sector is experiencing a mix of pressures and incentives to increase investments in clean and climate-friendly energy sources. The transition to renewable energy has become crucial to address climate change and ensure energy security, and investments in this sector are expected to continue growing in the coming years.

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