• 2 hours Bidding Action Heats Up In UK’s Continental Shelf
  • 7 hours Keystone Pipeline Restart Still Unknown
  • 11 hours UK Offers North Sea Oil Producers Tax Relief To Boost Investment
  • 13 hours Iraq Wants To Build Gas Pipeline To Kuwait In Blow To Shell
  • 15 hours Trader Trafigura Raises Share Of Oil Purchases From State Firms
  • 17 hours German Energy Group Uniper Rejects $9B Finnish Takeover Bid
  • 18 hours Total Could Lose Big If It Pulls Out Of South Pars Deal
  • 20 hours Dakota Watchdog Warns It Could Revoke Keystone XL Approval
  • 2 days Oil Prices Rise After API Reports Major Crude Draw
  • 2 days Citgo President And 5 VPs Arrested On Embezzlement Charges
  • 2 days Gazprom Speaks Out Against OPEC Production Cut Extension
  • 2 days Statoil Looks To Lighter Oil To Boost Profitability
  • 2 days Oil Billionaire Becomes Wind Energy’s Top Influencer
  • 2 days Transneft Warns Urals Oil Quality Reaching Critical Levels
  • 2 days Whitefish Energy Suspends Work In Puerto Rico
  • 2 days U.S. Authorities Arrest Two On Major Energy Corruption Scheme
  • 2 days Thanksgiving Gas Prices At 3-Year High
  • 2 days Iraq’s Giant Majnoon Oilfield Attracts Attention Of Supermajors
  • 3 days South Iraq Oil Exports Close To Record High To Offset Kirkuk Drop
  • 3 days Iraqi Forces Find Mass Graves In Oil Wells Near Kirkuk
  • 3 days Chevron Joint Venture Signs $1.7B Oil, Gas Deal In Nigeria
  • 3 days Iraq Steps In To Offset Falling Venezuela Oil Production
  • 3 days ConocoPhillips Sets Price Ceiling For New Projects
  • 5 days Shell Oil Trading Head Steps Down After 29 Years
  • 5 days Higher Oil Prices Reduce North American Oil Bankruptcies
  • 6 days Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 6 days $1.6 Billion Canadian-US Hydropower Project Approved
  • 6 days Venezuela Officially In Default
  • 6 days Iran Prepares To Export LNG To Boost Trade Relations
  • 6 days Keystone Pipeline Leaks 5,000 Barrels Into Farmland
  • 6 days Saudi Oil Minister: Markets Will Not Rebalance By March
  • 6 days Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount
  • 6 days Rosneft Announces Completion Of World’s Longest Well
  • 7 days Ecuador Won’t Ask Exemption From OPEC Oil Production Cuts
  • 7 days Norway’s $1 Trillion Wealth Fund Proposes To Ditch Oil Stocks
  • 7 days Ecuador Seeks To Clear Schlumberger Debt By End-November
  • 7 days Santos Admits It Rejected $7.2B Takeover Bid
  • 7 days U.S. Senate Panel Votes To Open Alaskan Refuge To Drilling
  • 7 days Africa’s Richest Woman Fired From Sonangol
  • 8 days Oil And Gas M&A Deal Appetite Highest Since 2013
Alt Text

The Hidden Cost Of Electric Cars

As countries across the globe…

Alt Text

Is Tesla’s E-Truck A Game Changer For Energy Markets?

Tesla’s E-truck is a potential…

Gregory Brew

Gregory Brew

Gregory Brew is a researcher and analyst based in Washington D.C. He is currently pursuing a PhD at Georgetown University in oil history and American…

More Info

Falling Costs Push Renewable Investment Ahead Of Fossil Fuels


According to the IEA’s World Energy Investment report, investment in electricity finally surpassed investment in oil and gas in 2016, for the first time in recorded history. As spending on new fossil fuel projects fell twenty-six percent in 2016, continuing a trend of declining investment that began with the collapse of prices in 2014, investment in electricity networks, energy efficiency and renewable energy output rose.

The trend comes as the energy sector “prepared for the electrification of everything,” according to one Bloomberg report, “from cars to buildings and industrial processes.”

The expansion of the global electricity grid sucked up $718 billion, rising by six percent. Investment in energy efficiency, itself a large source of new electricity, was up by 9 percent. While investment was down overall in renewable energy, this was due largely to falling costs, as capacity additions grew by fifty percent and total output from capacity rose by thirty-five percent.

Total investment in renewables reached $297 billion, down three-percent, and was the largest single part of overall electricity investment. Spending on clean energy was forty-three percent of the total, as carbon emissions stagnated for the third year in a row.

Investment in coal-fired plants was down overall, chiefly as a result of growing concerns about local air pollution in China (by far the largest destination for new energy investment, accounting for one-fifth of the global total), though investment in coal was up in India. While global investment in coal has not ended, it has reached a “pause” according to one observer.

Related: Macquarie: OPEC Deal To Collapse In 2018

Chinese investment focused on low-carbon electricity generation and expanding existing networks. Investment in coal-fired power plants fell by one-quarter. Investment in the US energy system was up by sixteen-percent, driven in large part by a surge in renewables. Wind and solar are on track to become the cheapest source of new electricity, according to new research from Morgan Stanley. The firm observed an “inflection point” reached in 2016, with costs falling by fifty-percent thanks to better turbine designs, improved materials and the collapsing cost of PV solar panels thanks to global over-supply.

Overall, investment in electricity accounted, including low-carbon components, accounted for forty-two percent of total investment, which reached $1.7 trillion. Oil and gas continued its slump, falling to $708 billion, though the sector has seen a resurgence this year, driven largely by new investment in US shale. Overall, investment in energy was down by twelve-percent in 2016, due to falling costs and low oil prices.

The fall-off in investment has the IEA and other analysts worried about future drops in supply. As demand continues and less new output comes on line, prices could leap back up and markets could become tight.

However, it’s also possible that the IEA report indicates a continuing shift in the energy sector away from conventional fossil fuels and towards electricity investment and renewable energy. Investment in electric vehicles (EVs) charging stations increased by $6 billion, while total sales of EVs were up thirty-eight percent, topping out at 750,000 vehicles. While this is still a tiny fraction of the global automobile market (88.1 million cars and light commercial vehicles were sold in 2016, a record-breaking year, according to Business Insider), it represents a dramatic increase from 2012, when EV sales were practically non-existent. Falling battery costs could make EVs comparable to conventional vehicles by 2025, and global EV sales could increase to 3 million by 2021.

Related: The Major Wildcard That Could Send Oil To $120

The changes in transportation is just one piece of the story. While the US enjoys a boom in investment in shale, China and India, which together dwarf the United States and represent the two fastest-growing energy environments, are embarking upon new strategies to meet future demand.

While India is investing in coal, it’s also moving forward on renewable energy, with Indian Prime Minister Nahendra Modi proposing a $1 trillion international solar alliance for the developing world. In a country feeling the acute effects of changing climate, solar power offers a cheap, decentralized option for meeting energy demand. The fact that it requires no water is also attractive, as water shortages bite into an economy which, on a local level, is still dominated by agriculture.

India plans on adding 160 gigawatts of renewable energy in the next four years, and it’s government has predicted renewable sources will provide fifty-seven percent of total electricity by 2027. By contrast, the US now has just over 100 GWs of wind and solar, built up over several decades, and renewables provide just over ten percent. The world’s largest coal company, Coal India, will close thirty-seven of its coal mines by March 2018; even as the country plans new coal-firing power plants, the falling costs and rising benefits of renewable energy is rendering coal uncompetitive.

For China, clean energy accomplishes two goals at once: cutting down air pollution, an endemic and increasingly dangerous political problem for the country’s government, and advancing China’s claim to global leadership. The country has touted its advances on renewable energy, as its proponents point to falling emissions levels and rising innovation and investment.

While attention will likely fix on what the IEA report says about investment in oil and gas, the report offers further evidence of the on-going shift taking place in global energy, particularly in the developing world.

By Gregory Brew for Oilprice.com

More Top Reads From Oilprice.com:

Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News