The International Energy Agency (IEA) warned spending on renewable energy would need to double by 2030, to keep pace with development required to limit global warming to 2C above pre-industrial levels.
It claimed the largest gap between 2018 spending and that needed to meet the agency’s sustainable development scenario is seen in wind power.
However, the IEA noted more renewable spending would be needed across all technologies and all geographies to meet goals under the Paris Agreement.
Just over $775 billion was spent in the global power sector in 2018, according to the report, down 1% year on year. Low-carbon power (renewables and nuclear) accounting for nearly 75% of generation spending.
Global power sector spending was down 1% on 2017 due to lower capital spending on coal and gas power, as well as solar PV and distribution, the IEA stated.
Spending on renewables dipped slightly, but declining capital costs means investment is funding more capacity than before.
Investments in wind power remained flat year on year and spending on solar PV was down 4%.
But, when adjusted for cost reductions since 2010, renewables investment in 2018 was up 55% since the start of the decade (above).
Total energy investment in 2018 of $1.8 trillion is also insufficient to meet growing energy demand, the IEA’s executive director Fatih Birol said, following the release of the agency’s World Energy Investment 2019 report.
"Energy investments now face unprecedented uncertainties, with shifts in markets, policies and technologies," Birol said.
"But the bottom line is that the world is not investing enough in traditional elements of supply to maintain today’s consumption patterns, nor is it investing enough in cleaner energy technologies to change course.
"Whichever way you look, we are storing up risks for the future," he added.
Improved technology, project management and financing terms have led to declining costs of renewable energy — including a 20% reduction in the capital costs of onshore wind since 2010 (above) — the IEA stated.
More powerful, bigger turbines — especially in the offshore sector — have driven down auction prices, for example, the IEA said.
Competitive tendering has encouraged shorter project lead times and reduced development costs for both wind and solar PV projects, the agency added.
Financing terms have also improved and helped to encourage renewables spending.
For example, the IEA said corporate procurement supported a 15% increase in solar PV and wind investments in the US last year.
But the spending encouraged by these developments has not been evenly distributed around the world, accordin to the IEA.
The poorest regions of the world, including sub-Saharan Africa, face persistent financing risks — received only 14% of investment in 2018, but account for 42% of global population (above).
Inversely, high-income countries with just over 16% of the global population, accounted for more than 42% of energy investment in 2018.
The IEA warned the bulk of energy investment needs to remain concentrated in "currently high- and upper-middle income countries and regions" to replace and upgrade aging assets.
But overall spending needs to grow to meet the energy demands of lower-middle and low-income countries as well.
Despite a 5% increase year on year, public spending on energy research, development and demonstration (RD&D) is also far short of what is needed to create the technologies required to meet global decarbonisation goals, the IEA stated.
"Current investment trends show the need for bolder decisions required to make the energy system more sustainable," Birol said.
"Government leadership is critical to reduce risks for investors in the emerging sectors that urgently need more capital to get the world on the right track."