Clean energy, electrification and efficiency investments helped the world’s five largest fuel-importing regions avoid around $260 billion in fossil fuel import costs in 2025, the IEA says.
The agency says energy security concerns linked to geopolitical tensions are reshaping global investment towards domestic energy resources, electricity infrastructure and low-emissions technologies.
Around $665 billion is now flowing annually into renewable power projects worldwide, including $365 billion into solar alone, according to the report.
Electricity-related spending now accounts for nearly 60% of global energy investment, with electricity supply and infrastructure investment projected to reach $1.6 trillion in 2026.
Despite clean-energy growth, fossil fuel investments remain substantial, with around $1.2 trillion expected to flow into oil, gas and coal in 2026.
Global investment in clean energy, electrification and energy efficiency has “tangibly improved” energy security over the past decade, helping the world’s five largest fuel-importing regions (China, the European Union, Japan and Korea, Southeast Asia and India) avoid around $260 billion in fossil fuel import costs in 2025 alone, according to a new report by the International Energy Agency.
The IEA’s latest World Energy Investment 2026 report comes amid heightened geopolitical uncertainty linked to the continuing Middle East conflict and disruptions around the Strait of Hormuz. The Paris-based agency said these risks are accelerating investment in domestic energy resources, electricity infrastructure and low-emissions technologies.
“We are in the midst of the largest energy security crisis the world has ever faced and I believe this will reshape investment strategies globally, with parallels to the major changes the energy world witnessed after the oil shocks of the 1970s,” said IEA executive director Fatih Birol.
The IEA said around $665 billion is now flowing annually into renewable power projects worldwide. Of this, $365 billion — nearly $1 billion a day — is going into solar projects alone, the report said.
Electricity-related spending now accounts for nearly 60 per cent of all global energy investment, according to the IEA. Investment in electricity supply and infrastructure is projected to reach $1.6 trillion in 2026, rising to $2 trillion when end-use electrification spending is included, the report said.
Countries most exposed to supply disruptions are rapidly accelerating renewable energy deployment, the IEA said. In South and Southeast Asia, low-emissions sources now account for about 75 per cent of total power generation investment, up from around 60 per cent in 2019, according to the report.
The Philippines, which declared a national energy emergency in March 2026, became the largest destination for Chinese solar panels among emerging and developing economies in the first quarter of 2026, the IEA said. Its solar panel imports tripled compared with 2025 levels.
In Africa, 15 countries recorded solar imports exceeding $400 million in the first quarter of 2026, compared with $650 million across the whole of 2025, the IEA said. The agency also highlighted growing consumer shifts towards electrification in response to supply disruptions.
In India, LPG shortages triggered a sharp rise in induction cookstove sales, while electric vehicle sales in Southeast Asia doubled in 2025 to reach a market share of nearly 20 per cent, the report said.
Investments in renewables, nuclear power, efficiency and electrification across China, the European Union, Japan and Korea, Southeast Asia and India collectively reduced fuel import bills by around $260 billion in 2025, the IEA said.
China alone accounted for about $110 billion of these avoided costs, according to the report.
Global power-sector investment increased by 7 per cent to $1.5 trillion in 2025, driven by higher spending on electricity grids, battery storage, wind and gas-fired generation, the report said.
Solar and wind remained the dominant destinations for new capital, accounting for 40 per cent of total power-sector investment and more than 60 per cent of generation investment in 2025, according to the IEA.
Grid and battery investments are beginning to catch up after years of lagging behind renewable generation additions, the report said. Global spending on electricity networks is expected to reach around $550 billion in 2026, up nearly 20 per cent year on year, according to the IEA.
Battery storage investment is projected to exceed $100 billion, the report said. But electricity infrastructure bottlenecks remain a major challenge, the agency warned.
“Constraints on the speed of grid expansion, including slow permitting in many cases, underscore the importance of investing in smarter and more efficient utilisation of existing infrastructure,” the report said.
Despite the rapid rise in clean energy spending, fossil fuel investment remains substantial, the IEA said. Total energy-sector investment is expected to rise by 5 per cent to $3.4 trillion in 2026, according to the report.
Of this, around $2.2 trillion is expected to go into renewables, nuclear power, grids, storage, low-emissions fuels, efficiency and electrification, while about $1.2 trillion will still flow into oil, gas and coal, the IEA said.
Natural gas investment is expected to reach $330 billion in 2026, the highest level in a decade, driven largely by LNG projects in the United States and Qatar, according to the report.
Coal supply investment is projected to rise to $180 billion in 2026, the highest since 2012, the IEA said. China is expected to account for nearly 70 per cent of total coal supply spending, while India remains the second-largest investor in coal supply, with investment tripling over the past decade, the report said.
The report also noted a surge in gas-fired power investment linked to the rapid expansion of artificial intelligence and data centres. Orders for new gas-fired power plants rose to 130GW in 2025, the highest level in 25 years, with US data-centre demand identified as a major driver, the IEA said.
Declining technology costs have fundamentally altered the economics of the global energy transition, the IEA said. Without cost reductions achieved over the past decade, energy investments anticipated for 2026 would have been nearly twice as expensive, according to the report.
Solar PV, battery storage and electric vehicle technologies have all seen cost declines of around 80 per cent since 2015, the IEA said. Adding 1GW of solar capacity required around $3 billion in investment in 2015, the report said. By 2025, this had fallen to roughly $0.7 billion per GW because of cheaper modules, manufacturing scale-up and supportive government policies, according to the IEA.
However, the agency warned that higher borrowing costs and market volatility could disproportionately hurt capital-intensive low-emissions technologies.
Emerging and developing economies outside China remain particularly vulnerable because financing costs for infrastructure projects are already at least double those in advanced economies, the report said.
Emerging economies outside China accounted for only 10 per cent of growth in global energy investment over the past decade, despite being expected to drive more than half of future growth in energy demand, according to the IEA.
Strengthening grids, diversifying supply chains and investing in storage and redundancy would improve resilience, but could also increase overall energy system costs, the agency said.
“The conflict is reinforcing a shift towards security, trust and diversity as key considerations when choosing energy projects and partners, alongside costs, prices and environmental performance,” the report said.