World Energy Investment 2017

Transcription

1 World Energy Investment 2017 Madrid, September 2017 Alessandro Blasi and Alfredo del Canto IEA OECD/IEA 2017

2 Global energy investment fell 12% in 2016, a second consecutive year of decline Global energy investment 2016 USD (2016) billio on % Networks Renewable 25% Coal Oil & gas +9% 25% 0 Thermal Electricity Oil, gas & coal Energy efficiency Renewables in transport and heat Total energy investment was $1.7 trillion in Electricity sector investment overtook oil and gas for the first time, while energy efficiency was the biggest growth sector.

3 China remains the first destination of energy investment in 2016 Energy investment in selected markets, 2016 China United States Europe India Russia Southeast Asia USD (2016) billion China represented 21% of global energy investment, supported by electricity supply and networks; despite a sharp decline in oil and gas, the US total share rose significantly.

4 Global upstream investment rebounds modestly in % Global oil and gas upstream capital spending USD D billion (nom minal) % 38% 38% 37% 26% +3% 39% 42% 42% 27% 27% 44% 45% 28% 29% 25% 28% 18% 19% 20% 21% 20% 26% 25% 21% 19% 17% 12% 14% 14% 14% 16% 12% 10% 13% US independents Global Cost Index (Right Majors axis) Other Shale private Cost Index (Right axis) NOCs Ramp up of activities leads to cost inflation in US tight oil but elsewhere upstream costs decline further. NOC share in total investment reaches another record high.

5 A two-speed world oil market Change in Upstream investment, 2017 vs % +53% 40% 20% 0% 20% 9% 4% +4% +6% Africa Latin America Middle East Russia US Shale After two years of unprecedented decline, global upstream investment is expected to stabilize in 2017, but downside risks remain

6 Oil and gas projects moving to shorter timelines and smaller sizes Average size of conventional resources sanctioned and time to market (years) e to market Tim Other offshore Global Average Onshore Deepwater offshore Average size of resources (Million barrels) A shift in company strategies and technology developments leads to shorter project cycles across all the oil and gas industry

7 A wave of coal power investment is coming to a pause GW Average annual final investment decisions for new coal fired power capacity China 100 India 80 Southeast Asia Rest of world Global average actual additions In 2016, sanctioning of new coal power fell to the lowest level in nearly 15 years, hampered by competition from renewables and environmental challenges.

8 In wholesale markets, retirements of dispatchable power exceed FIDs Sanctioned large scale dispatchable generating gcapacity and retirements in established wholesale markets GW Retirements Final investment decisions In Europe, the US and Australia, compressed load factors, weak price signals from energy-only markets and market design uncertainty can challenge investment for gas power plants and other large-scale dispatchable capacity.

9 Investment in clean power is not keeping pace with demand TWh Expectedannual power generation from final investment decisions Nuclear Hydropower & other renewables Wind Solar PV Average power demand growth ( ) While the contribution of new solar PV and wind has grown nearly three-quarters in the past five years, FIDs for nuclear and hydropower have slowed. Clean power FIDs in 2016 generate at only two-thirds the level of power demand growth.

10 Smarter networks may be key enablers to address flexibility gaps Investment in digital grid infrastructure and total electricity networks spending ion USD (2016) billi Physical backbone Power equipment Smart meters Smart grid infrastructure EV chargers Networks spending is dominated by lines and power equipment, but digital grid infrastructure now accounts for over 10% of networks investment.

11 The role of state actors in energy investments has increased Sources of finance for 2016 energy investments by financing mechanism Ownership of 2016 energy investments by type of organisation 7% 11% 42% 47% 93% Project finance Balance sheet Government/SOEs Private sector Households, communities and self consumption The share of state actors in total energy investment reached 42% in 2016, largely thanks to state-owned enterprises in electricity sector investment, notably in China, and NOCs in upstream oil & gas

12 Policies play an important role in electricity sector business models Top 10 areas of generation investment and their main funding models, 2016 China solar PV US solar PV* Chinacoal power China onshore wind China hydropower Europe onshore wind India coal power Japan solar PV US onshore wind* China nuclear USD (2016) billion Contracted pricing administrative mechanism Contracted pricing competitive mechanism Wholesale pricing Distributed ib t generation *US renewables benefit from federal tax credits in addition Generation investments mostly have contracted pricing that allows for long-term cost recovery of assets. Competitive mechanisms play growing role in setting renewables remuneration, at 36% of utility-scale investment vs 28% in 2011.

13 Conclusions o o o o o Investment fell by 12% in 2016, a second consecutive year of decline, and electricity sector investment overtook oil, gas and coal investments combined Despite a decline in coal power investment, China remained the top destination for energy investment due to robust renewables, electricity networks and energy efficiency spending An upswing of US shale investment is creating a two-speed oil market and triggering a rapid transformation ti of the oil and gas industry Although electricity investment remains robust, policies need to focus on maintaining supply adequacy, stimulating an acceleration of clean power and strengthening market signals for investment in flexibility Investment decisions today will leave their mark on energy on energy infrastructure for decades to come; the IEA will continue to focus on investment as a cornerstone of a secure and sustainable energy system

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