That said, total investments slipped 7% over the past three years as coal spending slumped.
China remained the largest market for energy investment in 2018, but its lead over Western giants narrowed as total investments slipped 7% over the past three years due to lower spending on new coal-fired power plants, according to the International Energy Agency’s (IEA) World Energy Investment 2019 report.
China’s lower spending on new coal-fired plants, which crashed by over 60%, outweighed relatively high investment in renewable power and nuclear. Overall, energy efficiency spending has risen by over 6% the past three years.
Global power sector investment dipped 1% to just over $775b in 2018, with lower capital spending on generation. Investment in electricity networks edged down, although investment in battery storage surged 45% from a relatively low base, IEA highlighted.
Deals related to industrial energy efficiency hit less than $40b in 2018, with China representing 37% of the total in 2018, up from a quarter in 2015. North America on the other hand, which comprised 17% in 2015, was below 10% of the total in 2018.
“This trend reflects the continuing modernisation of the Chinese industrial sector and ongoing efforts to improve energy efficiency, as driven by wide-reaching government mandates,” IEA explained. “China’s active and substantial energy service company (ESCO) industry has also been an important driver, with favourable policies encouraging investment in industrial energy efficiency delivered by ESCOs.”
At just over 45%, heavy industry represented a smaller share of global industrial energy efficiency investment than in 2015, when it was nearly half of the total. This largely reflects the continuing slowdown in the construction of new energy-intensive industrial facilities in China, which is the result of ongoing structural change in the Chinese economy, as well as in Europe and North America, IEA highlighted.
China’s central government has made efforts in recent years to restrict permitting and plant construction, amidst overcapacity and local air pollution concerns. “There is some uncertainty over the capacity under construction in China, which could affect investment levels ahead,” IEA said. That said, reports suggest some plant sites where activity was previously suspended may be resuming construction.
Against the slowdown of China’s domestic coal power additions, industry sources reported that increased competition from Chinese engineering, procurement and construction (EPC) companies seeking business abroad is helping reduce the costs in setting up new coal power plants in places like Southeast Asia.
For hydropower, where costs are location specific, IEA observed that the share of deployment in China has decreased over the past decade, raising the global weighted average.
Global solar PV spending also recorded a 4% dip, which was primarily attributed to the downward movement in renewables investment, largely due to policy changes in China. “The government is seeking to promote more cost-effective and system-friendly investment. Outside of China, renewables spending in the rest of the world grew by almost 5%,” IEA highlighted.
The report also noted that nuclear power investment edged up as new grid-connected plants in 2018 grew threefold, with 80% of them in China. Construction starts rose to 6GW though none were in China.
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