The latest and 10th edition of the World Energy Investment Report from the International Energy Agency (IEA), released recently in June this year, provides a detailed snapshot of global and regional energy investment flows and patterns. It updates energy investment flows for 2024 and provides an initial outlook for 2025.
It highlights how clean energy is now attracting the bulk of capital globally, while also showing the uneven pace and structure of investment across different regions, countries and sectors. For Africa, and countries like Nigeria, the report provides valuable data, context and guidance on how to attract and allocate capital effectively and shape their energy transition strategies.
In this article, I summarise some of the key data and insights from the IEA report, with a particular focus on Africa and Nigeria. The article draws out the numbers and patterns shaping global energy investment, and then turns to the African context to examine what is happening across the continent and what that means. It also looks at the broader investment challenges and opportunities that are relevant for countries in Africa trying to attract energy capital. The final sections distil lessons that African governments and policymakers, including those in Nigeria, can take from the report.
Beyond summarising the data, I also reflect on what these investment trends mean from my own perspective. I explore what the data says about the direction of global energy capital, what it reveals about the constraints facing Africa, and what policy and institutional shifts might be needed to improve energy access and accelerate clean energy transitions in a way that aligns with the continent’s realities.
This article also builds on an earlier analysis I wrote on the Africa Finance Corporation’s (AFC) State of Africa’s Infrastructure Report 2025. While the AFC report focused more broadly on infrastructure development, it raised several important points on the trends, opportunities and barriers in Africa’s energy sector. In this sense, I draw parallels between the AFC and IEA reports to highlight shared themes and reinforce the structural issues shaping the energy investment landscape in Africa.
Global investment trends and data in the energy sector
According to the IEA report, global energy investment is projected to reach US$3.3 trillion in 2025, representing a 2% increase from 2024. This continues a trend of rising energy-related R&D spending, which has grown by 75% over the past decade. Clean energy remains dominant, with US$2.2 trillion expected to flow into technologies such as renewables, nuclear, grids, storage, low-emission fuels, and electrification. This is double the US$1.1 trillion projected for fossil fuels (oil, natural gas, and coal).
In particular, for the first time since 2020, fossil fuel investment is expected to decline in 2025. Clean energy investment has increased from US$1.2 trillion in 2015 to US$2 trillion in 2024. Electricity investment is leading this shift. Spending in the sector is projected to reach US$1.5 trillion in 2025, which is about 50% more than the combined investment in oil, gas, and coal. Ten years ago, fossil fuel supply investments were 30% higher than those for electricity generation, grids, and storage. This position has now reversed.
The report notes that investment in low-emissions power generation has nearly doubled over the past five years. Solar PV stands out, with investment expected to reach US$450 billion in 2025, making it the largest single item in global energy investment. The cost of solar panels has dropped by 60% compared to a decade ago. Global investment in batteries for power sector storage is set to reach US$66 billion in 2025. Similarly, investment in nuclear energy has risen by 50% over the past five years and will exceed US$70 billion in 2025.
Annual global spending on electricity grids is about US$400 billion, but this is failing to keep pace with growing power demand and the rapid deployment of renewables. Strengthening electricity security will require a sharp rise in grid investment to bring it closer to parity with generation spending. The report also indicates that upstream oil investment is set to fall by 6% in 2025, marking the first year-on-year decline since 2020. This will bring total upstream oil and gas investment to just under US$570 billion, representing a 4% drop. Global refinery investment is expected to hit its lowest level in a decade in 2025.
Investment in LNG facilities is projected to reach US$20 billion in 2025. The period from 2026 to 2028 is expected to see some of the largest annual increases in LNG capacity. Investment in low-emissions fuels is also expected to reach a record high in 2025. However, at less than US$30 billion, it remains small in absolute terms. This includes a pipeline of approved hydrogen projects requiring around US$8 billion of investment. Coal investment continues to rise, with a further 4% increase expected in 2025. This is largely driven by local demand in China and India. Global approvals for new coal-fired power plants have reached their highest level since 2015.
The report highlights growing momentum in efficiency and end-use electrification. Investment in areas such as electric vehicles and building upgrades is projected to reach US$800 billion in 2025. The cost of some key clean technologies continues to fall. The IEA’s Clean Energy Equipment Price Index hit a record low in early 2024, 60% below its level a decade ago. However, inflationary pressures persist. Grid material costs have nearly doubled in the last five years, and upstream oil and gas costs are projected to rise by 3% in 2025.
The report confirms that China remains the world’s largest energy investor by a wide margin. Its share of global clean energy investment has grown from one-quarter a decade ago to almost one-third today. China’s clean energy investment totalled more than US$625 billion in 2024, nearly double the amount in 2015. In contrast, spending on renewables and low-emissions fuels in the United States has nearly doubled over the past ten years but is now expected to plateau. Meanwhile, upstream oil and gas investment is increasingly concentrated among major resource holders in the Middle East. This region is projected to account for 20% of global upstream investment in 2025, which will be its highest share on record.
In my view, the data and insights from the report show that global investment is clearly shifting towards clean energy, not just in rhetoric but in actual capital flows. Solar power and electrification are becoming mainstream. Countries that continue to base their policy and investment frameworks on fossil fuel extraction risk being left behind. Grid infrastructure is now a major bottleneck. This is especially relevant for Africa, where grid capacity is already limited. Even as technologies become more affordable, infrastructure and institutions remain key constraints.
African investment trends and figures in Africa’s energy sector
The IEA report notes that Africa accounts for only 2% of global clean energy investment, despite having 20% of the world’s population. Energy investments in Africa are one-third lower in 2025 than they were in 2015. This decline is mainly due to reduced oil and gas spending, which has only been partially offset by increased investment in renewable power.
Currency depreciation and higher interest rates have made it harder for African countries to access and service debt. The IEA report estimates that Africa’s debt servicing in 2025 will exceed 85% of its total energy investment. Historically, about half of Africa’s energy investment has gone into oil and gas, mostly for export. This spending fell after the 2014–2015 drop in oil prices but has recovered somewhat since 2021.
Clean energy investment remained relatively flat at under US$30 billion per year until 2021. It has since increased, driven by low-emissions power, which made up around 40% of clean energy investment in 2024. Private sector clean energy investment in Africa more than doubled between 2019 and 2024, rising from about US$17 billion to nearly US$40 billion.
Public and DFI funding for energy projects in Africa has dropped by roughly one-third over the past decade, from US$28 billion in 2015 to US$20 billion in 2024. This is largely due to an over 85% fall in Chinese DFI spending between 2015 and 2021. Energy access remains a major challenge. Around 600 million people still lack access to electricity, and nearly one billion people in sub-Saharan Africa do not have clean cooking solutions.
Risk-tolerant capital providers such as private equity and venture capital have focused on off-grid solar and electric vehicles. This signals growing interest in decentralised clean energy solutions. However, the average deal size in the off-grid solar sector remains small, at around US$7 million.
The figures confirm a familiar truth. Africa is significantly underinvested in clean energy. The debt burden worsens the problem, but the data also shows that private capital is ready to move where opportunities are clear. The off-grid solar sector proves this point. It is concerning, however, that public and concessional finance are declining at a time when Africa needs it most. Countries like Nigeria should be asking what policy and institutional reforms are needed to attract both public and private capital at scale.
Investment challenges and opportunities
The IEA report shows that the global energy investment landscape is shaped by both serious challenges and promising opportunities for growth and transformation. Elevated geopolitical tensions and ongoing economic uncertainty are causing some investors to delay new project approvals. Grid infrastructure remains a major bottleneck. Licensing procedures are lengthy, supply chains for transformers and cables remain tight, and prices have nearly doubled over the past five years. Many utilities, particularly in developing economies, are in poor financial health. As a result, around 1,650 GW of solar and wind capacity is awaiting connection globally as of 2024.
Clean technology continues to attract capital due to falling costs. Solar PV prices have dropped by 60% over the past decade. Fossil fuel investments, on the other hand, face shrinking margins. Projects in low-emissions fuels such as hydrogen are especially exposed to policy uncertainty, with several already cancelled or delayed. In many developing economies, access to finance remains constrained by high debt burdens and foreign exchange risks. Lower oil prices and weaker demand expectations are reducing the profitability of upstream oil investment. Refineries are seeing record-low levels of investment. Exploration activity was flat in 2024, and overall growth in energy investment slowed due to falling prices. Projects outside the dominant producers were especially affected, and the increasing concentration of supply is raising new concerns about energy security.
Many developing economies continue to struggle to mobilise capital for energy infrastructure. Currency depreciation, higher interest rates, and high debt servicing costs are compounding the challenge. International public finance remains well below the levels needed and expected by developing countries, even though it plays an important catalytic role. Momentum behind sustainable finance has also slowed. Early efforts to green financial practices have weakened as regulatory and policy support has faded in key markets.
Equally, financial institutions face legal challenges related to their net-zero commitments. Venture capital investment in energy has declined, hitting start-ups that require large funding rounds to scale. Higher interest rates have made equity investment in innovation riskier, discouraging investors from backing new technologies.
Rising trade barriers and tariff hikes, particularly those targeting Chinese imports in the United States, India, and the European Union, are adding cost and complexity to global supply chains. This has led to delays and greater uncertainty in clean energy investment decisions. In Europe, heat pump sales have fallen. Higher electricity prices, cheaper gas, slower construction activity, and weaker policy support have all contributed. These developments show how clean energy uptake is sensitive to short-term price trends. Capital-intensive projects such as near-zero-emissions steel remain difficult to justify. Their capital costs are three to four times higher than conventional alternatives, and profitability is highly volatile.
Nonetheless, there are bright spots. Capital continues to flow into renewables, nuclear, grids, storage, low-emission fuels, energy efficiency, and electrification. Falling costs for renewable technologies and batteries are making these options cost-effective and commercially viable. Solar PV prices, for example, are 60% lower than a decade ago. Strong sales of electric vehicles, growing demand for building upgrades, and increased electrification of industrial processes are driving investment on the demand side. Electric vehicles alone are expected to displace over five million barrels per day of diesel and petrol use by the end of the decade, with China accounting for half of this shift.
There is renewed interest in nuclear energy, especially as new technologies such as small modular reactors show potential to meet the rising energy demand of data centres. The planned expansion of LNG capacity in the United States and Qatar is set to reshape gas markets. Development finance institutions and multilateral climate funds continue to play a key role in de-risking energy investments and attracting private capital, particularly in emerging and developing economies. Export credit agencies are also shifting more of their support towards clean energy.
Green bond issuance remains strong despite economic headwinds, and sustainable debt has grown steadily over the past decade. Transition finance is becoming essential for countries that need to manage energy security while reducing emissions. Investment in artificial intelligence offers further opportunities to optimise energy systems and develop technologies that reduce data centre energy demand. Methane abatement in oil and gas operations offers particularly high returns, with many measures delivering rates above 15%. Recycling, especially in energy-intensive materials such as aluminium, provides a lower-cost route to decarbonisation. Sustained progress will depend on consistent policy support, such as the incentives for heat pumps in China, and regulatory changes that reward outcomes, such as performance-based remuneration for grid operators.
The above insights from the IEA report capture the contradictions of the moment. Clean energy is now cost-competitive and increasingly attractive to investors, yet broader macroeconomic and regulatory conditions continue to hold progress back. For African countries, this suggests that clear domestic policies and stable institutions can help narrow the investment gap. Real opportunities exist, particularly in decentralised systems, energy efficiency, and methane reduction. These do not always require large amounts of capital but do depend on the right policy frameworks.
Where the IEA and AFC reports intersect: Shared themes on Africa’s energy investment landscape
Both the IEA’s 2025 World Energy Investment Report and the AFC’s State of Africa’s Infrastructure Report identify similar structural factors shaping Africa’s energy investment landscape. The IEA report takes a global perspective, while the AFC grounds its analysis in African policy and institutional contexts. Despite these different vantage points, both reports converge on several key themes.
Each report points to Africa’s large and persistent energy investment gap. As earlier noted, the IEA report highlights that Africa accounts for just 2% of global clean energy investment, even though it is home to nearly 20 percent of the world’s population. The AFC presents equally sharp figures. In 2024, Africa added only 6.5 gigawatts of utility-scale capacity. This falls far short of the 16 gigawatts needed annually through to 2050. Electricity supply is not keeping up with population or economic growth, leading to lower energy use per person and widening access gaps.
Both reports also acknowledge that clean energy is expanding, but fossil fuels, particularly natural gas, still have a place in Africa’s energy mix. As previously also mentioned, the IEA report alludes to a global increase in investment in renewables, nuclear power, electricity grids, and storage. It also recognises that gas will continue to be needed in many parts of the world as a reliable source of power. The AFC report shares this view. It sees strong potential in solar, hydro, wind, and geothermal energy, but also identifies gas as necessary to support grid stability and drive industrial growth.
Another shared concern is the limited flow of domestic capital into energy infrastructure. The AFC report estimates that African institutional investors hold more than US$4 trillion. This includes pension funds, insurance firms, sovereign wealth funds, and public development banks. However, only a small share of this capital reaches infrastructure or energy projects. Both reports highlight weak intermediation and shallow financial markets as key constraints. Domestic savings are often locked into short-term, low-risk assets. The IEA report emphasises the need for stronger local capital markets and better mobilisation of domestic resources alongside international investment.
The reports also point to similar opportunities. Africa has an abundance of solar, hydro, geothermal, and gas resources that remain underutilised. Demand for electricity is growing as urbanisation, industrial activity, digital infrastructure, and electric appliances expand. Both reports support regional energy integration efforts, such as the African Single Electricity Market. They also note that falling technology costs, especially for solar PV, are creating more bankable and scalable investment models.
Despite these opportunities, both reports acknowledge serious constraints. Energy finance in Africa is expensive. The continent faces high debt levels, volatile currencies, and rising interest rates. These conditions raise the cost of capital and deter investors. As mentioned, the IEA report estimates that Africa’s debt servicing in 2025 will exceed 85% of its total energy investment. The AFC identifies weak macroeconomic conditions and policy uncertainty as additional deterrents.
Poor transmission infrastructure is another shared concern. Many African countries have fragmented and underdeveloped grid systems. This results in stranded power generation assets and long delays in connecting new projects. The AFC report estimates that the continent needs between US$3.2 billion and US$4.3 billion per year in transmission investment up to 2040. The IEA report raises the same issue, noting that renewable energy is being deployed faster than grid infrastructure is being expanded.
Utility performance remains a core problem in both reports. Many electricity providers are financially unsustainable. Tariff structures do not reflect actual costs. Revenue collection is weak, and operational inefficiencies are widespread. This undermines investor confidence and weakens creditworthiness. Project bankability is also a serious barrier. Even when financing is available, there are not enough well-prepared, investment-ready projects. Many large-scale projects still depend on development finance institutions or export credit agencies to reach financial close.
Both reports also stress the uneven distribution of energy investment across Africa. Most clean energy funding is concentrated in a few countries such as South Africa, Morocco, Egypt, and Kenya. Other regions, particularly landlocked or climate-vulnerable countries, receive far less support. This increases energy inequality across the continent.
By and large, the reports present a clear and consistent picture. Africa has significant energy potential and a growing demand. However, it faces deep investment gaps, weak financial ecosystems, and major infrastructure challenges. Clean energy is becoming more cost-effective and attractive, but access remains highly uneven. No single actor can close the gap. African governments must focus on mobilising local capital, improving utility governance, developing credible project pipelines, and investing in transmission networks to unlock scale and attract long-term capital into the energy sector.
Lessons for Africa and Nigeria on energy investment
The IEA report draws out important lessons for Africa as a region, and for Nigeria in particular.
For Africa broadly
Across the continent, the financing gap and cost of capital remain key challenges. Governments need to prioritise policy reforms and build stable, predictable regulatory environments to reduce both actual and perceived risks for investors. International public finance, particularly from development finance institutions, multilateral climate funds, and export credit agencies, continues to play a vital role in de-risking investments and unlocking private capital, especially in emerging markets and new technologies.
In addition, African countries must strengthen domestic capital markets. While foreign finance remains essential, building strong local financial systems can reduce dependence on foreign currency borrowing and help mitigate exchange rate risks. Governments and their partners should also ensure that concessional finance is used more strategically to manage project risks through instruments such as guarantees and credit enhancements.
Further, decentralised solar solutions offer a practical way to expand energy access, particularly where utility-scale projects face delays or financing difficulties. The case of Pakistan illustrates how falling solar panel prices, especially through Chinese imports, can drive large-scale uptake of small-scale solar among households and businesses. This model may offer a financially sustainable path in contexts where state utilities struggle financially or where grid tariffs are high.
However, decentralised energy growth can put pressure on state utilities. As electricity tariffs increase and grid reliability remains weak, more consumers may turn to stand-alone solar, reducing the number of paying customers and worsening utility finances. To avoid this, policymakers should introduce targeted incentives for low-income households while also investing in grid modernisation. A more modern grid can better accommodate decentralised systems, improve service quality, and support broader access without undermining the financial stability of utilities. Grid investment also plays an important role in building resilience to extreme weather events and integrating new renewable energy sources.
African countries must also invest in building local innovation ecosystems. Many lower- and middle-income countries depend on energy innovations developed elsewhere. Strengthening local innovation capacity and fostering international cooperation can help accelerate the diffusion of technology and improve access to finance for local entrepreneurs. For smaller and early-stage projects, such as those focused on basic energy access, private equity and venture capital are important sources of capital. Governments should work to attract this risk-tolerant capital by addressing policy and market concerns that often drive investors towards more profitable segments like electric vehicles and commercial solar.
For Nigeria specifically
The IEA report highlights that the country has already seen significant growth in Chinese solar imports, suggesting that it is well placed to benefit from cheaper solar panels and the decentralised solar model adopted in Pakistan. Tariff reforms have increased household electricity prices, especially for those who consume around 40 percent of the country’s electricity. Combined with declining solar costs, this creates strong incentives for households and businesses to adopt stand-alone solar. To manage this transition effectively, Nigerian policymakers must carefully design utility financial recovery plans to avoid driving grid customers away. Targeted subsidies for low-income users and continued investment in grid upgrades are essential to balance affordability with utility viability.
On the supply side, upstream oil and gas investment in sub-Saharan Africa, including Nigeria, is projected to decline in 2025. However, Nigeria could reverse this trend by improving its policy environment. A clear and stable regulatory framework would help attract new investment in the coming years.
Finally, Nigeria has already drawn private equity and venture capital into early-stage energy access ventures, but there is a growing shift by investors towards electric mobility and commercial solar due to profitability concerns. Policymakers could support these emerging segments while also identifying ways to make residential energy access projects more attractive to private capital.
These lessons from the IEA report reinforce that Africa’s energy transition will follow a different path from other regions. It will require a combination of decentralised solutions, targeted policy reforms, and capital that is willing to absorb more risk. In Nigeria, current pricing dynamics already favour solar. With the right regulatory framework, the country has a clear opportunity to scale solar deployment, attract investment in clean technologies, and still capture value from oil and gas in the short term.
The latest and 10th edition of the World Energy Investment Report from the International Energy Agency (IEA), released recently in June this year, provides a detailed snapshot of global and regional energy investment flows and patterns. It updates energy investment flows for 2024 and provides an initial outlook for 2025.
It highlights how clean energy is now attracting the bulk of capital globally, while also showing the uneven pace and structure of investment across different regions, countries and sectors. For Africa, and countries like Nigeria, the report provides valuable data, context and guidance on how to attract and allocate capital effectively and shape their energy transition strategies.
In this article, I summarize some of the key data and insights from the IEA report, with a particular focus on Africa and Nigeria. The article draws out the numbers and patterns shaping global energy investment, and then turns to the African context to examine what is happening across the continent and what that means. It also looks at the broader investment challenges and opportunities that are relevant for countries in Africa trying to attract energy capital. The final sections distil lessons that African governments and policymakers, including those in Nigeria, can take from the report.
Beyond summarizing the data, I also reflect on what these investment trends mean from my own perspective. I explore what the data says about the direction of global energy capital, what it reveals about the constraints facing Africa, and what policy and institutional shifts might be needed to improve energy access and accelerate clean energy transitions in a way that aligns with the continent’s realities.
This article also builds on an earlier analysis I wrote on the Africa Finance Corporation’s (AFC) State of Africa’s Infrastructure Report 2025. While the AFC report focused more broadly on infrastructure development, it raised several important points on the trends, opportunities and barriers in Africa’s energy sector. In this sense, I draw parallels between the AFC and IEA reports to highlight shared themes and reinforce the structural issues shaping the energy investment landscape in Africa.
Global investment trends and data in the energy sector
According to the IEA report, global energy investment is projected to reach US$3.3 trillion in 2025, representing a 2% increase from 2024. This continues a trend of rising energy-related R&D spending, which has grown by 75% over the past decade. Clean energy remains dominant, with US$2.2 trillion expected to flow into technologies such as renewables, nuclear, grids, storage, low-emission fuels, and electrification. This is double the US$1.1 trillion projected for fossil fuels (oil, natural gas, and coal).
In particular, for the first time since 2020, fossil fuel investment is expected to decline in 2025. Clean energy investment has increased from US$1.2 trillion in 2015 to US$2 trillion in 2024. Electricity investment is leading this shift. Spending in the sector is projected to reach US$1.5 trillion in 2025, which is about 50% more than the combined investment in oil, gas, and coal. Ten years ago, fossil fuel supply investments were 30% higher than those for electricity generation, grids, and storage. This position has now reversed.
The report notes that investment in low-emissions power generation has nearly doubled over the past five years. Solar PV stands out, with investment expected to reach US$450 billion in 2025, making it the largest single item in global energy investment. The cost of solar panels has dropped by 60% compared to a decade ago. Global investment in batteries for power sector storage is set to reach US$66 billion in 2025. Similarly, investment in nuclear energy has risen by 50% over the past five years and will exceed US$70 billion in 2025.
Annual global spending on electricity grids is about US$400 billion, but this is failing to keep pace with growing power demand and the rapid deployment of renewables. Strengthening electricity security will require a sharp rise in grid investment to bring it closer to parity with generation spending. The report also indicates that upstream oil investment is set to fall by 6% in 2025, marking the first year-on-year decline since 2020. This will bring total upstream oil and gas investment to just under US$570 billion, representing a 4% drop. Global refinery investment is expected to hit its lowest level in a decade in 2025.
Investment in LNG facilities is projected to reach US$20 billion in 2025. The period from 2026 to 2028 is expected to see some of the largest annual increases in LNG capacity. Investment in low-emissions fuels is also expected to reach a record high in 2025. However, at less than US$30 billion, it remains small in absolute terms. This includes a pipeline of approved hydrogen projects requiring around US$8 billion of investment. Coal investment continues to rise, with a further 4% increase expected in 2025. This is largely driven by local demand in China and India. Global approvals for new coal-fired power plants have reached their highest level since 2015.
The report highlights growing momentum in efficiency and end-use electrification. Investment in areas such as electric vehicles and building upgrades is projected to reach US$800 billion in 2025. The cost of some key clean technologies continues to fall. The IEA’s Clean Energy Equipment Price Index hit a record low in early 2024, 60% below its level a decade ago. However, inflationary pressures persist. Grid material costs have nearly doubled in the last five years, and upstream oil and gas costs are projected to rise by 3% in 2025.
The report confirms that China remains the world’s largest energy investor by a wide margin. Its share of global clean energy investment has grown from one-quarter a decade ago to almost one-third today. China’s clean energy investment totaled more than US$625 billion in 2024, nearly double the amount in 2015. In contrast, spending on renewables and low-emissions fuels in the United States has nearly doubled over the past ten years but is now expected to plateau. Meanwhile, upstream oil and gas investment is increasingly concentrated among major resource holders in the Middle East. This region is projected to account for 20% of global upstream investment in 2025, which will be its highest share on record.
In my view, the data and insights from the report show that global investment is clearly shifting towards clean energy, not just in rhetoric but in actual capital flows. Solar power and electrification are becoming mainstream. Countries that continue to base their policy and investment frameworks on fossil fuel extraction risk being left behind. Grid infrastructure is now a major bottleneck. This is especially relevant for Africa, where grid capacity is already limited. Even as technologies become more affordable, infrastructure and institutions remain key constraints.
African investment trends and figures in Africa’s energy sector
The IEA report notes that Africa accounts for only 2% of global clean energy investment, despite having 20% of the world’s population. Energy investments in Africa are one-third lower in 2025 than they were in 2015. This decline is mainly due to reduced oil and gas spending, which has only been partially offset by increased investment in renewable power.
Currency depreciation and higher interest rates have made it harder for African countries to access and service debt. The IEA report estimates that Africa’s debt servicing in 2025 will exceed 85% of its total energy investment. Historically, about half of Africa’s energy investment has gone into oil and gas, mostly for export. This spending fell after the 2014–2015 drop in oil prices but has recovered somewhat since 2021.
Clean energy investment remained relatively flat at under US$30 billion per year until 2021. It has since increased, driven by low-emissions power, which made up around 40% of clean energy investment in 2024. Private sector clean energy investment in Africa more than doubled between 2019 and 2024, rising from about US$17 billion to nearly US$40 billion.
Public and DFI funding for energy projects in Africa has dropped by roughly one-third over the past decade, from US$28 billion in 2015 to US$20 billion in 2024. This is largely due to an over 85% fall in Chinese DFI spending between 2015 and 2021. Energy access remains a major challenge. Around 600 million people still lack access to electricity, and nearly one billion people in sub-Saharan Africa do not have clean cooking solutions.
Risk-tolerant capital providers such as private equity and venture capital have focused on off-grid solar and electric vehicles. These signals show growing interest in decentralized clean energy solutions. However, the average deal size in the off-grid solar sector remains small, at around US$7 million.
The figures confirm a familiar truth. Africa is significantly underinvested in clean energy. The debt burden worsens the problem, but the data also shows that private capital is ready to move where opportunities are clear. The off-grid solar sector proves this point. It is concerning, however, that public and concessional finance are declining at a time when Africa needs it most. Countries like Nigeria should be asking what policy and institutional reforms are needed to attract both public and private capital at scale.
Investment challenges and opportunities
The IEA report shows that the global energy investment landscape is shaped by both serious challenges and promising opportunities for growth and transformation. Elevated geopolitical tensions and ongoing economic uncertainty are causing some investors to delay new project approvals. Grid infrastructure remains a major bottleneck. Licensing procedures are lengthy, supply chains for transformers and cables remain tight, and prices have nearly doubled over the past five years. Many utilities, particularly in developing economies, are in poor financial health. As a result, around 1,650 GW of solar and wind capacity is awaiting connection globally as of 2024.
Clean technology continues to attract capital due to falling costs. Solar PV prices have dropped by 60% over the past decade. Fossil fuel investments, on the other hand, face shrinking margins. Projects in low-emissions fuels such as hydrogen are especially exposed to policy uncertainty, with several already cancelled or delayed. In many developing economies, access to finance remains constrained by high debt burdens and foreign exchange risks. Lower oil prices and weaker demand expectations are reducing the profitability of upstream oil investment. Refineries are seeing record-low levels of investment. Exploration activity was flat in 2024, and overall growth in energy investment slowed due to falling prices. Projects outside the dominant producers were especially affected, and the increasing concentration of supply is raising new concerns about energy security.
Many developing economies continue to struggle to mobilize capital for energy infrastructure. Currency depreciation, higher interest rates, and high debt servicing costs are compounding the challenge. International public finance remains well below the levels needed and expected by developing countries, even though it plays an important catalytic role. Momentum behind sustainable finance has also slowed. Early efforts to green financial practices have weakened as regulatory and policy support has faded in key markets.
Equally, financial institutions face legal challenges related to their net-zero commitments. Venture capital investment in energy has declined, hitting start-ups that require large funding rounds to scale. Higher interest rates have made equity investment in innovation riskier, discouraging investors from backing new technologies.
Rising trade barriers and tariff hikes, particularly those targeting Chinese imports in the United States, India, and the European Union, are adding cost and complexity to global supply chains. This has led to delays and greater uncertainty in clean energy investment decisions. In Europe, heat pump sales have fallen. Higher electricity prices, cheaper gas, slower construction activity, and weaker policy support have all contributed. These developments show how clean energy uptake is sensitive to short-term price trends. Capital-intensive projects such as near-zero-emissions steel remain difficult to justify. Their capital costs are three to four times higher than conventional alternatives, and profitability is highly volatile.
Nonetheless, there are bright spots. Capital continues to flow into renewables, nuclear, grids, storage, low-emission fuels, energy efficiency, and electrification. Falling costs for renewable technologies and batteries are making these options cost-effective and commercially viable. Solar PV prices, for example, are 60% lower than a decade ago. Strong sales of electric vehicles, growing demand for building upgrades, and increased electrification of industrial processes are driving investment on the demand side. Electric vehicles alone are expected to displace over five million barrels per day of diesel and petrol use by the end of the decade, with China accounting for half of this shift.
There is renewed interest in nuclear energy, especially as new technologies such as small modular reactors show potential to meet the rising energy demand of data centres. The planned expansion of LNG capacity in the United States and Qatar is set to reshape gas markets. Development finance institutions and multilateral climate funds continue to play a key role in de-risking energy investments and attracting private capital, particularly in emerging and developing economies. Export credit agencies are also shifting more of their support towards clean energy.
Green bond issuance remains strong despite economic headwinds, and sustainable debt has grown steadily over the past decade. Transition finance is becoming essential for countries that need to manage energy security while reducing emissions. Investment in artificial intelligence offers further opportunities to optimize energy systems and develop technologies that reduce data centre energy demand. Methane abatement in oil and gas operations offers particularly high returns, with many measures delivering rates above 15%. Recycling, especially in energy-intensive materials such as aluminum, provides a lower-cost route to decarbonization. Sustained progress will depend on consistent policy support, such as the incentives for heat pumps in China, and regulatory changes that reward outcomes, such as performance-based remuneration for grid operators.
The above insights from the IEA report capture the contradictions of the moment. Clean energy is now cost-competitive and increasingly attractive to investors, yet broader macroeconomic and regulatory conditions continue to hold progress back. For African countries, this suggests that clear domestic policies and stable institutions can help narrow the investment gap. Real opportunities exist, particularly in decentralized systems, energy efficiency, and methane reduction. These do not always require large amounts of capital but do depend on the right policy frameworks.
Where the IEA and AFC reports intersect: Shared themes on Africa’s energy investment landscape
Both the IEA’s 2025 World Energy Investment Report and the AFC’s State of Africa’s Infrastructure Report identify similar structural factors shaping Africa’s energy investment landscape. The IEA report takes a global perspective, while the AFC grounds its analysis in African policy and institutional contexts. Despite these different vantage points, both reports converge on several key themes.
Each report points to Africa’s large and persistent energy investment gap. As earlier noted, the IEA report highlights that Africa accounts for just 2% of global clean energy investment, even though it is home to nearly 20 percent of the world’s population. The AFC presents equally sharp figures. In 2024, Africa added only 6.5 gigawatts of utility-scale capacity. This falls far short of the 16 gigawatts needed annually through to 2050. Electricity supply is not keeping up with population or economic growth, leading to lower energy use per person and widening access gaps.
Both reports also acknowledge that clean energy is expanding, but fossil fuels, particularly natural gas, still have a place in Africa’s energy mix. As previously also mentioned, the IEA report alludes to a global increase in investment in renewables, nuclear power, electricity grids, and storage. It also recognizes that gas will continue to be needed in many parts of the world as a reliable source of power. The AFC report shares this view. It sees strong potential in solar, hydro, wind, and geothermal energy, but also identifies gas as necessary to support grid stability and drive industrial growth.
Another shared concern is the limited flow of domestic capital into energy infrastructure. The AFC report estimates that African institutional investors hold more than US$4 trillion. This includes pension funds, insurance firms, sovereign wealth funds, and public development banks. However, only a small share of this capital reaches infrastructure or energy projects. Both reports highlight weak intermediation and shallow financial markets as key constraints. Domestic savings are often locked into short-term, low-risk assets. The IEA report emphasizes the need for stronger local capital markets and better mobilization of domestic resources alongside international investment.
The reports also point to similar opportunities. Africa has an abundance of solar, hydro, geothermal, and gas resources that remain underutilized. Electricity demand is growing as urbanization, industrial activity, digital infrastructure, and electric appliances expand. Both reports support regional energy integration efforts, such as the African Single Electricity Market. They also note that falling technology costs, especially for solar PV, are creating more bankable and scalable investment models.
Despite these opportunities, both reports acknowledge serious constraints. Energy finance in Africa is expensive. The continent faces high debt levels, volatile currencies, and rising interest rates. These conditions raise the cost of capital and deter investors. As mentioned, the IEA report estimates that Africa’s debt servicing in 2025 will exceed 85% of its total energy investment. The AFC identifies weak macroeconomic conditions and policy uncertainty as additional deterrents.
Poor transmission infrastructure is another shared concern. Many African countries have fragmented and underdeveloped grid systems. This results in stranded power generation assets and long delays in connecting new projects. The AFC report estimates that the continent needs between US$3.2 billion and US$4.3 billion per year in transmission investment up to 2040. The IEA report raises the same issue, noting that renewable energy is being deployed faster than grid infrastructure is being expanded.
Utility performance remains a core problem in both reports. Many electricity providers are financially unsustainable. Tariff structures do not reflect actual costs. Revenue collection is weak, and operational inefficiencies are widespread. This undermines investor confidence and weakens creditworthiness. Project bankability is also a serious barrier. Even when financing is available, there are not enough well-prepared, investment-ready projects. Many large-scale projects still depend on development finance institutions or export credit agencies to reach financial close.
Both reports also stress the uneven distribution of energy investment across Africa. Most clean energy funding is concentrated in a few countries such as South Africa, Morocco, Egypt, and Kenya. Other regions, particularly landlocked or climate-vulnerable countries, receive far less support. This increases energy inequality across the continent.
By and large, the reports present a clear and consistent picture. Africa has significant energy potential and a growing demand. However, it faces deep investment gaps, weak financial ecosystems, and major infrastructure challenges. Clean energy is becoming more cost-effective and attractive, but access remains highly uneven. No single actor can close the gap. African governments must focus on mobilizing local capital, improving utility governance, developing credible project pipelines, and investing in transmission networks to unlock scale and attract long-term capital into the energy sector.
Lessons for Africa and Nigeria on energy investment
The IEA report draws out important lessons for Africa as a region, and for Nigeria in particular.
For Africa broadly
Across the continent, the financing gap and cost of capital remain key challenges. Governments need to priorities policy reforms and build stable, predictable regulatory environments to reduce both actual and perceived risks for investors. International public finance, particularly from development finance institutions, multilateral climate funds, and export credit agencies, continues to play a vital role in de-risking investments and unlocking private capital, especially in emerging markets and new technologies.
In addition, African countries must strengthen domestic capital markets. While foreign finance remains essential, building strong local financial systems can reduce dependence on foreign currency borrowing and help mitigate exchange rate risks. Governments and their partners should also ensure that concessional finance is used more strategically to manage project risks through instruments such as guarantees and credit enhancements.
Further, decentralized solar solutions offer a practical way to expand energy access, particularly where utility-scale projects face delays or financing difficulties. The case of Pakistan illustrates how falling solar panel prices, especially through Chinese imports, can drive large-scale uptake of small-scale solar among households and businesses. This model may offer a financially sustainable path in contexts where state utilities struggle financially or where grid tariffs are high.
However, decentralized energy growth can put pressure on state utilities. As electricity tariffs increase and grid reliability remains weak, more consumers may turn to stand-alone solar, reducing the number of paying customers and worsening utility finances. To avoid this, policymakers should introduce targeted incentives for low-income households while also investing in grid modernization. A more modern grid can better accommodate decentralized systems, improve service quality, and support broader access without undermining the financial stability of utilities. Grid investment also plays an important role in building resilience to extreme weather events and integrating new renewable energy sources.
African countries must also invest in building local innovation ecosystems. Many lower- and middle-income countries depend on energy innovations developed elsewhere. Strengthening local innovation capacity and fostering international cooperation can help accelerate the diffusion of technology and improve access to finance for local entrepreneurs. For smaller and early-stage projects, such as those focused on basic energy access, private equity and venture capital are important sources of capital. Governments should work to attract this risk-tolerant capital by addressing policy and market concerns that often drive investors towards more profitable segments like electric vehicles and commercial solar.
For Nigeria specifically
The IEA report highlights that the country has already seen significant growth in Chinese solar imports, suggesting that it is well placed to benefit from cheaper solar panels and the decentralized solar model adopted in Pakistan. Tariff reforms have increased household electricity prices, especially for those who consume around 40 percent of the country’s electricity. Combined with declining solar costs, this creates strong incentives for households and businesses to adopt stand-alone solar. To manage this transition effectively, Nigerian policymakers must carefully design utility financial recovery plans to avoid driving grid customers away. Targeted subsidies for low-income users and continued investment in grid upgrades are essential to balance affordability with utility viability.
On the supply side, upstream oil and gas investment in sub-Saharan Africa, including Nigeria, is projected to decline in 2025. However, Nigeria could reverse this trend by improving its policy environment. A clear and stable regulatory framework would help attract new investment in the coming years.
Finally, Nigeria has already drawn private equity and venture capital into early-stage energy access ventures, but there is a growing shift by investors towards electric mobility and commercial solar due to profitability concerns. Policymakers could support these emerging segments while also identifying ways to make residential energy access projects more attractive to private capital.
These lessons from the IEA report reinforce that Africa’s energy transition will follow a different path from other regions. It will require a combination of decentralized solutions, targeted policy reforms, and capital that is willing to absorb more risk. In Nigeria, current pricing dynamics already favour solar. With the right regulatory framework, the country has a clear opportunity to scale solar deployment, attract investment in clean technologies, and still capture value from oil and gas in the short term.
Conclusion
The IEA 2025 World Energy Investment Report shows that global capital is moving rapidly towards clean energy. Africa and Nigeria are not yet in a position to fully benefit. With focused reforms, stronger risk mitigation tools, and greater emphasis on decentralized systems and grid resilience, both can attract more of the investment needed for inclusive energy transitions. But this shift will not occur automatically. It will depend on deliberate policy choices, consistent regulation, and better use of both public and private finance.