Nigeria Jostles for Share as  Global Energy Spending Set to Hit $3.3tn in 2025

Emmanuel Addeh in Abuja 

Global energy investment is set to reach a record $3.3 trillion in 2025, two-thirds of which will be on ‘clean energy’ technologies, double the amount going to fossil fuels, according to a new report released by the International Energy Agency (IEA).

The total marks a 2 per cent rise in real terms compared to 2024, despite headwinds from elevated geopolitical tensions and economic uncertainty”, the agency said.

However, Nigeria has continued to push for increased investment in the sector, whether in fossil fuels or in renewables, to reduce its high energy poverty nationwide, marked by inadequate crude oil production and over 80 million without reliable electricity supply, due to lack of investment.

The IEA report predicted that around $2.2 trillion of the $3.3 trillion will go to renewables, nuclear, grids, storage, low-emissions fuels, energy efficiency and electrification in 2025, compared to $1.1 trillion for oil, gas and coal.

But Nigeria’s efforts to attract investment into the sector are beginning to yield tangible results, signaling a modest but realignment-driven resurgence in the country’s upstream fortunes.

In the renewables segment, the country has experienced a significant uptick in investment over the past decade, with more than an estimated $2 billion committed between 2014 and 2024. This capital has flowed into critical segments such as solar panel manufacturing, battery production, and the development of mini-grids that serve communities beyond the reach of the national grid. 

In its Integrated Resource Plan, the country has outlined an ambitious goal to mobilise $122 billion in energy investments between 2024 and 2045. Of this, approximately $56 billion is earmarked for solar and $39 billion for hydropower. 

According to the IEA report, the rise in “clean energy” investment reflects “not only efforts to reduce emissions but also the growing influence of industrial policy, energy security concerns and the cost competitiveness of electricity-based solutions.”

Investment trends are being shaped by a “rapid rise in electricity demand”, the IEA said, noting that energy security is “a key driver” of the growth in investment globally.

Global spend on the electricity sector is set to hit $1.5 trillion this year, driven mainly by record investment on low-emissions generation, the organisation said. It expects solar power alone to attract $450 billion this year.

Besides, investment in power grids, it said, is “struggling to keep pace with the rise in power demand”, although spending is still forecast to surpass a record $400 billion this year, it said.

In contrast, investment in fossil fuel supply is expected to fall by around 2 per cent this year — the first decline since 2020 — owing to a “drop in prices and uncertain investment climate”, the IEA said. 

Upstream oil and gas investment is forecast to fall by approximately 4 per cent to just under $570 billion, led by a 6 per cent decline in upstream oil spending to roughly $420 billion, the organisation predicted.

“The sharp drop in oil prices, rising operational costs, the impacts of tariffs and concerns about potential oversupply have led many companies to revise their investment plans,” the IEA said.

Investment in coal supply is set to grow again in 2025, but more slowly — up by 4 per cent on the year, compared with an average 6 per cent annual increase over the past five years, the IEA said. Coal investment is largely driven by China and India.

Also, spending on ‘low-emissions fuels’ is expected to hit a new record in 2025, but will remain below $30 billion, the IEA report added. The agency flagged that such projects ‘are particularly prone to policy uncertainty.

The report noted that pending patterns, remain very uneven – with many developing economies, especially in Africa, struggling to mobilise capital for energy infrastructure, made worse by currency depreciation and higher interest rates.

“In Africa, overall debt servicing costs are equivalent to over 85 per cent of total energy investment in 2025. Energy investments in Africa are one-third lower in 2025 than they were in 2015, as a decline in oil and gas spending has been only partially offset by higher investments in renewable power. Africa accounts for only 2 per cent of clean energy investment despite having 20 per cent of the world population,” the agency added.

However, it noted that over the past decade, roughly half of energy investment in Africa has been in oil and gas, primarily made by private companies with a view to export. 

As global technology cost reductions have improved the competitiveness of solar, it said that solar now represents the least-cost source of power in Nigeria and many African countries, improving competitive landscape and more than doubling of private sector clean energy investment, rising from around $17 billion in 2019 to almost $40 billion in 2024.

In the same vein, despite the waning investment in the oil sector, Nigeria is upbeat that it can attract both local and international investments, as it aims to harness its hydrocarbons resources, while taking cognisance of the energy transition programme.

Final Investment Decisions (FIDs), the ultimate vote of investor confidence are also returning . The Special Adviser to the President on Energy,  Olu Verheijen, in a report published by THISDAY, recently stated that Nigeria has secured over $8 billion in new deepwater oil and gas investments under the Bola Tinubu administration. 

She emphasised that this inflow of capital into Nigeria’s offshore energy sector marks a significant shift in investor confidence, driven largely by recent policy reforms and executive actions aimed at improving project economics and reducing bureaucratic delays.

Among the key projects contributing to this $8 billion figure are Shell’s Bonga North deepwater development and the Ubeta gas project led by TotalEnergies and the Nigerian National Petroleum Company Limited (NNPC). 

To further catalyse growth, the federal government has announced a new executive order that allows companies to retain 50 per cent of any cost savings achieved through efficiency improvements. In addition, the order caps the value of tax credits at 20 per cent of project costs, an effort to curb excessive claims while still encouraging new development.

Besides, indigenous companies such as Seplat Energy, Renaissance Africa Energy, Conoil, Oando and Green Energy are now responsible for over 50 per cent of Nigeria’s onshore oil production, a sharp increase from their roughly 40 per cent share just a year prior.