Lars Schernikau: Energy Economist, Commodity Trader, Author (recent book “The Unpopular Truth… about Electricity and the Future of Energy”)
Details inc Blog at www.unpopular-truth.com
The International Energy Agency (IEA) just published its 2025 World Energy Investment (WEI) report. It marks the 10th anniversary of this major annual review. And after spending time reading the full 255-page document, it’s clear to me that global energy investment trends are raising serious questions about future energy security, affordability, and return on investment.
In this article, I want to zoom in on two of the issues I identified from the report that deserve more public debate: the growing imbalance in energy investment and the troubling decline in the return on that investment. The consequences of these trends could weigh heavily on taxpayers and consumers.
Wind and solar…more money, less return
Today, global investment in wind and solar is about 7 times higher (per unit of energy generated) than investment in dispatchable power like coal, gas, nuclear, and hydro combined. That alone should make us pause and take a second look…more on this in my latest blog IEA 2025 World Energy Investment a Review
Even more concerning is the IEA’s own data that shows that wind and solar, as industries, are just not profitable. Solar manufacturers, especially in China, are losing billions as competition drives prices below production costs. Utilities in many markets are also struggling to earn stable returns from variable wind and solar generation.
Meanwhile, investment into traditional fuels that still supply about 80% of our primary energy needs has fallen dramatically. A decade ago, coal, oil, and gas received 55% of global energy investment. Today, they receive just 33%, in absolute terms, about 25% less than 10 years ago.
We have to recognize an unpopular truth: the energy return on investment (EROI) for coal, oil, and gas remains far higher than for wind and solar. A dollar invested in coal or gas delivers much more usable energy than a dollar invested in solar panels or wind farms… especially after accounting for intermittency, backup systems, grid upgrades, and storage.
Figure 1: Investments in intermittent Wind and Solar 7x higher than in desptachable Coal, Gas, Nuclear, hydro | Source Schernikau based on IEA World Energy Investment 2025 and IEA
Less investment overall
It’s not just about where the money is going. Worryingly, total global energy investment as a share of GDP is declining. In 2015, it was about 3.6% of global GDP. This year, it will drop to just 2.9%.
At a time when we face surging energy demand (think AI data centers, electrification, cooling needs), the world is spending less, relative to its wealth, on the infrastructure that keeps the lights on. That is a recipe for future shortages and volatility.
Who will pay the bill?
Taxpayers already are. The wind and solar boom is fueled by massive subsidies and incentives, mostly funded through public money. As investment in dispatchable energy lags, grid instability risks increase, forcing governments to spend even more to “patch” the system with expensive emergency measures.
How long will money flow into low yielding investments like wind and solar, before the red flags are raised?
Is it then a surprise that in many developing countries, particularly in Asia, governments are quietly turning back to coal and gas to meet rising energy demand? China approved nearly 100 GW of new coal plants in 2024 alone. India added another 15 GW.
Why you ask?…they do this because these investments reliably produce affordable energy, something no country can live without.
Figure 2: The power industry is also struggling with a shortage of skilled labor and supply equipment. For instance, transformers and cables have doubled in price in the past 10 years in Europe.
A call for balance
This is not an anti-wind, anti-solar argument. Wind and solar can play a role in a diverse energy system. But I do see the need for a more balanced investment approach, one rooted in realism and return.
Prioritizing these low-return investments while starving high-EROI energy sources will only drive costs higher for taxpayers, slow economic growth, and compromise grid reliability. If we continue down this path, the long-term cost to society could far outweigh any of the benefits.
For anyone serious about energy security and economic stability, it is time to reassess where and how we invest in the future of energy.
For sources and further reading, see my complete article on the IEA World Energy Investment 2025 report and if you are interested to remain updated on my writing, please sigh up there.
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“Wind and solar can play a role in a diverse energy system.” Ah role playing as opposed to actual achievement.
“-Play a role…” “Acting!!” h/t to John Lovitz.
“Renewables” got their name due to the taxpayer money which needs to be renewed all the time to keep them running.
Not to mention equipment that doesn’t last very long and therefore requires endless replacements and serial manufacturing.
It should be. Grid connected wind and solar are idiotic. Parasites on the grid that do nothing but make the grid LESS RELIABLE and MORE EXPENSIVE.
And they won’t do a thing about the “climate.”
Wind and solar can play a role in a diverse energy system the same way arsenic can play a role in a well-rounded diet.
A very low level of arsenic is not deadly. There are certain applications where wind and solar are not deadly. The difference is giving high levels of arsenic to the entire population or forcing high levels of solar and wind generation or the entire population.
With the low levels, people can choose (liberty is choosing).
“This is not an anti-wind, anti-solar argument.”
Yes, in fact, it is a good argument, because it reveals the absurdity of the “cheaper than fossil fuels” chant.
“Wind and solar can play a role in a diverse energy system.”
Sure, just like wide bell-bottoms and leisure suits can play a role in a diverse clothing system. The proliferation of wind and solar was a fashion trend – no more than that.
I liked my bell-bottoms in the ’60s. A friend in the navy, about my size, gave me a pair of his navy trousers. He explained the origin of the bell-bottoms. It was so if you fell over board with your shoes on, you could get them off easily. Not sure if that’s the true story but it sound true at the time. As for leisure suits- couldn’t stand them- but of course I can’t stand any type of suit. I prefer comfortable clothes and those not made of plastic.
“This is not an anti-wind, anti-solar argument.”
Too bad. Is the author not brave enough or not smart enough?
The author chose a topic and stayed true to the topic recognizing that others will build the bridge for him.
Well, he did build a pretty good case against it in his own way. But, does say, “Wind and solar can play a role in a diverse energy system.” Maybe a tiny role- in places where there is no functioning grid, or where a person may just decide to be off the grid. I recently bought some solar lights for my yard. Look nice too.
Some other things the IEA say
Investment in grids is struggling to keep pace with the rise in power demand and unreliables deployment. Each year around $400bn is spent on grids worldwide compared to $1 trillion on generation.
Grid spend is being held back by lengthy permitting procedures and supply chain tightness for transformers and cables. Grid materials have almost doubled in price in the last 5 years as a result of the increased demand for cables and transformers.
Investment flows are not yet on track to deliver on the renewable and efficiency goals agreed at COP 28. Annual investment in unreliables needs to double to achieve this by 2030
Offshore wind faces challenges. Developers have significantly pared back their ambitions or restructured their businesses due to higher costs and uncertain policy frameworks.
Growth of onshore wind is being constrained by grid bottlenecks but low cost Chinese manufacturers expanded their market share in 2024
Lengthy permitting times, connection queues, rising costs and challenges to financing grids are now a key bottleneck and grid infrastructure is expected to constrain near term deployment of utility scale generation capacity.
IEA ‘World Energy Investment 2025’ (June 2025)
We keep saying that renewables are a road to destroying industry and bankrupting the country. The AGW cabal smiles.
“The Grid” is going to abuse consumers on power costs and knows they have much more profitable abusing left to go. And the options for getting “off the grid” are not good. Beware, handmaidens…
You can get your garden shed “off the grid” with solar PV panels…closest you are probably going to get….
There is nothing surprising about these findings. The CAGW monsters have been lying about the usefulness and cost of wind and solar for decades. This has not happened in a vacuum, Our side has been shining the light on this whole stinking mess for just as long. This is not new information.
Fire up all fossil fuel and nuclear generators. Build new fossil fuel and nuclear generators. Remove wind and solar from the grid. Stop all government subsidies, tax preferences and mandates. Do this and we will have plenty of reliable and affordable power.