The IEA expects low-emissions energy investment to reach $2.2 trillion in 2026, out of total global energy spending of $3.4 trillion
Middle East tensions are reinforcing energy security as a policy priority, prompting countries to accelerate spending on renewables, grids, storage, and nuclear power
Solar and battery storage are attracting growing investment as governments and consumers seek to reduce exposure to imported fuel and supply disruptions
With the world facing its second energy crisis within 5 years (first in 2021-2023 due to the Russia-Ukraine war, and now the Middle East conflict), energy security has become the main driver of global energy investment decisions, says the International Energy Agency (IEA) in its World Energy Investment 2026 report.
Renewables, with their home-grown energy advantage, offer this energy security. This is why the IEA expects global investment in renewables to be strong at about $665 billion in 2026, with solar alone taking in $365 billion or $1 billion a day, followed by $200 billion in wind and $75 billion in hydropower. Renewables, together with nuclear, grids, storage, low-emissions fuels, efficiency, and electrification, are likely to account for $2.2 trillion in investments this year.
Investments in battery energy storage systems (BESS) are likely to surpass $100 billion this year, growing by over 35% from about $80 billion in 2025, as new capacity additions outpace price declines. The global investment drive will be led by China, the US, and Australia, necessitated by the expansion of renewable energy capacity and the need to maintain system flexibility.
This will be part of the $3.4 trillion total capital flows to the energy sector that the IEA expects for 2026. A total of $1.2 trillion will still go to oil, natural gas, and coal despite the destabilizing effect of the Middle East conflict, according to the analysts.
The IEA says around 3-quarters of the anticipated 2026 energy investments are effectively locked in, based on decisions made well before the conflict began. “But, no matter how and when this crisis ends, it will leave a lasting mark on energy investment strategies and flows,” it adds.
While annual investment growth in renewables has moderated following several years of rapid expansion owing to falling technology costs, particularly for solar panels, and policy changes in the US and China, low-emission sources still account for more than 70% of total power generation investment globally, according to the report writers.
They add that more than 30 energy facilities in the Middle East have been damaged either moderately or severely. This includes refineries, petrochemical plants, upstream oil and gas production sites, and tankers. Their total repair bill is expected to run into tens of billions of dollars.
While the conflict has boosted revenues for most oil and gas producers, the IEA expects oil supply investments to decline for the third year in a row to less than $500 billion in 2026. Natural gas supply investment will reach its highest level in the last 10 years, at $330 billion, but the report highlights that consumer sentiment has started affecting prospective gas importers in Asia.
“We are already seeing intensified efforts by both producer and consumer countries to diversify trade routes and energy sources – such as advancing new pipelines and other supply infrastructure, on the one hand, and turning more to domestically available resources, on the other,” said IEA Executive Director Fatih Birol.
He added, “These range from renewables and nuclear to coal, oil and gas, in some cases – as well as broader measures to strengthen electricity systems, expand electrification and accelerate energy efficiency.”
This interest is not without precedent. According to the report, investments in renewable energy, nuclear power, electrification, and energy efficiency over the past 10 years have improved energy security and lowered emissions in major fuel-importing regions.
In 2025, these investments helped regions including China, the EU, Japan, Korea, Southeast Asia, and India save about $260 billion on fossil fuel imports, with even bigger savings expected in 2026. About one-third of the savings came from renewables, another one-third from efficiency improvements, around 20% from electrification, and the rest from nuclear energy. China saw the highest savings, mainly due to electrification.
With the world in the midst of the ‘largest energy security crisis’ now, fuel importers are looking at energy resources available at home, including renewables, nuclear, and – in some cases – coal. The IEA says that preliminary signs indicate that renewable energy deployment is picking up in several markets heavily affected by the energy crisis.
“In 2015, adding 1 GW of solar PV capacity required around USD 3 billion in investment. In the last decade, rapidly declining module costs and supportive government policies have reduced average investment requirements to USD 0.7 billion per GW,” observe the analysts.
Falling costs are prompting a surge in solar panel imports in several parts of Asia and Africa.
For instance, the Philippines, which declared a national energy emergency in March, was the largest destination for Chinese solar panels among emerging markets and developing economies in Q1 2026, at triple the 2025 levels. Countries such as Thailand, the Philippines, and Vietnam have reaffirmed plans to expand clean power and cut dependence on imported fuels (see Philippines Fast-Tracks 1.47 GW RE & Storage Amid Middle East Crisis).
Record-high solar imports of over $400 million were reported in 15 African nations in Q1 2026, compared with $650 million for the whole of 2025.
Solar PV investment in India has grown by 25% annually over the last 5 years; at the same time, oil refining investment has grown by 23%. “Today for every dollar invested in fossil-based generation, India invests three in renewables and nuclear, up from 1.5 just five years ago,” the IEA points out. In 2026, the country is expected to see up to $170 billion in energy investment.
Households and businesses are now increasingly using solar panels and batteries to reduce exposure to energy shocks, especially where diesel generators are common.
Additionally, electricity demand from the rapid expansion of data centers and artificial intelligence have started to influence energy investment trends, especially in the US.
“We are in the midst of the largest energy security crisis the world has ever faced – and I believe this will reshape investment strategies globally, with parallels to the major changes the energy world witnessed after the oil shocks of the 1970s,” stated Birol.
The complete report is available on the IEA’s website for free download.