The energy investment gap: a major challenge to expanding clean energy production

The world is witnessing accelerating change in the energy sector, which goes beyond the climate file, touching on other influential issues such as security of supply, the cost of energy, and the ability of economies to support industry and growth. In this context, investment in energy comes to the fore, as it is the key to expanding the renewable energy portfolio and building an infrastructure capable of meeting the growing demand in a stable and affordable manner.

Clear progress has been achieved globally in the use of renewable energy sources, as clean energy – such as solar energy and wind energy – has become the largest part of the new capacity added, and contributes about 40% of electricity generation. However, this expansion poses increasing challenges to existing infrastructure, and makes modernizing networks and enhancing their flexibility a prerequisite for maintaining the continuity of this progress.

The article addresses this issue from multiple angles, starting with monitoring the investment gap in energy infrastructure, then discussing the cost of delayed investment and its impact on prices, industry and public confidence, with a review of pioneering models in this file, before moving on to solution paths and practical options capable of pushing energy investment forward during the next stage.

Energy investment crisis

Experience in operating energy systems shows that infrastructure is at the forefront of energy security discussions, with a widening gap between policy ambitions and the amount of actual investment required to implement them. The repeated outages and grid failures in just one year have once again highlighted the state of stress under which energy systems operate, at a time when demand is accelerating and generation sources are expanding.

In Europe – for example – this contradiction clearly emerged. The energy shock after the Ukraine war prompted a rapid expansion of renewable energy, increasing its share from 38% to 47% of EU electricity generation within four years. However, infrastructure bottlenecks and the obsolescence of parts of it have emerged as a factor affecting the sustainability of this progress, revealing that the expansion of production has not been accompanied by energy investment at the same pace.

Hence, the energy investment gap is no longer a technical issue related to a specific sector, but rather has turned into a factor influencing the performance of the economy, price stability, and society’s confidence in the ability of energy systems to meet basic needs, which puts the cost of this delay at the forefront of public debate.

The impact of the infrastructure gap on the economy and society

Energy infrastructure failures lead to widespread power outages, the effects of which range from disrupting economic activities to disrupting the daily lives of communities. The obsolescence of assets, the weak pace of investment, and the increasing pressure on networks have contributed to the occurrence of major outages during the recent period, including the outage witnessed by Spain and Portugal in April 2025, which reflects the extent of the fragility experienced by the energy systems.

The International Energy Agency estimates that the world needs to double the capacity of existing networks over the next 15 years to achieve climate goals. With the slowdown in investment, renewable energy projects with a capacity of up to 1,500 gigawatts are accumulating waiting to be connected to the grid, which reflects on manufacturing opportunities and paths to reduce emissions, and increases the burden of energy costs associated with relying on imports of traditional fuels.

Grid bottlenecks contribute to rising energy prices, slowing industrial growth, and eroding public confidence in the ability of systems to provide affordable energy. Waves of price rises during recent crises have revealed the sensitivity of economies to the gap between expansion of production and infrastructure readiness. In Europe, for example, grid constraints have affected prices and use of renewable energy, while limited infrastructure in Asia and the Pacific has stalled the expansion of electricity use and deprived large segments of stable supplies.

As reliance on renewable energy sources expands, delayed investment in networks and infrastructure increases the cost of absorbing these sources into energy systems. As this cost rises, the ability to provide affordable energy becomes a critical factor in the success of the current expansion path. In this context, energy investment rises to the forefront of public priorities, as an issue related to resource management, timing of decisions, and integration of planning and organizational tools.

From this standpoint, the practical question arises regarding implementation mechanisms, and how to transform this priority into effective projects capable of dealing with the regulatory, financing and societal complexities surrounding the energy sector.

How can the implementation dilemma be overcome?

Developing energy infrastructure requires coordinated action that combines public policy and private capital. Successful experiments, such as the early expansion of wind energy in Denmark, have relied on public-private partnerships that combined government incentives with private innovation. Tools such as green banking and blended finance have helped direct billions of dollars toward modernizing networks and enhancing their readiness.

Flexible regulatory frameworks have also helped accelerate this path, by providing experimental spaces for implementing new models, testing advanced technologies, and encouraging decentralized flexibility, in order to achieve a better balance between the interests of network operators and consumers. This approach has emerged in the United States, Germany, and the Nordic countries, where regulation has been used as a tool to support investment.

Community support remains key to successful energy investing. In 2024, Iberdrola used an interactive approach to explain the challenges of the energy transition to its clients, which helped raise understanding and build acceptance. This experience shows the importance of direct communication and transparency in enhancing trust, especially with the expansion of infrastructure projects.

The ability of these models to continue is linked to the extent to which a balance is achieved between financing investments and maintaining affordable energy costs, which places us in front of pioneering and successful experiences that have succeeded in transforming general principles into applicable policies, which prompts us to focus on specific international models to understand how investment in energy has been able to be translated into tangible results on the ground.

Lessons for China and the Nordic countries in investing in energy

The Asian experience reflects the magnitude of the ongoing transformations in energy demand, as economic growth and expanding electricity use drive unprecedented energy investment needs, especially in infrastructure. According to research issued by the Asian Development Bank and the World Economic Forum, the Asia-Pacific region represents about 60% of global carbon emissions and contains 60% of the world’s population, which makes investment decisions in its energy systems have a direct impact on the future of global sustainability.

In the same context, China stands out as a model for a broad investment approach in the energy sector. It pumped about $625 billion into clean energy during 2024, exceeding the volume of investments in Europe and North America. Most importantly, this expansion in generation was accompanied by a parallel investment in infrastructure, which reflects an awareness of the importance of the balance between energy production, transmission and distribution.

China’s UHV Transmission system embodies this trend, as it is designed to integrate extensive renewable resources and transmit electricity over long distances with high efficiency. The Ningxia-Hunan line, which began operation in August 2025, is an example of this, with its ability to supply about 10 million homes with electricity based mainly on solar and wind energy.

On the other hand, Europe faces the challenge of accelerating the pace of energy investment to keep pace with its expansion in renewable generation sources. The continent can benefit from the experience of the Nordic countries, which have accumulated more than four decades of developing advanced energy systems, which included building cross-border interconnection networks, enhancing investments in infrastructure, and focusing on flexibility and digital automation.

European estimates indicate the size of the existing gap, as the Draghi report attributed to former Italian Prime Minister and former European Central Bank President Mario Draghi on European competitiveness – a comprehensive strategic plan to restore Europe’s economic strength – recommended investing about 300 billion euros annually in the energy sector, including networks and generation sources. Although investments in electricity networks in the European Union are expected to exceed 70 billion euros in 2025, double what they were a decade ago, the pace of investment is still slower than the speed of expansion in renewable energy, which is putting increasing pressure on energy systems.

Taken together, these experiences reveal that the success ofinvesting in energyis not related to the amount of financing alone, but rather to how it is directed and integrated with policies, regulation, and governance. This opens the discussion about the practical steps that countries need to enhance this investment and transform it into stable and sustainable results.

Energy Infrastructure Investment Recommendations

Governments and investors gathered at the 2026 World Economic Forum Annual Meeting in Davos have a real opportunity to work together and lead change in the energy infrastructure investment file, by focusing on the following axes:

• Prioritize proactive investments:Move from “reactive” to “forward-looking” planning that integrates renewable energies, storage technologies, and large-scale grid resilience.
• Strengthening public-private partnerships:Mobilizing capital and expertise to rapidly modernize networks by leveraging innovative financing and regulatory support, as national investments backed by private capital will be imperative.
• Accelerating regulatory innovation:Adopting cross-border frameworks and flexible electricity tariffs, which will open the door to private investment, new technologies, and innovative business models.
• Public engagement:The huge benefits of these investments, including energy security, cost reduction, economic growth, and decarbonisation, must be clearly communicated to communities, while actively engaging them in the dialogue around developing this infrastructure.

The success of the energy transition path is linked to the ability of countries to adopt a comprehensive vision for energy systems, based oninvesting in energyas a basic pillar of infrastructure and operational flexibility, and not just a circumstantial response to crises. Building affordable, resilient energy systems requires proactive decisions that view investment as a long-term stabilizing factor that supports economic growth and security of supply.

For its part,The Earth Guards Foundationstresses the need to enhance awareness of the importance of balanced investment in energy as it is directly linked to achieving a number of Sustainable Development Goals (SDGs), most notably the seventh goal on clean and affordable energy, the ninth goal on sustainable infrastructure and industry, in addition to the thirteenth goal on climate action. From this standpoint, the Foundation raises this issue in an analytical and awareness-raising context that links energy security, economic justice, and resource protection, which contributes to building a broader understanding of the development paths of the energy sector and its role in achieving more sustainable development for current and future generations.