Global Energy at a Turning Point: The Breakthroughs That Redefined Power in 2025

The year 2025 marked a defining chapter in the global energy story, as nations accelerated the shift toward cleaner power while confronting stubborn realities of demand growth, grid constraints, and geopolitical risk. Record-breaking investment flowed into renewables, nuclear power regained strategic relevance, and electrification reshaped consumption patterns across transport, industry, and digital infrastructure.

At the same time, fossil fuels remained deeply embedded in energy systems, particularly in fast-growing economies where security of supply often outweighed climate ambition. These eight highlights capture the forces that shaped global energy in the past year and hint at how power systems will evolve in the decade ahead.

Global electricity demand

Global electricity demand continued its rapid ascent in 2025, reflecting accelerating electrification, digitalization, and climate-driven consumption patterns.

In mid-2025, the International Energy Agency (IEA) forecasted a global electricity consumption of 3.3% for the year, following a robust 4.3% increase in 2024 — itself one of the largest year-on-year rises on record.

This growth, equivalent to adding the annual electricity use of a major industrial nation each year, is being driven by several structural factors. Emerging and developing economies, particularly China and India, are expected to account for more than 60% of demand growth through 2026, as industrial expansion, rising air-conditioner ownership, and growing electric vehicle fleets increase load on power systems.

China’s power demand surged by about 7% in 2024, and this momentum is expected to continue, with electricity use projected to expand at an average pace of roughly 6% annually through 2027.

In advanced economies, longstanding energy demand declines have reversed, with data centers, heat pumps, and EV charging contributing to renewed electricity growth. In the US, projected growth in electricity use over the next three years is set to be so substantial that it will effectively add a load comparable to California’s entire current power demand to the national system. By contrast, the EU is expected to see a far more moderate pace of electricity demand growth over the same period.

The broader energy system is also shifting: projections through 2027 show global electricity demand growing at around 4 % annually. The IEA projected that, from now through 2027, the world’s annual increase in electricity demand would exceed the total amount of power Japan uses in an entire year.

“The acceleration of global electricity demand highlights the significant changes taking place in energy systems around the world and the approach of a new Age of Electricity,” noted IEA Director of Energy Markets and Security Keisuke Sadamori. “But it also presents evolving challenges for governments in ensuring secure, affordable, and sustainable electricity supply.”

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Renewables continue explosive momentum

According to the IEA’s Renewables 2025 outlook, total renewable capacity additions remain robust, with solar and wind continuing to dominate new power investments. Global renewable power capacity will expand by nearly 4,600 gigawatts (GW) from 2025 to 2030, with solar PV alone expected to contribute around 80% of new installed capacity over that period.

Starting in 2025 throughout 2030, global onshore wind capacity is poised for strong growth, with cumulative additions expected to rise 45% above 2019‑2024 levels, reaching 732 GW. The sector continues to face challenges, including supply chain bottlenecks, inflationary pressures, and lengthy permitting and grid connection timelines.

However, targeted policies in both developing and advanced economies are helping to ease these constraints and support expansion. Annual capacity growth is seen across a wide range of regions, including India, Africa, Europe, Latin America, ASEAN countries, the Middle East, and Eurasia. Analysts expect this geographic spread, combined with improving technology and regulatory support, to drive steady momentum for onshore wind over the next few years.

Energy think tank Ember announced that in the first half of 2025, global renewable generation not only kept pace with rising electricity demand but actually exceeded it, marking a historic shift in the energy landscape. Rapid expansion of solar capacity, combined with strong growth in wind generation, was said to have propelled renewables past coal to become the largest source of electricity worldwide.

Solar alone accounted for the bulk of new generation, supplying roughly 83% of the additional electricity consumed, with multiple countries achieving record monthly outputs. Wind energy also contributed significantly, supporting the integration of variable renewable sources into grids across Europe, Asia, and the Americas.

Early renewable transition strains

Despite the rapid rollout of renewable energy, 2025 exposed several cracks in early decarbonization efforts that underline how a fast transition without parallel grid upgrades and flexibility investments can create operational and economic pressures.

One of the most dramatic moments came in April 2025, when a major blackout cut power to millions across Spain and Portugal for hours. Investigations showed the outage was triggered by frequency instability and rapid grid separation from the wider continental system as renewable generation – especially solar, which supplied around 59 % of Spain’s electricity at the time — rose sharply without adequate inertia and balancing support in place. The loss of conventional inertia from thermal generators left the grid vulnerable to rapid frequency swings, highlighting technical limitations in systems dominated by variable renewables.

Elsewhere in Europe, grid infrastructure struggled to keep pace with renewable deployment. In the Netherlands, surging solar and wind generation outstripped grid capacity, creating congestion and long queues of projects awaiting connection, underscoring bottlenecks in transmission and distribution expansion.

The UK also felt the economic side of the transition: even with record levels of wind and solar generation, gas‑fired power output increased in 2025, partly to provide reliability and balancing services amid intermittent supply. Wholesale and retail electricity prices remained relatively high compared with earlier periods due to pricing mechanisms where fossil fuel plants still set market prices, and the cost of balancing intermittent renewables is folded into consumer bills.

Germany’s renewable output fell in early 2025 due to unusually weak wind speeds, with wind generation declining significantly and renewables’ share dipping to 54% of electricity production. To fill the gap, production from coal rose by about 9.3% and from fossil gas by about 11.6% in the first half of 2025, indicating that fossil sources were relied on more heavily when wind and other renewables were lower.

Balancing Growth and Net Zero

Debate intensified over whether the global push for net‑zero emissions should take precedence over broader economic development goals. Critics of current climate policy argue that ambitious net‑zero targets — especially those with high near‑term regulatory costs — risk slowing economic growth, diverting resources from pressing development challenges, and imposing burdens on lower‑income countries.

Danish political scientist Bjorn Lomborg has been one of the most prominent voices urging a re‑examination of net‑zero priorities. Lomborg argues that while climate change is real, the emphasis on sweeping emissions cuts can be inefficient and economically damaging. He has asserted that “spending trillions on policies with tiny benefits is a poor way to help the planet,” advocating instead for cost‑effective strategies such as innovation, adaptation, and investment in global welfare that deliver broader societal gains. Lomborg contends that a focus on prosperity enables societies to better cope with climate impacts.

Microsoft co-founder and philanthropist Bill Gates has also weighed in, urging a recalibration of climate strategy that aligns emissions goals with wider development concerns. Ahead of COP30, Gates called for a “strategic pivot” in climate action, suggesting that overly narrow focus on emission targets might detract from urgent global needs such as health, poverty eradication, and resilience building. He has stated that, while rich countries have a responsibility to pursue net‑zero, progress should be measured not only by temperature metrics but by improvements in quality of life and innovation.

These perspectives highlight a growing view among some policymakers, economists, and technologists in 2025: that climate policy must balance ambitious decarbonization with economic growth and human development. Proponents of this approach argue that emphasizing innovation, especially in clean tech, storage, and adaptation, can make sustainable growth compatible with long‑term climate objectives.

Opposing views on net zero

At COP30 in Belém, Brazil, European Parliament delegates emphasized that the summit’s outcome showed“the gap between climate ambition and concrete emission reductions remains consistently large” and that the pace of action was“far too insufficient to meet the urgency of the climate crisis.” They highlighted that more ambitious national climate plans and implementation are needed to keep 1.5 °C within reach.

At the same time, domestic politics in the UK illustrated how net‑zero has become a contested political issue. Conservative figures such as Shadow Energy Secretary Claire Coutinho have publicly questioned the effectiveness of net‑zero policy, arguing that the UK’s approach has been burdensome and that it is “not working for the climate,” citing concerns about energy costs and dependency on foreign supply chains for low‑carbon technologies.

Meanwhile, Australia’s conservative Liberal Party formally abandoned its commitment to achieve net zero emissions by 2050, saying it would instead prioritize lowering energy costs and use all available technologies while still remaining in the Paris Agreement.

Party representatives such as Shadow Energy Minister Dan Tehan and other senior MPs explicitly rejected net zero as a central policy, arguing it should not be mandated. This shift followed months of internal debate and aligned the Liberals with their junior Coalition partner, the National Party, which had already dropped the net‑zero target earlier in the year.

The juxtaposition of international urgency with national criticism in 2025 highlights the complex political landscape that net‑zero policies must navigate as countries balance climate goals with economic and social concerns.

Continued reliance on fossil fuels worldwide

Although Ember reported that renewables surpassed coal globally for the first time, fossil fuel generation still increased in several regions. In the US, rising electricity demand outpaced additions from clean energy, while in the EU, weaker wind and hydro output prompted higher gas and coal use to meet consumption needs.

According to IEA projections and energy investment data, investment in oil, natural gas, and coal was still forecast to reach $1 trillion in 2025, even as clean energy investments surged to a record $2.2 trillion. This indicates that fossil fuels are not only still used for power production but continue to attract significant capital for extraction, refining, and infrastructure.

Investment in new liquefied natural gas (LNG) infrastructure is accelerating, with projects in the United States, Qatar, Canada, and other countries poised to enter operation. The global LNG market is projected to see its largest-ever expansion in capacity between 2026 and 2028, reflecting rising demand for flexible fossil fuel supply.

US clean energy progress stalled in 2025 after federal support for renewables was rolled back under the second administration of President Donald Trump. Steep cuts to tax credits for developers are expected to curb investment in solar, wind, and other clean technologies in the coming years, leaving the country’s power system more reliant on fossil fuels.

In the US, coal-fired plants recorded the most significant increase in output in 2025. Rising gas prices squeezed utility margins, prompting operators to turn back to coal to meet demand. From January to November, coal generation jumped 13% compared with the previous year, marking its highest output in three years, according to Ember data.

The data highlights how policy changes and market conditions can quickly reverse gains in clean energy deployment, reinforcing the continued centrality of fossil fuels in the U.S. power sector.

Nuclear energy comeback

Nuclear energy reasserted itself as a significant player in the global energy transition, marking a notable turnaround after years of stagnation in many regions.

Nuclear power is on track to generate a record level of electricity this year as more than 70 GW of new capacity is under construction globally — one of the highest levels in three decades — reflecting renewed interest from governments and investors alike. This expansion underscores nuclear’s appeal as a low-carbon, reliable source of baseload power amid rising electricity demand and concerns about energy security.

The momentum for nuclear energy was prominently showcased at COP30, where the World Nuclear Association expanded its global coalition aimed at tripling nuclear capacity by 2050 — a goal now endorsed by 33 nations and a wide range of financial institutions and industry partners. This level of broad-based support signals a collective recognition that nuclear must play a central role in meeting climate targets while ensuring stable energy supplies.

Emerging technologies, particularly small modular reactors (SMRs), are gaining traction as well, offering the promise of lower upfront costs and greater siting flexibility, even as regulatory and supply chain hurdles persist.

Over the last five years, governments and utilities have approved life-extension programs for more than 60 nuclear reactors worldwide, equal to nearly 15% of the global fleet. At the same time, spending on nuclear projects has surged. Annual investment in new builds and plant life extensions has climbed almost 50% since 2020, topping $60 billion. In high-growth scenarios, this figure would need to double to around $120 billion a year by 2030.

Battery storage innovation

Battery storage technology made substantial gains, with global utility-scale deployments rising sharply. BloombergNEF (BNEF) forecasts that energy storage installations have reached around 92 GW this year, a roughly 23% increase over 2024. Global grid-scale battery installations reached roughly 156 gigawatt-hours (GWh) by October 2025, a year-on-year rise of about 38 %, underscoring accelerating adoption worldwide.

China led major markets with battery storage installations up 27%, while both Europe and North America posted 21% growth. Battery deployments across the rest of the world surged by 242%, signaling a rapid broadening of energy storage adoption into emerging and non-traditional markets.

Utility-scale developments dominated energy storage growth in 2025, representing about 84% of new GWh additions. From 2025 to 2028, most installations are expected to remain short-duration systems, with projects under six hours accounting for roughly four-fifths of total capacity added.

In a notable shift, lithium-ion battery projects in these markets were already being designed to deliver six-to-eight hours of storage, bringing them into direct competition with newer long-duration storage technologies.

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A future in focus

Taken together, the energy developments of 2025 pointed to a transition that was no longer defined only by technology and carbon targets, but increasingly by human development. Access, affordability, jobs, community impacts, and energy security began to feature more prominently in planning, signalling that the global shift in power systems was starting to grapple with the realities of people’s lives as much as with megawatts and emissions.

Renewables continued to anchor new capacity, nuclear power re-entered strategic debates, and digital tools reshaped how electricity was generated and managed. At the same time, the continued reliance on coal, gas, and oil, together with under-investment in grids and surging demand, highlighted the social and economic constraints that still framed the transition, particularly in emerging markets.

Rather than a clean break from the past, 2025 revealed a period of coexistence, where legacy fuels and new technologies operated side by side while governments and industries tested how far the transition could advance without undermining development goals.

Many of these themes are likely to permeate the energy sector for years to come. How effectively policies, infrastructure, financing models, and public support evolve will determine whether this momentum reshapes the energy ecosystem in ways that are not only cleaner, but also more inclusive, resilient, and attuned to the needs of communities worldwide.

Sources:

https://www.aa.com.tr/en/energy/electricity/global-electricity-demand-to-soar-as-coal-use-falls-iea/50762

https://www.iea.org/reports/global-energy-review-2025/global-trends

https://www.iea.org/news/growth-in-global-electricity-demand-is-set-to-accelerate-in-the-coming-years-as-power-hungry-sectors-expand

https://www.iea.org/reports/renewables-2025/renewable-electricity

https://ember-energy.org/latest-insights/global-electricity-mid-year-insights-2025/#executive-summary

https://en.wikipedia.org/wiki/2025_Iberian_Peninsula_blackout

https://www.iea.org/commentaries/grid-congestion-is-posing-challenges-for-energy-security-and-transitions

https://bpconsulting.co.uk/why-are-energy-bills-still-so-high-in-2025

https://www.carbonbrief.org/analysis-uk-renewables-enjoy-record-year-in-2025-but-gas-power-still-rises

https://www.cleanenergywire.org/news/renewables-share-slightly-down-germany-first-half-2025-wind-expansion-gains-steam

https://www.cleanenergywire.org/news/fossil-electricity-production-germany-increased-10-first-half-2025