The global energy sector is on the brink of transformative changes, characterised by a continued focus on decarbonisation, decentralisation, and digitisation. These shifts will continue in 2025, driven by technological advancements, environmental imperatives, and shifting geopolitical dynamics that will shape the way energy is produced, distributed, and consumed.

Llyr Rowlands, Palladium Chief Operating Officer, shares his insights into the key trends to watch in the coming year.

Renewable Energy’s Continued Momentum

“The transition to renewable energy sources isn’t slowing down,” says Rowlands. He points to data from the International Energy Agency (IEA), which forecasts global investment in renewables to reach $1.3 trillion in 2025. A decade of technological advancements has significantly reduced costs, with solar photovoltaic (PV) prices falling by 82% and wind energy costs dropping by 39%.

However, the pace of renewable capacity installation is expected to dip slightly compared to record levels in 2023. The Economist projects 250 gigawatts (GW) of combined solar and wind capacity to be added in 2025, with China leading both production and investment.

Energy storage remains a linchpin for integrating renewables. Advances in battery technology—longer lifespans, higher energy density, and lower costs—are making storage solutions increasingly viable. Rowlands highlights that global battery storage capacity is projected to reach 270 gigawatt-hours (GWh) by the end of the year.

“To put it in perspective,” he says, “a city like London consumes about 52 GWh of electricity per day and at 270 GWh, the global storage capacity could power London for over five full days without any additional electricity generation.”

Electrification Gains Momentum

Electric vehicles (EVs) are set to play a pivotal role in reducing carbon emissions. Despite a recent slowdown in sales growth, EV sales are expected to rise by 30% in 2025, reaching 15.1 million units. This surge would elevate EVs’ market share from 13.2% in 2024 to 16.7% in 2025.

“The expansion of charging infrastructure is critical to this growth,” Rowlands explains. According to the IEA, the number of public charging points worldwide will exceed 12 million by 2025. Enhanced battery technology and more accessible charging solutions are expected to accelerate EV adoption.

The Digital Revolution in Energy

The digitalisation of energy systems is another transformative trend for 2025. “Smart grids are revolutionising how electricity is managed,” Rowlands notes. These systems use digital technology to optimise energy distribution and consumption. The IEA estimates that global investment in smart grids will reach $241 billion this year.

Integration of the Internet of Things (IoT) will play a pivotal role. With over 41 billion connected IoT devices projected by 2025, smart energy systems will offer real-time data analytics, demand response capabilities, and predictive maintenance. This, Rowlands explains, will lead to greater efficiency and lower energy costs for consumers.

A Resurgence in Nuclear Energy

Nuclear energy is poised for a resurgence in 2025, driven by the need for reliable power to support emerging technologies such as artificial intelligence and advanced computing. “Small modular reactors are gaining attention, though they remain in development and costly,” Rowlands points out.

The International Atomic Energy Agency (IAEA) projects global nuclear capacity could increase 2.5 times by 2050 in its high-case scenario. Nuclear’s role as a stable, zero-emission power source makes it increasingly appealing as countries strive for energy security and climate goals.

Geopolitical and Policy Shifts

Geopolitical tensions, including instability in the Middle East and reduced Russian natural gas transit through Ukraine, are influencing national energy strategies. “Many countries are rethinking energy independence,” says Rowlands, emphasising the dual focus on reducing reliance on fossil fuels and bolstering domestic energy production.

In the US, shifting political priorities may also reshape the landscape. “Some policies may pivot towards deregulation and fossil fuels, potentially rolling back elements of the Inflation Reduction Act,” he explains.
“This could revive oil, gas, and coal industries, but it may clash with the interests of regions committed to renewable energy.”

What Lies Ahead

“2025 will be a pivotal year for the energy sector,” Rowlands reflects. “The interplay of technology, policy, and geopolitical factors ensures a dynamic and unpredictable landscape.”

From renewable energy breakthroughs to electrification and digitalisation, the global energy transition continues to gather pace. The year ahead promises to be a defining chapter in the push towards a sustainable, efficient, and secure energy future.

Contact info@thepalladiumgroup.com to learn more.