Top 10: Energy Predictions for 2025

The energy industry is, unsurprisingly, ever changing.

2024 has seen a lot of ups and downs, with trends such as sustainable aviation fuel (SAF) production and nuclear energy’s image refresh dominating headlines.

But what will 2025 have in store?

After looking back on 2024, Energy Digital takes a look at some of the biggest factors that could influence the energy sector in 2025.

10. Renewable energy capacity and generation will continue to grow

The International Energy Agency (IEA) predicts that in 2025, more than a third of the world’s electricity will come from renewables.

This is despite the agency saying that global renewables lag behind targets set at COP.

“By 2025, for the first time in history, Asia will account for half of the world’s electricity consumption and one-third of global electricity will be consumed in China,” the agency says. “Over the next three years the electricity consumption added each year is roughly equivalent to that of the United Kingdom and Germany combined.” 

Consultancy Deloitte adds that there is a “renewables race to fill resource gap as demand for clean energy is outpacing supply”.

Its 2025 Renewable Energy Industry Outlook says: “The year 2025 will be defined by a race to overcome constraints and fill a growing gap between supply and demand for clean energy. 

“Market and technology advantages such as low cost and modularity could be even more important amid policy uncertainty in the coming year. 

“The growing cleantech manufacturing, AI and carbon industries will likely continue supporting renewables supply through domestic renewable supply chain development, AI-accelerated operational efficiencies and innovation and carbon attribute monetisation.

“Industrial policy, capital from technology companies committed to sustainability targets, new renewable technologies with 24/7 capabilities, more mature workforce development models and high-integrity carbon management can help renewables maintain momentum.”

9. China will dominate renewable installations

After China said it was reaching its solar and wind target five years ahead of schedule, analysis from Swedish engineering services firm AFRY shows that China is making substantial strides in the adoption of renewable energy.

While slightly slower than previous years, Chinese renewable installations are expected to remain well above 250GW in 2025.

AFRY says: “Recently there has been a remarkable surge in renewable energy deployment in China, with an eye-watering 60% increase from ~530GW in 2020 to ~860GW in just two-and-a-half years. 

“As we find ourselves midway through the 14th Five-Year Plan (FYP), at AFRY we have reflected on progress made to date and as a result anticipate that China will reach the renewable target of 1,200GW. 

“This would be a remarkable achievement, delivering five years ahead of schedule. Among the total new installed capacity during the 14th FYP period (2021-2025), we anticipate that renewables will account for more than 70%.

“Furthermore, our analysis indicates that the total installed capacity in China will reach approximately 3,200GW, surpassing the government's target of 3,000GW by the end of the 14th FYP.”

8. The US could become a leader in blue hydrogen production

The US is set to become the world’s leading producer of blue hydrogen, with projects totaling more than 1.5 million tons per year expected to reach final investment decisions

Energy transition global data and analytics solutions provider Wood Mackenzie says: “The expectation is grounded in anticipation of the incoming Trump administration’s failure to champion decarbonisation technologies, as well and the overturning of Chevron Deference, which could introduce regulatory uncertainty.

“Additionally, competition from other industries — particularly data centres — and long interconnection queues has the potential to further hinder green hydrogen’s growth.

“While there will still be some demand driven by corporate decarbonisation efforts, near-term opportunities for green hydrogen will shrink and we anticipate a substantial uptick in cancellations, particularly for projects targeting mobility, steel and e-fuels.

“North America is strongly weighted to blue rather than green hydrogen when we look at lower carbon intensity hydrogen in the round.

“The challenge from here in many respects is for developers to secure binding offtake agreements in order to unlock further final investment decisions on projects.”

7. Energy prices are going to rise

Energy prices are expected to rise globally in 2025 due to a number of factors, including growing demand, high wholesale prices, rising production costs, cold weather and declining gas inventories.

The IEA expects global electricity demand to grow by 4% in 2025 due to economic recovery, the need for electricity to power artificial intelligence, and expanding industrial activities. This demand is expected to facilitate stable but slightly rising energy prices.

Other factors influencing this trajectory include ongoing geopolitical conflicts and the availability of natural sources of energy — whether fossil or clean in nature.

“Current high coal and gas prices are not the result of a single shock event on the demand or supply side,” the IEA says. “Rather, they result from a combination of supply and demand factors that gradually tightened markets over the course of several months and even years.”

6. Coal in China could reach new highs

While many global powers are working to lessen their reliance on fossil fuels, such as the UK ceasing its reliance on coal for electricity, China is on track for record coal-fired generation.

Despite significant renewable growth, coal-fired generation in China is predicted to hit a new record high due to strong electricity demand growth in the country.

Energy thinktank Ember says: “Coal power in China has seen a relative decline, dropping from over 70% in the mid-2000s to about 60% in 2023. This trend is largely driven by the rapid expansion of non-fossil generation, particularly from renewable energy sources.”

S&P Global Commodity Insights’ 2025 Energy Outlook says: “As China represents nearly 60% of global coal consumption, if coal demand in China indeed grows again, demand in developing nations remains on its upward trajectory, and demand in the US temporarily rebounds, it is highly likely that global coal demand will once again paint a new record higher, even if demand in Europe and other developed economies contracts in 2025.”

5. The LNG boom

The liquefied natural gas (LNG) market is set for significant expansion. This comes as a major wave of LNG supply is expected, with 27 million metric tons of new supply, nearly 90% coming from North America.

S&P Global Commodity Insights’ 2025 Energy Outlook predicts that another wave of North American LNG supply “will begin to hit the market in earnest” in 2025, which it predicts will weaken global LNG prices but boost US gas prices.

“Although the timing of project completion and the degree of producer foresight to ramp up supply ahead of the surge will ultimately determine the relative impact,” the report says. 

4. EV impact

EV adoption is surging around the world, and this is apparent in none other than China.

Demand for transport fuels is likely to decline as EVs — as well as LNG-fueled trucks — gain market share. But this doesn’t just impact the EV market itself.

Iain Mowat,  Principal Analyst, EMEARC Refining and Oil Product Markets at Wood Mackenzie says: “We expect that China’s oil demand will continue to rise in 2025, but almost all of the growth will be accounted for by petrochemical feedstocks. 

“Demand for transport fuels is likely to decline. Continued growth in consumption of jet fuel will be more than offset by declines in demand for gasoline and diesel for road transport. “Electric vehicles and LNG-fuelled trucks are now having a significant impact on the Chinese market.”

3. Market reforms set to shake up the industry

With the implementation of new compliance requirements such as Market-wide Half-Hourly Settlement (MHHS), Energy Savings Opportunity Scheme (ESOS) and Streamlined Energy and Carbon Reporting (SECR), market reforms will have a significant impact on the energy industry.

Speaking with Energy Digital about MHHS earlier this year, Ben Whitelam, Director of Commercial at npower Business Solutions, says the settlement is making energy usage and billing more accurate and efficient.

“For businesses to benefit from a secure, responsive, low-carbon energy system that also supports net zero goals there must be a full-scale reform of the energy sector,” he says.

“This includes the ability to better manage all aspects of electricity more efficiently, particularly with the decrease in 24/7 fossil fuel generation, as businesses move to more intermittent renewable power sources.

“Importantly, MHHS will support the more flexible use of electricity, which we’re already starting to see with ‘time of use’ tariffs emerging to incentivise the use of energy at times of abundant supply and away from peak-demand periods.”

2. Policy shifts will underpin energy’s evolution

Donald Trump is reentering the White House as US President in the new year, which is just one of many factors that could influence policy shifts in 2025.

Ahead of the election result we looked at how the US Presidential Election could overhaul green energy policy, seeing as the Democratic and Republican parties have differing views on clean energy.

The Republican Party’s stance is positively pro-fossil fuel, with President-Elect Trump pledging to "DRILL, BABY, DRILL" to make the US "the number one producer of oil and natural gas in the world". 

The party says it will be “terminating the Socialist Green New Deal” and ending restrictions on oil, natural gas and coal. 

Former President Trump, at a campaign event in Erie, Pennsylvania, dismissed the climate crisis as "one of the greatest scams of all time". 

1. AI in energy management and forecasting

With few energy-specific AI applications on the market, more could emerge in 2025. 

This year, Hitachi Energy launched Nostradamus AI, one of the first AI forecasting solutions purpose-built for the energy industry. Nostradamus AI delivers precise energy forecasts, boosting decision-making and helps industry professionals across utilities, power system operators, energy producers and traders with its highly-accurate forecasts.

“AI and machine learning (ML) have changed the world,” Andy Howell, Global Head of Enterprise Software Products at Hitachi Energy says.

“Embracing AI in the power sector is not just a choice; it is an imperative. That’s why it’s critical that organisations have a dedicated tool designed specifically for analysing the massive amount of data generated across an evolving power grid.

“Hitachi Energy is leading this effort, relying on our decades of sector and data science experience to architect an energy industry AI solution that provides a relevant alternative to today’s inadequate forecasting options.”

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