It has been an eventful year for renewable energy. From geopolitical pivots to market shifts, the energy transition has been subject to many pressures. Nonetheless, it continues to push forward. Here’s a summary of the trends that have defined 2025 and will likely continue to shape clean energy progress as we move into the new year.
Much has been written about the U.S. government’s ongoing tensions with renewable energy, raising legitimate concerns about the future of the industry in the world’s second-largest electricity consumer and its implications for renewables globally.
According to Wood Mackenzie, policy reversals have reduced projected future renewable capacity by 30%. DNV estimates the country’s projected emissions reductions have been delayed by roughly five years.
Zooming out, however, the picture looks a lot brighter. China continues to set renewable buildout records — 390 GW of solar PV (56% of new global capacity) and 86 GW of wind (60% share) are expected to be installed this year. Globally, solar and wind growth outpaced overall electricity demand growth in the first half of 2025, while coal generation fell in both China and India, the two largest renewable builders.
Europe has also continued to expand solar and wind generation and is soon to fully deploy its Carbon Border Adjustment Mechanism (CBAM), which could boost clean energy worldwide. As the global political landscape continues to shift, renewables are set to keep growing — and to take on greater geopolitical significance.
Amid military tensions, supply chain disruptions, and trade disputes, countries and trade blocs are redefining their energy policies to strengthen energy independence — with varying results.
Since launching the REPowerEU plan, the European Union has heavily promoted renewable energy to reduce dependence on imported gas, particularly from Russia. Countries like Spain, with virtually no fossil fuel production, view renewable deployment as a matter of national security.
Meanwhile, the U.S. has reoriented its energy policy around “energy domination,” targeting “foreign-controlled” renewables, boosting hydrocarbon production, and seeking to expand American energy exports.
China and India have maintained a strong focus on domestic coal, with China also leaning on nuclear power. China remains the world’s largest supplier of low-cost renewable technology, competing with the U.S. for global trade influence.
These adjustments are likely to have lasting effects — including on climate change. DNV estimates that although “nations are likely to prioritize security and self-sufficiency over global trade and sustainability,” the result will still be a net reduction in CO₂ emissions. Whether this prediction holds remains to be seen, but it is clear that geopolitical tensions will continue to shape the speed and direction of the energy transition.
Spain has proven that renewables can sink electricity costs. According to Ember, wholesale electricity prices in the country were 32% lower than the EU average in the first half of 2025, largely because solar and wind have displaced more expensive gas and coal generation. Spain has also become less exposed to gas price spikes driven by geopolitical instability.
There is, however, a flipside to this positive trend. Across Europe, negative electricity prices are becoming more common due to high renewable penetration and the inflexibility of other energy sources — such as nuclear and coal — which can cannibalise the market and disincentivise clean energy generation.
Enter battery energy storage systems (BESS). The industry is now looking towards projects that combine renewable power with batteries, allowing electricity to be stored and delivered strategically during high-consumption hours. Spain has even enacted reforms to accelerate storage deployment and reduce reliance on gas for backup grid services, particularly after the country-wide blackout in May.
Hybrid Power Purchase Agreements (PPAs) that combine wind, solar, and BESS are also gaining popularity among corporate electricity buyers, as both offtakers and producers seek to strengthen the profitability of long-term offtake contracts.
The renewable sector is evolving, with mounting evidence that clean energy benefits consumers’ pockets. In the U.S., for example, policies supporting coal over renewables have already driven electricity bills up by 11% since the start of the second Trump presidency. With rising demand, driven partly by data centres, affordable renewable energy is likely to play an increasingly important role.
Data centres and artificial intelligence have drawn attention for their massive power requirements. According to a recent IEA report, data centres could account for nearly half of U.S. electricity demand growth between now and 2030. In other advanced economies, they could drive over 20% of demand growth, with some projections suggesting a fivefold increase in global data center energy use by 2040.
However, AI’s impact on electricity demand will vary by region. North America is expected to feel the greatest strain from AI-related expansion, while in Asia, electric vehicle charging and cooling needs will exceed AI’s power demands. DNV also projects that in Europe, EV-related demand will outpace that of data centres.
The energy needs of AI are not to be overlooked. Projected to account for 5% of global electricity usage in the coming decades, it will remain a massive force in the energy market, stressing the importance of clean power to keep them running.
UN Secretary-General António Guterres confirmed it in a recent interview ahead of COP30: we have failed to avoid overshooting 1.5°C in the next few years. We are now dangerously close to several tipping points, from the potential collapse of the Greenland ice sheet to the reversal of the AMOC current and the mass dieout of coral reefs.
The grim milestone did not come as a surprise. The past ten years have been the hottest on record, with global emissions still rising nearly a decade after the landmark Paris Agreement.
Even so, there are reasons for optimism. The power sector is expected to decarbonise rapidly, cutting emissions by almost 90% by 2060. Electrification will also drive emissions reductions in other sectors, halving those from manufacturing.
Despite some political resistance corporate climate action remains strong. The number of companies with SBTi-validated near-term and net-zero targets has more than tripled since 2023, with 91% reporting an overall positive business impact.
Sustainability is also increasingly viewed as a source of financial value. Morgan Stanley found that 88% of companies globally “see sustainability as a value creation opportunity,” while 83% think ROI on sustainability-related activities is as easy to quantify as for other investments.
Time is not on our side. But every fraction of a degree matters — and that means climate action remains as urgent as ever.