ENERGY TRANSITION MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2024-2031)
The global energy transition market is estimated to be valued at US$ 2.83 Tn in 2024 and is expected to reach US$ 5.42 Tn by 2031, exhibiting a compound annual growth rate (CAGR) of 9.7% from 2024 to 2031.
To learn more about this report, request sample copy
Governments and businesses around the world are increasingly supportive of sustainable energy solutions to mitigate climate change and reduce dependence on fossil fuels. Major investments are being made in areas such as renewable power generation, energy storage, electric vehicles, green hydrogen, and carbon capture to accelerate the worldwide transition to cleaner sources of energy.
The market trend in the global energy transition industry points towards steady growth. The market is driven by the societal need to reduce greenhouse gas emissions and the falling costs of renewable energy technologies like solar and wind power. Stricter emission regulations by governments such as NOx Emissions Limits, Coal Consumption Reduction, Paris Agreement Commitments, etc. and commitments by corporations to reduce their carbon footprint are increasing the demand for sustainable energy products and services. Furthermore, advancing technologies in battery storage and renewable infrastructure are supporting the reliable integration of more green power onto national grids.
Market Driver - Increasing government policies and incentives for renewable energy adoption
More and more governments around the world are strongly pushing for cleaner forms of energy production through favorable policy changes and financial incentives. This transition is mainly driven by the climate change risks brought about by excessive reliance on fossil fuels. According to the International Renewables Agency, over 50 countries have come out with long-term plans to increase their renewable energy capacities and lower their carbon footprint. Tax credits, production tax credits, grants, loans, net metering policies, renewable portfolio standards, and feed-in tariffs are some commonly used incentives and mandates adopted by these nations like U.S., Canada, China, etc.
The European Union has some of the most ambitious renewable energy goals globally. Its latest plan called the "Green Deal" proposes a 55% reduction in emissions by 2030 and net-zero emissions by 2050. Under this scheme, strict carbon pricing and performance standards are being put in place for industries and sectors. European countries like Germany, Denmark, Portugal, Spain and Sweden have long provided subsidies for solar panels, tax exemptions for wind farms, priority grid connections for renewable projects and competitive prices for the energy they produce. Asia Pacific too has embarked on an unprecedented renewable scale up. China aims to install over 1,200 GW of wind and solar power by 2030 while India has a solar target of 100 GW by the same year. Thailand, Vietnam, and Indonesia are other fast-growing renewable markets in Southeast Asia boosted by long-term electricity purchase agreements.
North American nations are also stepping up their climate action through renewable subsidies and mandates. The U.S. has extended the production tax credit deadline for wind and solar projects multiple times. Over 30 states have also adopted renewable portfolio standards requiring utilities to source a certain percentage of supply from eligible renewable sources. In Canada, long-term contracts and carbon pricing back strong growth in solar, wind and hydro. Sub-Saharan Africa presents immense opportunities with its vast solar and wind resource potential. Countries here are giving import duty exemptions, low-interest loans and tax holidays to attract investments into their renewable energy programs.
Such policy support has been instrumental in bringing down technology and installation costs. At the same time, it provides long-term revenue visibility to project developers through fixed tariffs enabling billions of dollars of investments. With governments substantially raising their aims and commitments at international forums, renewable incentives are likely to be further augmented globally. This will promote the rapid scaling up of emission-free power across industries and sectors helping transition away from fossil fuels over the coming decades.
For instance, in March 2021, Siemens Energy, a global leader in the energy sector, launched a new digital platform designed to optimize the integration and management of renewable energy sources. This innovative platform leverages advanced data analytics and AI to help energy companies and utilities maximize the efficiency and reliability of their renewable energy assets.
Get actionable strategies to beat competition: Get instant access to report
Growing Consumer Demand for Sustainable and Clean Energy Solutions
Alongside government push, energy customers too are pulling the transition through their evolving requirements and preferences. Consumers today want reliable electricity which is also environment-friendly and economically efficient. They are increasingly willing to directly invest in clean technologies or opt for renewable energy supply programs. For individual households, rooftop solar systems and home batteries are attractive propositions to lower power bills through self-generation and storage. Over a million homes in countries like Australia, Germany and U.S. have already adapted such integrated solar-plus-storage solutions.
Businesses appreciate the branding and marketing benefits stemming from sustainable energy use. Many big corporations such as Siemens AG, General Electric Company, Vestas Wind Systems A/S, etc. now publicly commit to science-based emissions targets and sourcing a specific percentage of operations from renewables. Technology giants like Google, Facebook, and Amazon satisfy a major part of electricity demand through massive corporate renewable power purchase agreements. The manufacturing sector too sees a competitive advantage in switching to round-the-clock clean power through on-site solar plus wind hybrid projects. Companies at the forefront of sustainability stand to attract and retain top talent as well as gain customer favor in environment-conscious markets.
Individual consumer expectations on sustainability are also shaping energy policies indirectly. More young buyers today research sources and carbon footprint of the products they purchase. Automakers acknowledge this preference and rapidly expand electric vehicle ranges reducing dependence on oil.
Key Takeaways from Analyst:
The global energy transition market is experiencing significant growth driven by the urgent need to reduce carbon emissions and address climate change. Countries and corporations around the world are making ambitious commitments to boost renewable energy and shift away from fossil fuels. This large-scale transition from conventional sources to renewables like solar, wind and hydrogen presents both opportunities and challenges.
North America currently dominate the energy transition space given their early investments in renewables and carbon-reduction policies. However, growth is accelerating the fastest in the Asia Pacific region due to increasing energy demands and government initiatives in countries such as China, India, and Japan. The transition remains constrained by the lack of enabling infrastructure for renewables and hydrogen as well as the high upfront costs of shifting energy systems. Policy and regulatory uncertainty also poses a risk to the long-term market outlook.
On the other hand, the need to overhaul global energy systems represents a huge market potential for technologies supporting the transition. These include renewable energy generation, energy storage, green hydrogen production, grid modernization, electric vehicles, and battery manufacturing. New business models centered around microgrids and distributed generation could also see increased adoption. Overall, the transformation of the energy sector remains one of the defining trends of the 21st century that will shape both economies and the climate for decades to come.
Market Challenge - High initial costs associated with renewable energy infrastructure
One of the major challenges the global energy transition market faces is the high initial costs associated with renewable energy infrastructure development and installation. Setting up large-scale solar and wind farms requires significant capital investments which increases the financial risk for private companies and burdens public financing. The high upfront installation costs of renewable technologies like solar panels and wind turbines compared to traditional fossil fuels hampers their widespread adoption. Moreover, additional transmission systems are needed to support renewable energy production in remote locations and bring that energy to demand centers, further raising project costs. Developing economies and off-grid communities find it especially difficult to bear such high capital expenditure. The lack of financing options and incentives in some parts of the world pose another barrier. Overall, the high capital intensity of renewable infrastructure remains a major roadblock in speeding up the global energy transition.
Market Opportunity - Technological advancements in energy storage and efficiency for market opportunities
One of the key opportunities in the global energy transition market lies in further technological developments in energy storage and efficiency. Advancements in battery technologies, renewable integration, and demand response systems can help overcome some of the intermittency issues related to renewable energy sources like solar and wind. Improved and lower-cost energy storage systems will allow greater utilization of renewable power generated. Likewise, adopting smart grid technologies and enhancing demand response capabilities in the electricity system can help balance supply and demand more effectively. Advancements are also being made to improve the efficiency and lower the costs of renewable energy production through innovations in solar panel and turbine designs. Such technological improvements have the potential to significantly bring down renewable infrastructure costs over time and accelerate the large-scale adoption of clean energy solutions. This offers substantial opportunities for companies investing in cutting-edge energy storage and efficiency research.
Discover high revenue pocket segments and roadmap to it: Get instant access to report
Insights By Energy Source - The Renewable Energy Sources Segment dominates due to the increasing cost competitiveness of various renewable energy sources when compared to fossil fuels
In terms of energy source, renewable energy is estimated to contributes 62.7% share of the market in 2024 owing to the increasing cost competitiveness of various renewable energy sources when compared to fossil fuels. Rapid technological advancements have led to a significant reduction in the capital costs of setting up renewable power projects. Furthermore, renewable sources have minimal or zero fuel costs over their operational lifetime, giving them long-term price certainty. This makes renewable energy an attractive long-term investment for both commercial and industrial consumers looking to minimize energy costs and price risks. Government policies including renewable portfolio standards and falling subsidy levels have also accelerated the adoption of clean sources. With renewable energy achieving parity even in electricity markets in many countries, their utilization is expected to rise substantially in the coming years.
Insights By Technology - The Energy Storage Systems (Batteries, Pumped Hydro) segment is driven by the increasing demand for grid balancing and electric vehicle uptake
In terms of technology, energy storage systems (batteries, pumped hydro) is estimated to contributes 36.4% share of the market in 2024 driven by the increasing demand for grid balancing and electric vehicle uptake. Growing penetration of renewable sources is necessitating sufficient energy storage capacity to balance intermittent renewable power supply and shifting demand patterns. This provides a massive business opportunity for battery-based and mechanical storage technologies. In addition, forecasts for mass-market adoption of electric vehicles are driving immense battery manufacturing capacities and battery recycling infrastructure. Strong policy push for emission-free mobility in major automotive markets and improving driving range and costs are bolstering large-scale EV uptake. This will have a sweeping effect on the growth of the energy storage industry to meet the anticipated spike in demand for batteries and charging infrastructure.
Insights By Application - The Power Generation segment takes the lead due to the extensive integration of renewable sources
In terms of application, power generation is estimated to contributes 42.5% share of the market in 2024 owing to the extensive integration of renewable sources. While the transportation and residential sectors are also undergoing electrification to cut emissions, bulk of investment into renewable capacity addition has been in utility-scale solar and wind power projects. Renewables are increasingly becoming the most pragmatic choices for utilities and bulk power suppliers in meeting rising electricity demand as renewable purchase obligations/mandates are spurring competitive renewable power procurement. With growing preference for renewable-based decentralized distributed generation over centralized fossil fuel plants, installation of solar rooftop systems and community wind projects are gathering momentum. The ongoing transition towards less carbon-intensive sources of energy in the power sector will thus continue supporting the growth of this segment.
To learn more about this report, request sample copy
North America has firmly established itself as the dominant region in the global energy transition market. The region is expected to hold 43.8% of the market share in 2024. With the U.S. at the forefront, the region is home to most of the major players in this sector. This strong industry presence supported by strategic government policies and initiatives has enabled North America to achieve a dominant market share.
For instance, in January 2023, Vestas, a global leader in wind energy solutions, announced plans to invest US$ 40 million in expanding and upgrading its two wind turbine manufacturing facilities in Colorado. This strategic move aims to increase production capacity and support the introduction of the company's newest turbine model for the U.S. Energy Transition Market.
However, the energy transition tide is gradually shifting towards Asia Pacific which is emerging as the fastest growing regional market. While some countries in Asia Pacific still rely majorly on conventional fossil fuels, others like China and India are proactively pursuing renewable energy and clean technologies to meet their growing needs as well as address environmental concerns. Both nations have significantly ramped up investments and implemented policies to boost their domestic renewable energy industries. This is creating substantial opportunities for both local as well as international companies operating in this sector.
Europe as well is making strides towards achieving its climate targets and carbon neutrality goals through large scale adoption of renewables, EVs, and supporting infrastructure. However, the untapped growth potential in Asia Pacific is quite immense given the continent's rising energy demands driven by industrialization and rapid urbanization. Countries across Southeast Asia, Australia, and New Zealand are also contributing to the region's expansion in the energy transition market through their commitment to clean energy development and transition away from fossil fuels.
The huge size of national economies, combined with supportive regulatory frameworks and manufacturing prowess makes Asia Pacific an attractive production hub for clean technologies. This is strengthening Asia Pacific's position as a prominent player in the global supply chain besides being a major demand center. Furthermore, growing cross-border cooperation on clean energy and smart grids within the region will continue propelling its growth trajectory in the coming years.
Energy Transition Market Report Coverage
| Report Coverage | Details | ||
|---|---|---|---|
| Base Year: | 2023 | Market Size in 2024: | US$ 2.83 Tn |
| Historical Data for: | 2019 To 2023 | Forecast Period: | 2024 To 2031 |
| Forecast Period 2024 to 2031 CAGR: | 9.7% | 2031 Value Projection: | US$ 5.42 Tn |
| Geographies covered: |
|
||
| Segments covered: |
|
||
| Companies covered: |
Siemens AG, General Electric Company, Vestas Wind Systems A/S, First Solar, Inc., SunPower Corporation, Tesla, Inc., Enphase Energy, Inc., Ørsted A/S, ABB Ltd., Schneider Electric SE, NextEra Energy, Inc., Canadian Solar Inc., Brookfield Renewable Partners L.P., Duke Energy Corporation, and BP plc |
||
| Growth Drivers: |
|
||
| Restraints & Challenges: |
|
||
Uncover Macros and Micros Vetted on 75+ Parameters: Get Instant Access to Report
*Definition: The global energy transition market provides insights into investments and innovations accelerating the global transition to more sustainable and resilient energy sources. The market covers opportunities within renewable energy generation such as solar, wind and hydro power as well as emerging technologies like energy storage, green hydrogen, carbon capture and utilization. It also analyzes trends and developments in the electrification of transport, the phasing out of fossil fuels and the increasing adoption of energy efficient practices across industries.
Share
About Author
Sakshi Suryawanshi
Sakshi Suryawanshi is a Research Consultant with 6 years of extensive experience in market research and consulting. She is proficient in market estimation, competitive analysis, and patent analysis. Sakshi excels in identifying market trends and evaluating competitive landscapes to provide actionable insights that drive strategic decision-making. Her expertise helps businesses navigate complex market dynamics and achieve their objectives effectively.
Missing comfort of reading report in your local language? Find your preferred language :
Transform your Strategy with Exclusive Trending Reports :
Frequently Asked Questions
Credibility and Certifications
860519526
9001:2015
27001:2022
Need a Custom Report?
We can customize every report - free of charge - including purchasing stand-alone sections or country-level reports
Customize NowSelect a License Type
Credibility and Certifications
860519526
9001:2015
27001:2022
Joining thousands of companies around the world committed to making the Excellent Business Solutions.
View All Our Clients
U.S.: 
U.K. : 
India :