The global energy market is forecast to witness several disruptions and positive outcomes in 2025 with evolving economic activities, population growth, geopolitics and climate change shaping industry dynamics.
Increase in Electricity Demand
Electricity demand will grow by 4% in 2025, the fastest annual increase in two decades, according to the International Energy Agency (IEA). Key drivers include rapid industrialization and population growth, particularly in Africa, which is projected to make a substantial contribution to this demand surge due to the region’s high population growth rate.
Efforts to expand energy access in Africa – where over 600 million people lack reliable energy – are expected to further electricity demand. Globally, increased adoption of electric vehicles, heat pumps and advanced cooling systems will also drive this growth.
Emerging Markets Power Growth
Developing economies will remain the primary drivers of energy market growth in 2025, driven by rising economic activities and expanding industrialization. The majority of developing economies continue to rely on traditional energy systems and prioritize accessibility over efficiency, hence boosting energy consumption, according to think tank the Economist Intelligence.
Demand for Fossil Fuels to Remain Strong
Energy security concerns will sustain demand for coal, oil and natural gas in 2025. Efforts to maintain grid stability during peak periods are expected to uphold coal’s share in global electricity generation.
For example, South Africa will maximize coal use to meet its growing domestic energy needs while Ghana will ramp up natural gas use to support its universal energy access goal. While fossil fuel supplies are expected to expand and prices moderate compared to 2022 peaks, oil prices are projected to stabilize at approximately $77 per barrel.
Renewables Expansion Gains Momentum
Renewable energy penetration is expected to continue rising with the sector generating 35% of global electricity. Solar PV is anticipated to account for half of this share. Falling renewable technology costs, supportive government policies and increased focus on emissions reductions will drive the industry growth. Up to 250 GW of combined solar and wind capacity will be installed in 2025, according to the Economist Intelligence.
Geopolitics to Cause Market Volatility
Geopolitical tensions will continue to influence global energy markets in 2025, disrupting price stability and supply chains. Ongoing conflicts in Europe and the Middle East, as well as trade disputes between the U.S. and China, could disrupt the energy landscape. In addition, strained relations between Iran and Israel pose further risks to supply chains and energy commodity prices.
