With the end of a highly tumultuous year just around the corner, many in the energy sector are probably hoping that 2025 will bring a higher degree of stability and predictability. That, however, does not appear likely at this stage. After elections were held in almost all major global economies this past year, new government policies – relating not only to energy but also trade, defense, climate, technology and so on – are poised to take shape in the months to come.

The push for decarbonization will continue, but it will need to circumnavigate tough challenges including economic instability, evolving energy demands and infrastructure constraints. Meanwhile, several new trends are emerging that will shape the energy sector’s trajectory. From shifts in the geopolitical balance to breakthroughs in low-carbon technologies and the increasing influence of artificial intelligence (AI), 2025 presents critical opportunities and risks for stakeholders across the energy value chain.

One key observation is that we’re moving from a time of energy scarcity to a time of energy abundance. Capacity additions in both fossil fuels and renewables are poised to outpace increases in demand next year. In the face of an oversupplied oil market, OPEC+ may need to extend its production cuts far into 2025 to protect oil prices. The era of China driving oil consumption growth appears to be over, with the country’s peak diesel in the rearview mirror, gasoline demand plateauing and coal consumption leveling off. 

In electricity markets, 90% of the power consumption growth in 2025 is forecast to come from renewables, while nuclear and gas share the remaining 10%. At the same time, the intermittency of renewable power capacity has triggered record periods of negative prices, intensifying the need for reliable energy storage. As such, 2025 could be a breakout year for energy storage systems. Total electricity growth in 2025 is expected to be 1,350 terawatt hours (TWh). Of that, data center consumption – primarily fueled by AI – is likely to grow from 450 TWh in 2024 to 500 TWh in 2025, or about 4% of total electricity consumption growth. This is roughly on par with the increase in demand stemming from the 20 million new electric vehicles (EVs) that are expected to roll off the assembly line next year.

We at Rystad Energy remain dedicated to connecting the dots across the entire energy spectrum. I hope you can join us for this year’s final edition of our Rystad Talks Energy webinar, where our senior experts explore the major trends that will shape the sector in the coming year.