Demand for electricity is rising across the world and electrification will be a huge growth driver, particularly in transport and some previously hard-to-reach industrial processes, but there is uncertainty over the pace of that growth. At the same time, while AI and cloud computing are boosting demand for electricity, more efficient processing may rein in data centre energy consumption.  

The commercial viability of projects is vulnerable to inflation, financing costs and supply chain constraints, all of which have become more unpredictable following the Covid-19 pandemic and the Russian invasion of Ukraine.  

Populist sentiment has triggered a backlash against the energy transition in some countries. Yet this is likely to affect the pace rather than the direction of change in most markets, particularly because solar and wind power often offer the lowest cost power production. 

Even in attractive investment environments, the speed at which new projects can be brought online can be limited by ageing grids, permitting bottlenecks, interconnection queues and environmental opposition.  

Changes to the financial instruments used to drive renewable energy investment to date are likely. It may become more common to index PPAs to inflation or interest rates to avoid a repeat of the offshore wind project cancellations that hit US offshore wind in 2023-24. 

Growing enthusiasm for 100% 24/7 carbon free energy is driving interest in granular certificates. Rather than merely procuring clean energy equivalent to their consumption, which can focus on the low-hanging fruit of daytime solar production, some corporates have pledged to reach 100% 24/7 carbon free energy by 2030. This will require granular procurement – buying electricity equivalent to their consumption for every hour of the day. This should drive interest in energy storage, pumped hydro and small modular reactors and advanced nuclear technology.