The global energy transition market is on a trajectory for significant growth, poised to reach a staggering USD 5.42 trillion by 2031. This impressive expansion, projected to occur at a Compound Annual Growth Rate (CAGR) of 14.4% during the forecast period, is primarily driven by a confluence of factors, including robust policy support and a shift towards sustainable energy solutions.
The burgeoning energy transition market is fueled by several key dynamics. Governments worldwide are actively promoting renewable energy adoption by implementing supportive policies and offering attractive subsidies. This translates to substantial capital expenditure directed towards large-scale renewable energy projects, resulting in a healthy double-digit growth rate in renewable energy installations over recent years.
As the cost of renewable energy technologies continues to decline, the energy mix is rapidly expanding to encompass a diverse range of renewable sources beyond solar and wind. Geothermal, hydro, biomass, and hydrokinetic energy sources are gaining traction in both developed and developing economies, showcasing the broader adoption of cleaner energy alternatives.
The report highlights several key trends shaping the energy transition market. The deployment of advanced energy storage technologies, such as lithium-ion batteries and pumped hydro storage, is experiencing significant growth. These technologies play a pivotal role in enhancing grid reliability through load balancing and providing backup power during outages caused by the intermittent nature of renewable sources. The collaborative efforts between pure-play energy storage and solar plus storage developers are also a prominent trend, further accelerating the transition to a cleaner energy future.
The renewable energy segment presents a significant opportunity within the energy transition market, expected to grow at a CAGR of over 12% during the forecast period. With solar and wind energy becoming increasingly cost-competitive compared to traditional fossil fuels, their deployment is being strongly encouraged through global policies and incentives. This is reflected in the rising investments in renewable energy infrastructure worldwide.
The energy storage technology segment is poised to witness substantial growth in the coming years. As the proportion of intermittent renewable sources like solar and wind on the grid increases, energy storage technologies become crucial in addressing the challenge of fluctuating power supplies. Battery energy storage systems, in particular, are anticipated to experience exponential uptake, with an annual growth rate exceeding 20% through 2031.
The global energy transition market is projected to witness a CAGR of 9.7% during the period from 2024 to 2031, driven by the strong policy push for decarbonizing energy systems worldwide. The renewable energy segment is expected to hold a dominant position, accounting for over 35% of the market by 2031, due to declining costs and the superior environmental credentials of solar, wind, and other renewables. Energy storage systems, especially batteries, are anticipated to achieve a CAGR of over 20% through 2031, driven by the increasing need for reliable power supply to complement the rising addition of renewable energy.
The residential sector is expected to dominate the energy transition market based on application, as individual prosumers increasingly embrace rooftop solar PV and battery storage solutions. Regionally, North America is projected to hold a dominant position over the forecast period, with a market share exceeding 30% in 2031. This can be attributed to supportive policies promoting clean energy adoption in the United States and Canada.
Key players operating in the energy transition market, including Duke Energy Corporation, Southern Company, and ENEL, are making significant investments in renewable assets, modernizing infrastructure, and energy storage to accelerate their transition away from fossil fuels. Partnerships and mergers and acquisitions (M&A) activity within the sector are also on the rise globally, reflecting the industry’s dynamic nature and its commitment to a sustainable energy future.
In January 2022, India announced its ambition to achieve net-zero emissions by 2070 and to meet 50% of its electricity requirements from renewable energy sources by 2030. This ambitious target highlights the global momentum towards decarbonization and the growing importance of the energy transition market.
