Global investment in the energy transition hit a record $2.3 trillion in 2025, good for a 8% increase from 2024, driven by massive spending on electric transport, renewable energy, and grid infrastructure, BloombergNEF has reported. Clean energy spending exceeded total fossil fuel supply investment for the second consecutive year, highlighting accelerated efforts to decarbonize, despite slowing growth rates in some sectors like solar.
Electrified Transport was the largest investment category after attracting $893 billion, up 21% from 2024, driven by electric vehicle sales and charging infrastructure expansion. Global electric vehicle (EV) sales reached ~20.7 million units in 2025, marking a 20% year-on-year increase and accounting for roughly one in four new cars sold worldwide.
China remained the dominant market with 12.9 million units sold, good for a 17% Y/Y increase, with EVs representing about 60% of new car sales. Europe experienced a 33% growth with over 4.3 million units, driven by stricter emissions standards. Unfortunately, North America was a laggard, with sales reaching 1.8 million units after a 4% sales decline in the United States and a 41% drop in Canada, mainly due to subsidy changes.
Global investment in renewable energy (primarily solar PV and wind) reached $690 billion in 2025, representing a 9.5% year-on-year decline, largely driven by regulatory changes and market uncertainty in China. Solar PV investments clocked in at $252 billion in the first half of 2025, with small-scale solar (rooftop) seeing significant growth, while utility-scale solar asset finance dropped by 22%. Wind energy attracted $126 billion in H1 2025, with offshore wind a major bright spot, after attracting $39 billion–higher than the total for the entire year in 2024.
China maintained its position as the world’s largest market for energy transition, with total investment reaching roughly $800 billion in 2025. However, for the first time since 2013, China experienced a decline in annual renewable energy funding, with investment falling by nearly 10% Y/Y largely due to new power market regulations. Starting in June 2025, new, large-scale wind and solar projects were mandated to compete in the market rather than receiving guaranteed, subsidized rates, leading to increased investment uncertainty. The removal of mandatory energy storage requirements for new projects and the move toward market-based pricing led to a more cautious approach by developers. While investment in new renewable project funding fell, overall renewable capacity continued to break records, with non-fossil fuel power generation accounting for over 60% of total installed capacity by late 2025.
The European Union saw H1 2025 investment jump by 63% to $30 billion as developers shifted focus to the North Sea offshore wind projects. This surge in investment was largely driven by a strategic pivot toward North Sea offshore wind projects, as developers reallocated capital away from U.S. projects amid changing policy certainty.
Meanwhile, U.S. renewable energy investments in H1 2025 dropped significantly, falling to less than $40 billion, marking a 36% decrease from H2 2024 in large part due to policy headwinds. The new administration’s actions included initiatives to scale back support for wind energy, with onshore wind investment falling by 80% compared to the second half of 2024. Further, developers rushed to begin construction in late 2024 to lock in tax credits before potential changes, resulting in a natural slowdown of new projects in H1 2025. The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, significantly restricts U.S. solar and wind energy by accelerating the expiration of tax credits (originally extended to 2034 by the IRA) to December 31, 2025. This imposes stricter domestic content requirements, likely reducing future renewable capacity and increasing project costs, while favoring baseload sources like nuclear and geothermal/
Power Grids netted the third highest investment dollars, with modernization and expansion of networks surging 17% to $483 billion in a bid to address bottlenecks in renewable integration and rising demand from AI data centers. Data centers are rapidly becoming a primary, and in many cases dominant, driver of electricity grid stress, primarily fueled by the exponential growth of artificial intelligence (AI) and cloud computing. The immense, 24/7 power demand required for training and operating AI models is overwhelming existing infrastructure, causing significant grid congestion, interconnection delays, and in some regions, threatening reliability. AI-optimized server racks require 30 – 100+ kW of power, compared to 7-10 kW for traditional racks, placing severe strain on local power distribution and cooling infrastructure.
Data centers are clustered in specific regions, such as Northern Virginia, Ireland, and Singapore, which severely stresses local substations and transmission lines. AI workloads are bursty, characterized by periods of high, intense resource demand (spikes) followed by long periods of low utilization or idle time. AI-related power demand typically fluctuates by hundreds of megawatts in seconds, challenging grid operators’ ability to balance supply and demand. Investment in digital infrastructure, particularly driven by AI data center expansion, has reached massive, record-setting levels, with 2025 spending estimated at nearly $600 billion range. This surge in capital is profoundly influencing corporate renewable energy procurement, as technology companies and investors increasingly integrate clean energy solutions to power energy-intensive digital assets.
Data center electricity consumption is projected to jump from ~1.5% of global demand in 2024 to more than double by 2030, driven by the AI “gold rush”. In the U.S., demand is projected to jump from ~25 GW currently to over 80 GW by 2030, potentially accounting for up to 12% of national electricity use.
Global grid infrastructure investment exceeded $470 billion in 2025, marking a second consecutive year of double-digit growth driven by the need to connect renewable energy and support rising electricity demand. Key areas of focus included reconductoring for rapid capacity expansion and upgrading transmission networks. Reconductoring is the process of upgrading existing electrical transmission lines by replacing old conductors with modern, high-capacity, and often lighter-weight advanced conductors is a faster, more cost-effective way to boost grid capacity, enhancing reliability and supporting renewable energy integration, with projects often completed in 18 months to 3 years. Reconductoring is becoming a primary, cost-effective strategy to unlock capacity due to permitting delays for new lines. However, IRENA estimates that annual grid investment needs to reach $671 billion by 2030 to meet the needs for the energy transition.
BNEF also reported that clean energy supply chain investments, primarily driven by surging battery manufacturing and material production, grew 6% to reach $127 billion. Investment in new battery factories and material processing facilities was a major driver of the 2025 supply chain investment growth. Lithium-ion battery pack prices dropped by 8% in 2025 to an average of $108/kWh, despite fluctuating raw material prices, improving affordability for EVs and stationary storage. Global battery energy storage system (BESS) capacity for the first half of 2025 hit 86.7 GWh, a 54% year-on-year surge, with total 2025 planned deployments over 412 GWh. China continues to lead in battery manufacturing and EV adoption, with high, albeit moderating, investment, while the U.S. is experiencing policy-induced shifts in investment.
By Alex Kimani for Oilprice.com
