As the world transitions toward cleaner energy sources and grapples with critical political shifts, 2025 is shaping up to be a pivotal year for the power sector.
According to Power Technology parent company GlobalData’s Power Predictions 2025 report, several key themes are set to dominate the global power landscape this year, from geopolitical shifts affecting supply chains to advancements in electric vehicles (EVs), energy storage, nuclear power and hydrogen.
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Geopolitics, supply chains and the energy transition
The power sector in 2025 will not be immune to geopolitical shifts, with supply chain dynamics in particular set to be struck by the blow.
According to the report, international tensions will continue to influence trade policies, resource availability and transportation routes this year, thereby affecting the efficiency and reliability of supply chain operations.
Supply chain disruptions are expected to prevail in the Middle East, with the spillover of the Gaza conflict into neighbouring Lebanon and ongoing threats to maritime trade in the Red Sea. This geopolitical instability will impact the availability and pricing of materials such as semiconductors, which are essential for both renewable energy technologies and EVs.
Another major concern is the concentration of critical minerals in specific regions across the world, with sizeable portion of the world’s lithium reserves in South America and Australia, the Democratic Republic of the Congo dominating cobalt and Indonesia leading in the production of nickel.
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By GlobalDataThe competition to secure supply from these geographic monopolies has sharpened rivalries among China, the US and the EU. With China leading in the mineral supply chain and the development of transition technologies, Western nations have implemented various sanctions and tariffs to level the playing field. China has retaliated with similar measures.
These tensions have disrupted global supply chains and market stability and “will continue to do so this year”, says GlobalData power sector senior analyst Pavan Vyakaranam, adding that President Donald Trump’s return to office will escalate the US-China trade war in 2025, further straining supply chain dynamics.
However, Vyakaranam believes that such disruptions will not pose a significant risk to the global power sector and energy transition, as “the world is learning to work around these geopolitical tensions”.
“Looking back at the Russian invasion of Ukraine, everybody panicked and thought it would be incredibly difficult to manage – and it was, initially – but then supply chains and other aspects evolved, and we figured things out. So, although geopolitical crises will continue to come up this year, they will not have a fatal impact on the energy sector.”
Batteries in charge: EVs and energy storage
Despite potential troubles in its supply chain, batteries are set to take centre stage this year.
According to GlobalData’s report, electrification of the transportation sector will catalyse demand for batteries in 2025.
GlobalData forecasts global EV sales will reach 13.68 million this year.
“The projection for all-electric vehicle sales to increase nearly 30% from last year underscores the acceleration of EV production and, by extension, battery demand,” says Raphael Héliot, policy manager at E-Mobility Europe, formerly known as AVERE.
Although supply chain challenges may continue to impact the costs of raw materials needed for batteries, John Higham, board member of the Electric Vehicle Association, says that “costs for raw materials make a small impact on the overall cost of the battery” and hence will not deter the growth of the battery market – and with it, the EV market.
Lithium-ion (Li-ion) batteries are poised to maintain their dominance in the battery market due to their superior performance and elevated energy density. GlobalData projects the Li-ion battery industry’s revenues will grow to $160bn this year, constituting 95% of global battery sales.
Concurrently, lithium-iron phosphate (LFP) and sodium-ion batteries are expected to gain more ground. “There is a lot of pressure for companies to reduce supply chain costs, so many have been trying to find better alternatives,” Vyakaranam explains.
LFP batteries have expanded their market presence, particularly in China, and now predominate in the lower-tier EV market. Their growing popularity owes largely to their relatively reduced supply chain costs, as they obviate the need for nickel or cobalt.
Meanwhile, sodium-ion batteries have a lower energy density than Li-ion alternatives but use a safer, more abundant and sustainable material, making them an attractive option for short-range EVs.
Vyakaranam caveats: “There have been developments [with alternatives to Li-ion], but nothing that will reach commercial phase any time soon.”
In tandem with rising EV adoption, investment in EV charging infrastructure is growing. Companies such as Charge Zone and GLIDA are investing millions to expand charging networks, while policy measures in regions such as the EU and California are driving the transition away from combustion engines.
Héliot notes the “stop-and-go” effect the EV industry has experienced: encouraging policies initially boosted adoption, but it was followed by stagnation due to pushback; however, momentum is expected to pick up again.
“2025 will mark the beginning of a new growth phase, driven by the enforcement of stricter emissions targets and the introduction of more affordable EV models,” he says. “We anticipate broader consumer adoption as automakers expand beyond premium segments to target mainstream and budget-conscious buyers. This shift will further democratise EVs, fostering growth across a wider range of market segments globally.”
While the Trump administration’s hostility towards EVs presents yet another potential setback for the industry, Higham and Vyakaranam believe that it will not be enough to deter the growth of the market this year. “The drive for EVs and EV infrastructure comes ultimately from the consumer side,” Vyakaranam says.
Another driver of batteries – albeit different – is the recognition of energy storage as a key enabler of the energy transition, with battery energy storage systems (BESS) poised to lead the way.
Global BESS deployment is set to register 154.6GW by the end of this year, up 56% from 98.78GW in 2024, according to GlobalData. The BESS market is expected to reach $14.89bn by 2027.
BESS help balance the intermittent nature of solar and wind power by storing excess energy and releasing it when demand peaks.
“BESS act as a very good integrator for maintaining grid stability in areas where there have been mass renewables deployment. So, regions with ambitious plans for renewables – the US, China, India and the EU, for instance – are likely to make moves on BESS this year,” says Vyakaranam.
Nuclear as the solution to increasing power demand
GlobalData’s report highlights that nuclear power will pick up steam this year, especially in helping meet increasing power demand driven by the expansion of AI and data centres.
“The emergence of a new market of end-energy users such as heavy industry and technology sectors, notably with the concept of nuclear-powered data centres, will drive nuclear expansion,” Henry Preston, a representative of the World Nuclear Association, tells Power Technology. “These sectors require large amounts of clean energy, but crucially, this energy needs to be secure and reliable – which nuclear is well suited for.
“This means we will see an increase in public-private partnerships for financing and developing nuclear projects.”
One of the most promising developments in the nuclear sector is the rise of small modular reactors (SMRs), which offer a range of benefits over traditional large reactors, including greater flexibility and inherent safety features.
Like Preston, Alexandra Wyler, a representative of SMR producer Blykalla, believes that “the trend of partnerships between tech giants and advanced SMR concepts will continue” as “the need for more direct current capacity to support the growing AI and cloud market is growing at a much faster pace than power can be provided, and SMRs are one of the best solutions to clean and collocated base power”.
While the technology is yet to be commercialised, with growing political and financial backing, SMR demonstrations are now in the advanced stage of construction in countries such as Argentina, China, Russia and the US, whereas the UK, Poland, Canada and Romania have entered development stages.
Around 42.8GW of SMR capacity is currently in the pipeline, constituting around 279 reactors globally. Out of the total pipeline capacity, about 22.8GW is in the announced stage, 19.6GW in the permitting stage, 819MW under construction and 320MW in the finance stage.
“SMRs are a game-changer. They will play a crucial role in how fast countries can meet their transition goals,” Vyakaranam says. “I won’t say that SMRs will completely shift the balance in 2025, but this year will be critical in SMRs proving to be relatively safer and more flexible than conventional nuclear technologies.”
However, Vyakaranam says a critical challenge for SMRs will be financing. “There is a lot more [funding] needed for research and development, waste management, safety and security.”
Wyler agrees that “the most significant hurdles are related to access to sufficient capex [capital expenditure]”, adding that “lengthy regulatory processes could also inhibit the speed of deployment”.
Regardless, the nuclear industry is expected to continue its growth trajectory. GlobalData forecasts that total nuclear power generation will reach 2.67 terawatt-hours in 2025 with 5GW of capacity additions – more than five times the 989MW added in 2023.
GlobalData also predicts that more countries in 2025 will join the pledge to triple global nuclear capacity by 2050 – a target first set by 21 countries at COP28, which grew to 31 signatories at COP29.
“Nuclear energy’s role in mitigating the impacts of climate change has become much more appreciated at the COP conferences in the past two years,” Preston says, adding: “The new US administration’s decision to withdraw from the Paris Agreement may have an impact on that progress, but we believe there will continue to be strong support for nuclear from the US because of the enhanced energy security that nuclear can provide.”
Hydrogen also on the rise
“While hydrogen of all types is gaining some traction, the overall drive is towards green hydrogen, which is set to become more economical to produce,” says Vyakaranam.
Indeed, a recent study by the Hydrogen Council indicated that the cost of renewable hydrogen production is projected to decrease by up to 60% within the next decade, largely due to the reduced cost of renewable electricity generation and the expansion of electrolyser manufacturing.
Hydrogen’s potential extends beyond its role as a clean fuel; it is also increasingly being seen as a solution for storing renewable energy as well as improving energy efficiency through combined heat and power generation.
According to GlobalData, global green hydrogen production capacity is expected to reach 2.76 million tonnes per annum (mtpa) by the end of 2025, compared with 270,000tpa registered this year.
North America holds the leading position in the global hydrogen market. “With many projects in the pipeline, the region will maintain a substantial share of the market this year and in the near future,” Vyakaranam says.
“There is a lot of project activity coming up in APAC [Asia-Pacific], but in terms of scale, it needs to catch up and does not compare to North America at this moment,” he adds.
The report notes that Australia, with its vast renewable resources, is also well-positioned to become a key player in the green hydrogen economy. Europe, too, is investing heavily in hydrogen and may emerge as a notable competitor in coming years.
