Transforming Energy Landscape: Insights into the 2025 Global Power Market Outlook

**The 2025 Global Power Market Outlook: Divergent Paths in a Transforming Energy Landscape**

Global power markets are on the brink of unprecedented transformation in 2025, marked by sharply divergent regional trajectories that reflect different policy environments, economic conditions, and rates of technological adoption. While the Asia Pacific region is leading a significant investment surge fueled by a revolution in energy storage and renewable energy deployment, the United States is facing strong demand growth amidst rising policy uncertainties. Meanwhile, Europe is managing implementation challenges, even as it remains committed to decarbonization.

The global energy transition is progressing unevenly, with investment patterns shifting dramatically as storage technologies mature and gain mainstream acceptance across key markets. Traditional fossil fuel investments are being replaced at varying rates in different regions, while new demand drivers—such as data centers and hydrogen production—are reshaping load profiles and infrastructure needs. This complex landscape offers both opportunities and risks for power market participants as they navigate evolving regulatory frameworks, supply chain constraints, and changing competitive dynamics.

In our H1 2025 regional power Strategic Planning Outlooks, Wood Mackenzie’s expert analysts examined the outlook for power markets in the Asia Pacific, the U.S., and Europe. Below, we summarize the key takeaways for each region.

### Asia Pacific: Energy Storage Revolution Drives Unprecedented Investment Surge

Asia Pacific’s power markets are witnessing an extraordinary investment boom, with projected generation investments reaching **$3.9 trillion** over the next decade—**44% higher** than the previous ten years. Solar energy is leading this investment wave, capturing one-third of total capital, while energy storage has emerged as a mainstream technology, accounting for **14%** of investments through 2034, surpassing both coal and gas.

This transformation underscores the region’s role as the global demand growth engine, responsible for **82%** of worldwide power demand increases between 2015 and 2024, with annual growth rates of **5%**, five times higher than the rest of the world. Despite trade tensions, power demand in Asia Pacific is expected to maintain a **5% annual growth rate through 2030**.

The region appears to be at a pivotal moment in decarbonization, with power sector carbon emissions expected to peak at **8.2 billion tonnes of CO2 in 2024** as renewables rapidly displace coal generation. The combined share of hydro, solar, and wind generation is projected to increase from **27% in 2024 to 40% by 2030**, while coal’s share is expected to decline from **53% to 38%** during the same period.

This energy transition, coupled with lower fuel prices, is driving wholesale power prices downward for the second consecutive year, falling **11% in 2024** to **$77/MWh**, with expectations of further decline to **$72/MWh by 2030**. The revenue from energy storage is poised for explosive growth, surging from **$14 billion in 2024 to $184 billion by 2035** as storage’s share of on-grid sales expands from less than **1% to over 11%**.

### U.S. and Canada: Stronger Demand Growth Amid Policy Uncertainty and Rising Costs

American and Canadian power markets are experiencing robust demand growth driven by large industrial loads and manufacturing expansion, with demand projected to grow at **2% annually through 2050**, up from a previous forecast of **1.6%**. This growth persists despite delays in electric vehicle deployment, which sees charging demand **20% lower through 2030**. Large customers are willing to pay premiums to ensure reliable supply, fueling this accelerated growth, even amidst policy headwinds.

However, increasing policy uncertainty due to potential trade actions and regulatory changes introduces new costs and development risks, with proposed tariffs potentially raising generation costs across all technologies. Supply growth is responding to surging demand, particularly in gas generation, as data centers and manufacturing drive interest in new projects. Major turbine manufacturers report being sold out for several years, although manufacturing constraints limit near-term capacity additions.

Nuclear capacity is expected to increase by **9 GW through 2060** as utilities seek clean, firm power sources, while solar and storage are projected to add **2.4 TW** of capacity. Wind development, however, faces regulatory headwinds, resulting in **17% lower additions by 2050** compared to previous forecasts. The combination of stronger demand, higher commodity costs, and increased thermal generation is creating a bullish price environment, with power prices rising **10-50%** above previous forecasts across most markets.

### Europe: Navigating Headwinds in the Energy Transition

European power markets face a more challenging outlook in the latter half of 2025 as global trade tensions dampen economic growth and investor confidence. While there is a strong political commitment to decarbonization, policymakers are grappling with increasing complexities in delivering the energy transition.

Power prices are expected to follow gas costs downward toward 2030, supported by rising renewable supply. However, long-term price stability will depend on improved flexibility solutions and higher carbon pricing as thermal generation becomes less dominant. The path forward reveals significant delivery challenges, with permitting and grid connection hurdles continuing to impede progress, despite some improvements.

Offshore wind development is under pressure from rising costs and delivery constraints, while the limits of system flexibility are being tested as supply security climbs the policy agenda. These supply-side challenges are compounded by weakening demand growth, as traditional industrial sectors face macroeconomic pressures and key electrification drivers—such as transport, heating, and hydrogen—encounter commercial and technical obstacles that slow their deployment.

Despite these near-term challenges, the fundamental trajectory towards decarbonization remains intact, although the pace may be more measured than initially anticipated as Europe seeks to balance ambitious climate goals with practical implementation realities.

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