Five Forces Reshaping the Global Energy Transition
Energy transitions can be understood as a long-run, structural reshaping of how societies produce, distribute, and consume energy.
Today’s energy transition may be moving the world from fossil-fuel systems to low- or zero GHG energy – yet it goes well beyond just decarbonization or swapping technologies: it is a broad rewiring of economic and industrial development, from hydrocarbon molecules to electrons, to build a more sustainable and resilient future.
Our latest paper, The Five Forces of the Energy Transition, identifies five economic forces accelerating this transformation, and critical bottlenecks that may shape its pace, creating both risks and opportunities for investors and businesses.
The Five Forces
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Growing Demand in EnergyDigitalization and emerging-market growth are set to drive the next wave of global energy demand. Emerging economies drove nearly 80% of incremental energy demand growth in 2024, while data centres consumed an estimated 485 TWh – equivalent to France's entire electricity use – and could double by 2030 as AI scales.[1][2] This could create powerful tailwinds, but outcomes depend heavily on regional grid structures, planning and permitting, financing, and project quality.
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Improving Economics of Renewables and StorageClean energy is now the cheapest way to build new energy generation in most markets. Solar and onshore wind costs are roughly half those of coal and gas.[3] Battery storage has fallen dramatically, helping enable firmer renewable output and new grid services. For investors, returns are now shaped less by technology risk and more by financing conditions, policy, grid access, and offtake structures.
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Energy SecurityGeopolitical shocks have elevated energy security to be one of the primary investment drivers. The 2026 disruption to the Strait of Hormuz – carrying ~20% of global oil and 25% of LNG – pushed Brent above $115 per barrel.[4][5] With 74% of the world's population living in fossil-fuel importing nations, domestic renewable energy is increasingly viewed as strategic infrastructure, not simply clean power.[6]
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ElectrificationElectricity is becoming a core carrier of economic growth. The IEA forecasts 3.6% annual demand growth through 2030 – 50% faster than the prior decade.[7] Global EV sales exceeded 20.7 million units in 2025, capturing over 25% of new car sales. Electric technologies are typically 3-4x more energy-efficient than their fossil-fuel counterparts. Over 80 million km of grid must be built or refurbished by 2040 to support the demand surge.[8] For investors, electrification broadens opportunity beyond generation into grids, charging, industrial electrification, and system optimization.
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DecarbonizationThe energy system accounts for about 75% of global CO₂ emissions. Clean energy investment reached $2.3 trillion in 2025, with two dollars flowing to clean energy for every dollar going to fossil fuels.[9] Yet deployment lags net-zero ambitions. It has been estimated that only about 10% of the assets required for a net-zero system by 2050 have been built.[10] The remaining gap, especially in hard-to-abate sectors, could potentially represent one of the largest capital deployment opportunity of this decade.
Three Bottlenecks Constraining Progress
Implications for investors
In our view, the energy transition demands a systems-level perspective — one that extends beyond clean energy generation into the grids, storage capacity, transport infrastructure, and raw materials that make electrification possible at scale.
We believe the most resilient portfolios may allocate across all of these layers, not just a single clean-energy theme. In our opinion, priorities should include renewable power paired with storage and secured long-term offtake agreements; grid modernisation as an important enabler of demand growth; energy storage as a core pillar underpinning grid stability; and selective exposure to nuclear and sustainable transport with rigorous risk underwriting.
Those who approach the transition with a disciplined, system-wide view – and understand how forces differ across regions and maturity – may be better placed to make portfolio decisions aligned with the evolving global energy system.
Sustainable Investment Specialist, Mercer Global Strategic Research