The energy transition market comprises products and solutions that enable the shift from fossil-based energy sources such as coal, oil, and natural gas to renewable sources including solar, wind, hydropower and geothermal. Energy transition products incorporate advanced energy storage solutions, smart grid technologies, electric vehicles (EVs), charging infrastructure, energy management systems and renewable power generation equipment. They play a vital role in facilitating the integration of renewable sources into conventional power grids as well as transportation sector electrification. The growing demand for clean energy globally has fueled significant investments in expanding renewable power capacity and phasing out coal plants.
The global energy transition market is estimated to be valued at US$ 2.83 Tn in 2024 and is expected to reach US$ 5.42 Tn by 2031, exhibiting a compound annual growth rate (CAGR) of 9.7% from 2024 to 2031.
Key Takeaways
Key players operating in the energy transition market are Siemens AG, General Electric Company, Vestas Wind Systems A/S, First Solar, Inc., SunPower Corporation, Tesla, Inc., Enphase Energy, Inc., Ørsted A/S, ABB Ltd., Schneider Electric SE, NextEra Energy, Inc., Canadian Solar Inc., Brookfield Renewable Partners L.P., Duke Energy Corporation, and BP plc.
The Energy Transition Market Demand for clean energy and supportive government policies promoting renewable power adoption are propelling the energy transition market. According to IEA, global renewable electricity capacity additions are estimated to rise by over 60% between 2020 and 2024. Countries worldwide have announced targets to expand installed solar and wind capacity over the next decade.
Leading energy transition solution providers are also expanding their operations globally to capture opportunities arising from the increasing renewable investments across emerging economies such as China, India and Middle Eastern nations. While developed markets in Europe and North America will continue dominating renewable installations, developing regions offer high growth potential.
Market key trends
The declining cost of renewable power generation, energy storage solutions and electric vehicles is a major trend fueling faster global energy transition. Drop in solar PV and wind turbine prices over the past decade has already made them highly competitive with fossil fuels in many parts of the world. Continued technological innovations are expected to drive further reductions. The falling battery pack costs are also removing barriers to mass adoption of EVs and large-scale energy storage projects for grid flexibility. This cost decline will accelerate the retirement of coal plants and increased uptake of renewables complemented by energy storage.
Porter’s Analysis
Threat of new entrants: Globally, energy policies and regulations have high entry barriers for new players. However, innovative startups are exploring opportunities in renewable and clean tech solutions.
Bargaining power of buyers: Individual consumers have low bargaining power but large corporate buyers and governments can negotiate with key suppliers on prices and contract terms for utility-scale renewable projects.
Bargaining power of suppliers: Majority of equipment suppliers enjoy pricing power due to need for specialized manufacturing capabilities and technologies for solar panels, wind turbines and energy storage solutions.
Threat of new substitutes: Alternate sources of renewable energy like solar, wind, hydro and energy efficiency are substituting fossil fuels. Distributed energy generation poses a competitive threat to utilities’ centralized model.
Competitive rivalry: Intense competition exists among major solar and wind power producers. New entrants are challenging incumbents with newer storage and hybrid energy solutions. Utilities competition is also growing among renewable energy service providers.
Geographically, North America and Europe have traditionally been major markets for the energy transition sector in terms of value, together accounting for over 55% share driven by supportive government policies and investments in these regions. However, Asia Pacific region is emerging as the fastest growing market due to rapid capacity additions of renewable energy mainly in China and India and aims to become the global manufacturing and supply hub. Other developing countries are also investing in clean energy infrastructure to meet climate targets.
Porter’s Analysis
Threat of new entrants: Globally, energy policies and regulations have high entry barriers for new players. However, innovative startups are exploring opportunities in renewable and clean tech solutions.
Bargaining power of buyers: Individual consumers have low bargaining power but large corporate buyers and governments can negotiate with key suppliers on prices and contract terms for utility-scale renewable projects.
Bargaining power of suppliers: Majority of equipment suppliers enjoy pricing power due to need for specialized manufacturing capabilities and technologies for solar panels, wind turbines and energy storage solutions.
Threat of new substitutes: Alternate sources of renewable energy like solar, wind, hydro and energy efficiency are substituting fossil fuels. Distributed energy generation poses a competitive threat to utilities’ centralized model.
Competitive rivalry: Intense competition exists among major solar and wind power producers. New entrants are challenging incumbents with newer storage and hybrid energy solutions. Utilities competition is also growing among renewable energy service providers.
Geographically, North America and Europe have traditionally been major markets for the energy transition sector in terms of value, together accounting for over 55% share driven by supportive government policies and investments in these regions. However, Asia Pacific region is emerging as the fastest growing market due to rapid capacity additions of renewable energy mainly in China and India and aims to become the global manufacturing and supply hub. Other developing countries are also investing in clean energy infrastructure to meet climate targets.
About Author:
Priya Pandey is a dynamic and passionate editor with over three years of expertise in content editing and proofreading. Holding a bachelor’s degree in biotechnology, Priya has a knack for making the content engaging. Her diverse portfolio includes editing documents across different industries, including food and beverages, information and technology, healthcare, chemical and materials, etc. Priya’s meticulous attention to detail and commitment to excellence make her an invaluable asset in the world of content creation and refinement.