This article was orginally published in French in EVOLEN APRIL 2025 Magazine available here
If you missed PART 1, you can read it at this link PART 1
Demography and AI make the global energy demand boom
Like gas, global demand for energy is increasing year on year, with strong prospects until at least 2050. At the forefront of this growing demand is, of course, electricity, demand for which is set to rise from 33,000Twh in 2025 to over 70,000Twh in 2050.
Part of this increase is due to the multiplication of uses for electricity: electric vehicles , data centers, AI, electrification of industry.
The other source of this increase in demand for electricity is demographics. The increase in the world’s population, particularly in non-OECD countries, and the rise in living standards are having a double impact on the total need for electricity.
Today, despite the explosion in wind and solar projects, renewable energies are chasing the increase in energy demand, which alone is not capable of absorbing. We will probably have to wait until 2035 or 2040 to see renewable energies begin to replace conventional energies for electricity generation.
Added to this is the digital arms race, illustrated by these latest figures: on the one hand, the Chinese record for the installation of coal-fired power stations, to the tune of 94.5GW by 2024, and on the other, the US plan to add 46 GW of gas-fired power stations to power AI by 2030.
These two examples illustrate the politico-strategic challenge of energy and how we are entering an era of ‘whatever it costs’ energy whose expected value creation is already measured in trillions of dollars.
In the midst of this political and energy upheaval, Europe is trying to find its way. At a rapid pace, it is realizing that its energy policy cannot be limited
to the kind of transition it had imagined. The abandonment of all-electric vehicles by 2035 is just the first sign.
This massive investment in fossil fuels, nuclear power and energy transport infrastructure will be needed to keep energy costs competitive, a sine qua non if Europe is to retain its status as an economic powerhouse and take on a new dimension in the digital age. Against this backdrop, France is not to be outdone
with the relaunch of the nuclear programme and the announcement by RTE of a €100 billion investment plan for the electricity network.
For all countries, the challenge is the same: to strengthen their electricity grid and multiply the sources of production, if possible decentralized, to meet demand and keep on track with the energy transition.
Between now and 2040, around 1,000 billion dollars will need to be invested, 10% of which has already materialized in projects.
These examples show how the energy transition is now concentrated where it creates value, and that it still has a bright future thanks to technological innovations that bring us new processes every day.
Energy Transition : Myth Vs Reality
Beyond electrification and renewables, the energy transition is slowly but surely taking off with a reasoned approach to value creation, such as the decarbonization and recycling projects at. On the other hand, the reality of the figures eliminates today the premium hunters of the energy transition around projects with an agenda that is purely political.
Indeed, the difference between the announcements of projects in this sector and their materialization in investments sometimes makes the head spin. The
green hydrogen and carbon dioxide storage projects are good examples.
In Europe, our figures match those of several analyses, which estimate the ratio between announced green hydrogen projects and those moving on to the
execution phase at 5%. We find roughly the same figure for CCS and wind power projects. However, this percentage increases for bio-fuels, E-fuels, recycling and electrification projects. Nevertheless, we are still a long way from the habits of fossil fuel projects, where there are fewer announcements.
On this point, Asia and North America are quite similar to Europe, with only the Middle East showing better figures, thanks in particular to solar energy.
The energy transition, like all the new markets, has suffered from a fashion effect in which all the world’s energy could only be electric or hydrogen.
Public policies in every country have attracted hundreds of start-ups in the hope of raising funds to launch projects.
However, not everything is technically or economically feasible. We note that since 2024, the energy transition has been entering a phase of technological maturity, coupled today with economic maturity under the pressure of the political issues that are reshaping the world.
As a result, the image of the energy transition today is one of contrasts and confusion, with the low rate of projects being implemented giving the impression of a sector that has been stillborn, while the actual volume of investment doubles every two years, making this sector the most dynamic and buoyant in the energy sector.
According to Project Smart Explorer‘s figures, the energy transition projects were worth just over $150 billion in 2024, and should exceed $200 billion in 2025, as shows in the graph above. Note on this graph that if the figures drop in 2026 and beyond, it is not because the market is shrinking, but simply because
our vision of projects is shrinking as far as we can see.
The reality of the figures is therefore a long way from the 1,000 billion dollars a year announced by certain think tanks or international agencies, which reflect promises or political ambitions. But with 150 billion dollars, the energy transition is on a par with downstream investments and should join upstream Capex by 2025. Despite all the difficulties of proactively identifying these projects, this sector offers the best opportunities for growth in energy.
In conclusion, the major powers are redrawing the energy map at high speed to learn the lessons of the war in Ukraine and fuel their race to digital weapons. Europe and the developing countries are determined to play their part in this reshaping. In practical terms, this commitment translates into global infrastructures for production, transport, transformation and energy transition, which will have to be adapted to meet the increase in demand for energy.
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