2025 global power market outlook: divergent paths in a transforming energy landscape

Global power markets are entering a period of unprecedented transformation in 2025, characterised by sharply divergent regional trajectories that reflect varying policy environments, economic conditions and technological adoption rates. While Asia Pacific leads a massive investment surge driven by an energy storage revolution and renewable deployment, the US grapples with robust demand growth amid rising policy uncertainty, and Europe navigates implementation challenges despite sustained decarbonisation commitments. 

The global energy transition is progressing unevenly, with investment patterns shifting dramatically as storage technologies mature and become mainstream across key markets. Traditional fossil fuel investments are being displaced at different rates regionally, while new demand drivers - from data centres to hydrogen production - reshape load profiles and infrastructure requirements. This complex landscape presents 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 local analysts explored the road ahead for power markets across Asia Pacific, the US and Europe. These insights are powered by comprehensive data and analytics from Lens Power & Renewables; our integrated platform that delivers a holistic, 360-degree view of the power value chain.

Read on to get a brief overview for each region and fill in the form at the top of the page to access your complimentary extracts from the full reports, which contain far more detail, granular data and charts. 

Asia Pacific: energy storage revolution drives unprecedented investment surge 

Asia Pacific's power markets are experiencing an unprecedented investment boom, with generation investments projected at US$3.9 trillion over the next decade - 44% higher than the previous ten years. Solar dominates this investment wave, capturing a third of total capital, while energy storage emerges as a mainstream technology accounting for 14% of investments through 2034, surpassing both coal and gas. This transformation reflects the region's continued role as the global demand growth engine, having driven 82% of worldwide power demand increases between 2015 and 2024 with annual growth rates of 5% (that’s five times higher than the rest of the world). Despite trade tensions, power demand in Asia Pacific is forecast to maintain 5% annual growth to 2030.  

The region appears to have reached a pivotal turning point in decarbonisation, with power sector carbon emissions potentially peaking 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 set to climb from 27% in 2024 to 40% by 2030, while coal's dominance erodes from 53% to just 38% over the same period. This energy transition and lower fuel prices are driving wholesale power prices downward for the second consecutive year, falling 11% in 2024 to US$77/MWh and expected to decline further to US$72/MWh by 2030. 

Energy storage revenues are poised for explosive growth, surging from US$14 billion in 2024 to US$184 billion by 2035 as storage's share of on-grid sales expands from less than 1% to over 11%. This storage boom helps address growing renewable curtailment challenges, with solar and wind curtailment levels rising to 7% and 2% respectively by 2050, highlighting the critical role of flexibility solutions in managing the region's renewable energy abundance. 

US 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 US and Canada demand projected to grow at 2% annually through 2050 - up from the previous 1.6% forecast. Growth accelerates despite delays in electric vehicle deployment, with charging demand 20% lower through 2030. Large customers remain willing to pay premiums to secure reliable supply, fueling this accelerated growth despite policy headwinds. However, policy uncertainty from potential trade actions and regulatory changes introduce new costs and development risks, with proposed tariffs potentially raising generation costs across all technologies. 

Supply growth responds to surging demand despite tariff-related challenges, with particular strength in gas generation as power-hungry data centers and manufacturing drive interest in new projects. Major turbine manufacturers report being sold out for several years, though manufacturing constraints limit near-term capacity additions. Nuclear capacity is expected to grow by 9 GW through 2060 as utilities seek clean firm power sources, while solar and storage add 2.4 TW of capacity. Wind development faces headwinds from adverse regulatory actions, resulting in 17% lower additions by 2050 compared to previous outlooks. 

The combination of stronger demand, higher commodity costs and increased thermal generation drives a bullish price environment, with power prices rising 10-50% above previous forecasts across most markets. Natural gas prices strengthen to $6.80/MMBtu by 2050, supporting this upward price trajectory while clean energy penetration reaches 72% by 2050 - modestly below earlier projections due to policy and supply chain challenges. 

Europe: navigating headwinds in the energy transition 

European power markets face a more challenging outlook in 2025's second half, as global trade tensions dampen economic growth and investor confidence. While political commitment to decarbonisation remains strong, policymakers confront mounting complexities in delivering the energy transition. Power prices are expected to follow gas costs downward toward 2030, supported by increasing renewable supply, though long-term price stability will depend on enhanced flexibility solutions and higher carbon pricing as thermal generation becomes increasingly sidelined. 

The path forward reveals significant delivery challenges, with permitting and grid connection hurdles continuing to impede progress despite some improvements. Offshore wind development faces particular pressure from rising costs and delivery constraints, while the limits of system flexibility are being tested as security of supply climbs policy agendas. These supply-side challenges are compounded by weakening demand growth, as traditional industrial sectors grapple with macroeconomic pressures and key electrification drivers - including transport, heating, and hydrogen - encounter commercial and technical obstacles that slow their deployment. 

Despite these near-term headwinds, the fundamental trajectory toward decarbonisation persists, though the pace may prove more measured than initially anticipated as Europe balances ambitious climate goals with practical implementation realities. 

LatAm: renewable surge drives decarbonisation and adds pressure on price volatility

Chile's power sector is undergoing a transformation driven by decarbonisation and the emergence of energy-intensive industries. Despite a projected 4.5% decline in power demand in 2025, long-term growth will average 3% annually through 2050, fuelled by green hydrogen production and electric vehicle adoption. New loads, including 52 TWh from green hydrogen and electric vehicles, will represent 27% of total demand by 2050. The Antofagasta region will emerge as the primary hub for mining and green hydrogen projects, with copper production peaking at 8.5 million tonnes in 2038 and requiring 46 TWh of power.

The country's decarbonisation strategy is driving unprecedented renewable expansion, creating a 16% oversupply by 2035 as renewable capacity outpaces modest demand growth. Renewables will reach 83% of the generation mix by 2045, supported by 25 GW of new storage capacity additions through 2025-2050. The entire coal-fired fleet will be decommissioned by 2035, with half already committed to cease operations by 2025, requiring replacement with 1 GW of gas-peaking units and substantial battery storage deployment to manage grid curtailment and provide system flexibility.

This renewable surge will fundamentally reshape Chile's power economics, with marginal costs declining 64% from US$53/MWh in 2025 to US$19/MWh by 2040. Battery storage will initially provide lucrative arbitrage opportunities averaging US$79/MWh until 2030, though profits will drop to around US$6/MWh long-term as capacity grows. Natural gas will transition from baseload to peak-demand generation, concentrated primarily in the Atacama and Quillota regions, while benefiting from cheaper imports from Argentina as LNG contracts expire in the early 2030s.

Learn more  

Don’t forget to fill out the form at the top of the page to access your complimentary extracts from each of our full regional outlook reports, which include a range of charts and data exploring these themes in more detail. 

Plus, learn more about Lens Power & Renewables; the offering that will transform your understanding of the power value chain globally, including:

• The changes that technology, regulation, growth and underlying fuel prices are having on US electricity generation, demand and wholesale energy prices.
• The uncertainty and complex challenges of delivering growth and decarbonisation to power markets in Europe, the Middle East and Africa - and how to sort through them.
• Foundational data and insights for 80+ regions covering 98% of all Asia Pacific power demand.