Energy Transition Market Expected to Reach $5.6 Trillion by 2031—Allied Market Research

According to a new report published by Allied Market Research, titled, "Energy Transition market by type: global opportunity analysis and industry forecast, 2022–2031 The global energy transition market size was valued at $2.3 trillion in 2021, and projected to reach $5.6 trillion by 2031, with a CAGR of 9.3% from 2022 to 2031.

Energy transition simply defines transformation of fossil fuels to renewable energy sources, which results in reduction in carbon emission and produces green energy. Prominent sectors of energy transition include energy storage, renewable energies, electric vehicles, heating, nuclear energy, hydrogen, and others. Among these, renewable energy was the largest sector in 2021, contributing $366 billion of global investment with small-scale systems (up 6.5% from 2020), whereas the electrified transport sector is expected to be the fastest growing sector, reaching $273 billion (up 77%) of global investment, making it the fastest-growing sector. electrified energy came in third with an investment of $53 billion, followed by nuclear energy at $31 billion.

By technology, one of the major renewable energy sources i.e., solar energy accounts for significant market share in renewable energy market. The installed capacity of solar energy in the Netherlands in 2018 increased by 1,500 megawatts (or 50% year-over-year), reaching 4,400 megawatts in which residential rooftop solar has been the main source in the past few years. Nearly 2,300 MW of residential rooftop solar capacity was added in 2018. However, rooftop solar for businesses is expanding. Nearly 530 MW of the 1,500 MW increase in 2018 was installed on industrial and utility roofs.

Moreover, in 2021, the frontiers of the wind energy are anticipated to shift more and more offshore. Offshore wind holds significant growth owing to its high-capacity factors and deployment potential as utilities concentrate on decarbonization and establish net-zero ambitions. Thus, growth of solar energy and wind energy is showing a promising growth for global market and this growth is anticipated to boost the growth of energy transition across the globe.

It is anticipated that the sector would continue to increase efficiency in 2023 with bigger turbines, taller towers, and longer cables. To increase efficiencies, wind turbine manufacturers are adopting larger turbines. Thanks to their extensive knowledge of offshore conditions, oil and gas industries are well-positioned to invest significantly in both fixed and floating offshore wind. Some substantial oil and gas firms are reorienting their efforts toward a fresh, reliable cash stream in a developing low-carbon industry.

The energy transition market is segmented on the basis of by type, application, and region.

On the basis of type, it is segmented into renewable energy, bioenergy, and electrification, energy efficiency, hydrogen, others. Renewable energy transition, which is further segmented into wind, solar, hydropower. On the basis of application, the market is classified into residential, commercial, and utility-scale.

Region wise, the market is studied across North America, Europe, Asia-Pacific, and LAMEA. Presently, Asia-Pacific accounts for the largest share of the market, followed by North America and Europe.

The major companies profiled in this report include Exelon Corporation, Duke Energy Corporation, Pacific Gas and Electric Company, Southern Company, American Electric Power, Inc, Edison International, Repsol, Brookfield Renewable Partners, Ørsted A/S, and NextEra Energy, Inc. Due to rapidly development of industrialization, modernization and spread of information through internet led to the development of tourism industry which in-turn has fuelled the demand for energy transition. Additional growth strategies such as expansion of production capacities, acquisition, partnership, and research & innovation in the solar energy application led to developments in the global energy transition market trends.   

COVID-19 impact analysis:

The Energy Transition market was negatively impacted due to the COVID-19 pandemic. However, strong consumer demand for electricity in utility scale sector and residential sector have surged the demand for Energy Transition market during the COVID-19 scenario. Several factors which slowdown the growth for energy transitions market across the globe are low amount of investments in 2020 and threatening to slow the expansion of key clean energy technologies.

Key findings of the study

• The Renewable Energy segment accounted for 31.4% energy transition market share in 2021 and is anticipated to grow at a rate of 9.8% in terms of revenue, increasing its share in the global energy transition market during the forecast period.
• The utility segment is the fastest-growing application segment in the global energy transition market and is expected to grow at a CAGR of 9.6% during 2021–2031.
• In 2021, Asia-Pacific region dominated the global energy transition market with more than 48.7% of the share, in terms of revenue.