Table Of Contents
- Growing energy demands boosting the revenue share of the domain
- Growing emphasis on nuclear energy driving the industry’s growth
- Rising dependence on energy grids opening new avenues for the sectoral growth
- Introduction of AI in energy generation impacting the domain positively
- Transition toward renewable energy sources creating numerous investment opportunities
- In summary
Yerukola Eswara Prasad
Koyel Ghosh
AI, Renewables, and Smart Grids: Driving Energy & Power Sector Growth in Q1 2025
Over the last few decades, the proportion of electricity generated through renewable energy has grown considerably with each passing year. Furthermore, rising geopolitical tensions, such as the Russia-Ukraine war, Israel-Palestine conflict, and China-Taiwan crisis, have driven up fossil fuel prices, causing market volatility. Naturally, developed and developing countries have started focusing on energy security to reduce their dependence on external events and developments. At the same time, the rising emphasis on sustainability has compelled power generation companies to invest in new technologies, thus expanding the scope of the landscape. This newsletter studies all such important trends and advancements in the energy and power domain that have impacted the sector positively in the first quarter of 2025.
Growing energy demands boosting the revenue share of the domain
In the era of globalization, the pace of industrialization and urbanization has increased exponentially across the globe. As a result, the electricity demand has surged significantly, especially in leading metropolitan cities and industrial towns across developed and developing countries of the world. The rising population in these nations has led to a growth in domestic household energy consumption, thus expanding the scope of the sector in Q1 2025. As per a survey done by Exxon Mobil, a multinational natural gas company, the growth in the global population and the increasing pace of economic growth is expected to elevate the energy demands by about 15% by 2050. Many experts opine that ASEAN countries, the Middle East region, and India are expected to contribute around 60-90% of this expansion in energy consumption.
The study done by the International Energy Agency has revealed that the rising living standards of people in countries such as the US, the UK, Germany, France, China, India, and Brazil have contributed to the growth of the energy and power domain in the first quarter of 2025. The adoption of new technologies and the increased dependence on transportation services have boosted the revenue share of the sector in recent times. Furthermore, the rowing awareness regarding the environmental hazards of conventional fossil fuels has led to a gradual transition toward sustainability, thus opening new avenues for growth in the landscape in Q1 2025.
Growing emphasis on nuclear energy driving the industry’s growth
In the last few years, the focus on clean energy sources has increased significantly due to rising concerns about environmental degradation. As per a report by WHO, the rising level of carbon emissions and air pollution is the world’s largest ecological risk faced by humans today. In such a scenario, nuclear energy has emerged as a reliable source of power for many countries which are facing a drastic rise in electricity consumption. Currently, in the low-carbon segment, nuclear energy is the second most-opted electricity generation methodology after hydropower. The development of advanced 4th-generation reactors and small modular reactors has played an important role in this transition toward nuclear energy.
The huge investments in atomic energy by major countries of the globe are expected to help the nuclear power plant and equipment market gather a revenue of $58.4 billion by 2030. The industry accounted for $41.1 billion in 2020 and is projected to rise at a CAGR of 3.5% during 2021-2030. Developing countries such as India, China, and Japan have launched initiatives to build the infrastructure required for the generation of electricity through this novel method. Furthermore, several private companies such as Alstom SA, Doosan Corporation, Larsen & Toubro Limited, The State Atomic Energy Corporation (ROSATOM), etc., have started designing specialized equipment and tools deployed for nuclear fission processes. These product launches and governmental schemes to promote this clean power generation mechanism have created favorable conditions for the growth of the industry.
Rising dependence on energy grids opening new avenues for the sectoral growth
Electrical grids are interconnected networks consisting of energy generation hubs, transmission systems, and distribution centers to help deliver electricity to end-use consumers. Power substations in these grids help regulate voltage, ensuring a stable power supply in the region. The electrical grid market accounted for $251.9 billion in 2023 and is expected to gather a sum of $413.1 billion by 2033, rising at a CAGR of 5.1% from 2024 to 2033. The growing integration of smart technologies in electric grids has generated numerous lucrative opportunities in the industry in the first quarter of 2025.
Along with this, innovations in energy storage systems have helped the sector flourish in Q1 2025. The emergence of solid-state batteries, for instance, has transformed the energy and power domain in recent times. These solutions have much higher energy densities and offer a stable power current as compared to traditional lead-acid and Li-ion devices. The applicability of these batteries has increased substantially in various end-use industries such as automotive manufacturing, consumer electronics, and aerospace and defense. The transition toward electric mobility is estimated to help the solid-state battery industry reach $3.4 billion by 2030. The landscape accounted for $0.5 billion in 2020 and is projected to rise at a CAGR of 18% during 2021-2030.
Introduction of AI in energy generation impacting the domain positively
The growing applicability of Artificial Intelligence and machine learning in electricity generation and distribution processes has accelerated industry growth in the first quarter of 2025. AI tools are increasingly being used to increase the efficiency and productivity of power companies, by streamlining operational workflows and automating repetitive tasks. The ability of these solutions to analyze large volumes of data enables enterprises to identify the energy consumption patterns of their customers, thereby aligning their power distribution processes accordingly. Furthermore, since renewable energy sources such as solar and wind are subject to climate variations, AI-based tools are deployed to forecast weather conditions to enhance the efficiency of electricity generation. Along with this, the surge in demand for machine learning algorithms for predictive maintenance is anticipated to help the AI in energy market gather a revenue of $14.0 billion by 2029. The industry was valued at $5.4 billion in 2023 and is estimated to grow at a CAGR of 17.2% during 2024-2029.
Transition toward renewable energy sources creating numerous investment opportunities
Since the signing of the Paris Climate Agreement in 2015, several governments have consciously reduced their dependence on conventional fossil fuels to bring down carbon emissions and achieve their declared net zero goals. The growing awareness of climate change has also played an important role in facilitating this transition toward renewables such as solar, hydropower, and wind energy. Moreover, the rise in the number of investments in distributed power sources and smart grids has helped the renewable energy market reach $2.5 trillion by 2033. The landscape accounted for $1.1 trillion in 2023 and is estimated to grow at a CAGR of 8.5% from 2024 to 2033.
In summary
To conclude, the exponential rise in the global population and the rapid pace of urbanization and industrialization have generated numerous growth opportunities for the energy and power domain in the first quarter of 2025. Furthermore, the integration of advanced technologies such as AI and machine learning has maximized the revenue share of the sector in recent times. The transition toward renewables and the surge in preference for nuclear energy is anticipated to augment the growth rate of the landscape in the coming period.
Stay in touch with our analysts for valuable insights on the growth drivers and opportunities in the energy and power sector!
