At first glance, the story is straightforward: the global energy transition is accelerating as a result of geopolitical turmoil. A recent report by Bloomberg shows that investment reached a record $2.3 trillion in 2025, up 8% on the previous year, and is expected to grow to $2.9 trillion in the coming years.
But look closer, and a more interesting — and more relevant — trend emerges. Growth is clearly still there, but is slowing. Capital is concentrating. And the transition is increasingly shaped by geopolitics, infrastructure constraints and industrial policy. The energy transition is not losing momentum, but it is entering a more complex, and more demanding, phase.
"}},{"componentType":"sectionTitle","title":"Strong momentum, but slowing growth"},{"componentType":"paragraph","richBody":{"value":"There is no doubt about the scale of progress. Investment in low‑carbon technologies has more than doubled since 2020 and now consistently exceeds spending on fossil fuel supply. Clean energy investment has even outpaced fossil fuel supply for two consecutive years, with the gap widening further in 2025. Yet the pace is clearly moderating. Annual growth has slowed from close to 30% earlier in the decade to just 8% today.
That slowdown is telling. It suggests the transition is moving beyond its early, high‑growth phase — driven by rapid cost declines and strong policy support — into something more capital‑intensive and operationally complex. For investors, this is a crucial shift. The broad “clean energy” theme is no longer enough. Returns will depend less on riding the trend, and more on identifying where value is actually created.
"}},{"componentType":"sectionTitle","title":"Electrification takes centre stage"},{"componentType":"paragraph","richBody":{"value":"One of the clearest changes is the dominance of electrification — particularly in transport. Worldwide investment in electric vehicles and charging infrastructure reached $893 billion in 2025, making it by far the largest segment. This matters because it signals a deeper shift in the transition itself. The focus is moving away from power generation alone towards how energy is consumed. Electrification of transport, heating and industry is becoming the main driver of capital flows. Meanwhile, the surge in AI data centres is quietly adding to electricity demand as new facilities come online.
Renewables remain a cornerstone, with $690 billion invested in 2025, but they are no longer the sole engine of growth. In parallel, one long‑overlooked segment is finally catching up: the grid. Investment in power networks has surged to $483 billion, reflecting the urgent need to connect renewable capacity and support the overall rising electricity demand. In practical terms, grids are becoming the new bottleneck — and, increasingly, the next investable theme.
"}},{"componentType":"sectionTitle","title":"Renewables: strong fundamentals, weaker momentum"},{"componentType":"paragraph","richBody":{"value":"The most counterintuitive trend in the data is the decline in renewable energy investment, which fell nearly 10% in 2025. This is not a story of weakening fundamentals. Quite the opposite. Solar, for instance, continues to benefit from falling costs and expanding supply, and is on track to become the world’s largest source of electricity within years.
Instead, the slowdown reflects changing market dynamics. Policy adjustments — particularly in China — combined with pricing pressure and grid constraints have dampened near‑term activity. For investors, the lesson is clear: cheaper technology does not automatically mean better returns. As markets mature, profitability becomes more dependent on regulation, market design and execution. The renewable space is evolving from a growth story into a margin story.
"}},{"componentType":"sectionTitle","title":"Mature vs emerging technologies"},{"componentType":"paragraph","richBody":{"value":"Another defining feature of the current phase is the divergence between mature and emerging technologies. Proven sectors — EVs, renewables, grids and storage — dominate investment. Meanwhile, newer areas such as hydrogen, carbon capture and clean industry still attract relatively limited capital and remain dependent on policy support. In 2025, investment in hydrogen and nuclear even declined in absolute terms.
This creates a clear two‑speed transition. On one side are scalable, increasingly commoditised technologies. On the other are capital‑intensive solutions that are essential for decarbonisation — but not yet commercially viable at scale. For investors, that translates into a structural trade‑off. Mature sectors offer visibility and scale, but potentially lower returns. Emerging sectors offer higher upside, but at the cost of policy risk and execution uncertainty.
"}},{"componentType":"sectionTitle","title":"Importance of politics, policy and geography"},{"alignedImage":{"position":"bottom"},"componentType":"paragraph","richBody":{"value":"If the transition was once seen as a global, market‑driven trend, it is becoming far more localised. Asia‑Pacific remains the largest investment region, accounting for nearly half of global spending, with China alone contributing around $800 billion in 2025. At the same time, Europe and the United States are stepping up investment, driven as much by energy security and industrial strategy as by climate goals. EU investment rose 18%, while US investment increased more modestly.
This reflects a broader reality: the energy transition is now deeply intertwined with geopolitics. Supply chains, domestic manufacturing and strategic autonomy are shaping capital flows as much as economics. For investors, geography is no longer a secondary consideration. Policy frameworks, subsidy regimes and regulatory stability will increasingly determine which projects succeed — and which do not.
"}},{"componentType":"sectionTitle","title":"Record investment is still not enough"},{"componentType":"paragraph","richBody":{"value":"Despite all the progress, a critical gap remains. Current investment levels, while record‑high, are still insufficient to meet the agreed global net‑zero targets. At the same time, demand for electricity is accelerating — driven by electrification and new energy‑intensive sectors such as data centres. This creates a subtle but important tension. The transition is advancing rapidly, yet the scale of the challenge is growing even faster.
"}},{"componentType":"sectionTitle","title":"From expansion to execution"},{"componentType":"paragraph","richBody":{"value":"Taken together, the latest trends point to a simple, but important conclusion: the energy transition is entering a new phase. The next decade will not be defined by rapid expansion alone, but by execution. By building grids, scaling infrastructure and navigating regulation.
For investors, that changes the game somewhat. Although the opportunity set remains vast — with annual investment expected to reach around $2.9 trillion in the coming years — capturing this potential will require far greater selectivity across regions, subsectors and companies. It’s no longer just about how much capital is deployed in the energy transition, but where and how it is deployed — and whether it generates sustainable returns.
"}},{"componentType":"linkList","iconTitle":{"title":"Read more"},"textLinks":[{"text":"Investment Outlook 2026: Homepage","url":"/en/personal/investing/market-news-and-views/investment-outlook-2026-home"},{"text":"Investment Outlook 2026: Equities","url":"/en/personal/investing/market-news-and-views/investment-outlook-2026-equities"},{"text":"Investment Outlook 2026: Risks","url":"/en/personal/investing/market-news-and-views/investment-outlook-2026-risks"},{"text":"Investment Outlook 2026: Download PDF","url":"https://assets.ing.com/m/7dfc82cb56e72468/original/Investment-Outlook-2026.pdf"}]},{"componentType":"sectionTitle","title":"Good to know"},{"componentType":"paragraph","richBody":{"value":"Investing involves risks and costs. The value of your investment may fluctuate. Past performance is no guarantee of future results. Read more about the risks of investing .
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"}}]},"hasMacro":false,"id":"a67ea058-bdd0-430f-b619-23e20a5b97dc","localeString":"en-GB","mainHeaderZone":{"backLink":{"textLink":{"text":"Market news and views","url":"/en/personal/investing/market-news-and-views"}},"componentType":"productHeader","coreHeader":{"body":"Recent price spikes mean that the energy transition remains attractive to investors.","headerImage":{"altTextEN":"Portfolio Management","altTextNL":"Vermogensbeheer","extension":"jpg","original":"https://assets.ing.com/asset/c44d6e40-d41a-4ffb-84e0-610d77c20e20/DPM_header7.jpg","transformBaseUrl":"https://assets.ing.com/transform/c44d6e40-d41a-4ffb-84e0-610d77c20e20/DPM_header7","type":"image","width":5749},"subtitle":"Geopolitics is fuelling the energy transition","title":"Investment Outlook 2026: Energy Transition"}},"publishDate":"2026-06-25T16:07:05.262+02:00"}}