The global energy transition continued to gain momentum last year, advancing even as it navigated a more complex geopolitical landscape. Clean energy spending reached new records in 2025 reflecting sustained investor confidence despite evolving trade dynamics and US tariff pressures rippling across global markets and supply chains.

Clean energy spending reached new records in 2025

While economic uncertainties persist, clean energy growth is being propelled by a stronger focus on energy security and affordability, reinforcing its role as a practical and resilient pillar of national development. The case for transition is no longer anchored solely in long-term climate ambition, but in the need to operate confidently within a more fragmented and competitive energy environment.

Rather than focusing primarily on distant climate targets, governments are placing greater emphasis on building critical industries, strengthening domestic capabilities and securing future jobs, all while managing a growing set of interconnected risks. Together, these dynamics at play signal a more execution-focused phase of the energy transition in 2026, one defined by delivery, readiness and the ability to compete in a fast-evolving landscape.

The contours of this next chapter are becoming clearer, shaped by a handful of trends that will influence investment, policy and competitiveness in 2026.

1. Artificial intelligence (AI) and digitalisation are rewriting the rules of energy demand

Electricity demand growth is re-emerging as both a central challenge and an opportunity of integration for energy systems globally, altering years of relatively stable consumption trends. The rapid expansion of AI, data centres, cloud services and digital infrastructure is dramatically increasing power requirements, particularly in industrial and urban hubs.

Estimates show data centre electricity demand could more than double by 2030 to about 945 terawatt hours, with the US and China accounting for over half the demand, followed by Japan, South Korea, India and Southeast Asia. This demand surge is placing new pressure on generation capacity and grid infrastructure, often at a pace faster than traditional planning cycles.

In 2026, these tensions will intensify as AI deployment accelerates and grid constraints become more visible to consumers and regulators alike. As a result, energy planners are prioritising practical solutions through firm and dispatchable generation, grid reinforcement and energy efficiency improvements alongside renewables expansion.

While the soaring demand will put strain on existing grids, effective use of AI can also help accelerate the energy transition rather than compete with it. Managing AI’s energy impact is no longer a future concern, but a present innovation imperative to align its growth with energy, economic and climate goals.

2. Grid resilience moves to the centre of energy planning

Traditional grids were designed for a different era, with centralised power generation and electricity flowing in one direction from power plants to passive consumers. However, this model no longer fits the ever-demanding energy landscape and must evolve to adapt to a more dynamic energy system.

Grids now need to manage multidirectional flows from variable, weather-dependent renewables, while withstanding growing exposure to extreme weather, geopolitical tensions and cybersecurity threats. These pressures are placing resilience and flexibility at the core of energy planning.

As such, energy investments will continue to prioritise transmission upgrades, grid digitalisation and storage solutions in 2026. An estimated USD21 trillion in grid upgrades is required by 2050 to enable more flexible and resilient networks. While this figure is substantial, it must be weighed against the far greater cost of inaction, estimated at around ~USD38 trillion annually.

Essentially, efforts to modernise grids and strengthen resilience are gaining pace. In 2026, capital will increasingly shift beyond generation capacity towards infrastructure that can better manage changing demand patterns, higher renewable penetration and rising climate volatility, while maintaining cost stability.

 

3. Intensifying competition across clean energy supply chains

In a fragmented geopolitical environment, countries are now competing more aggressively for clean energy investment, critical minerals and manufacturing capacity. This shift is redefining energy transition dynamics from a purely environmental imperative to a core economic and industrial strategy.

Industrial policy thus plays a greater role in shaping energy outcomes, as governments seek to attract investment, secure supply chains and build domestic capabilities. Tax credits, subsidies and trade measures are being used to achieve domestic and economic goals, highlighting strategic industrial development, not just more solar and wind farms.

India’s Dhirubai Energy Complex for instance, scheduled to start in 2026, aims to host gigafactories of solar panels, batteries and electrolysers under one roof. Other regions are also rethinking their industrial models to regain competitiveness; with the European Union (EU) aims to ensure at least 40% of key net zero technologies are manufactured at home.

4. Energy security and affordability regain prominence

Rising electricity demand and market volatility are pushing energy security and affordability to the forefront of policy discussions. Instead of a unified global energy transition, national governments are actively recalibrating their energy strategies to balance decarbonisation goals with cost stability, supply reliability and public acceptance.

Fuel mix decisions in 2026 reflect a more pragmatic approach, where renewables are complemented by firm capacity, storage and transitional energy sources. Affordability considerations are also shaping the pace and sequencing of energy transition pathways, particularly in emerging and developing economies.

Being a significant net importer of energy, India has been reinforcing domestic energy developments to achieve greater control over its energy sources. Meanwhile countries with limited natural resources like Singapore, Costa Rica, Denmark and Japan are exploring alternative approaches to secure their energy security and independence.

Along with playing the right cards in terms of access to natural resources, supply chains and alliances, creating the right policy frameworks will also be vital for succeeding in this new energy landscape. Getting this mix right in 2026 and beyond will require policymakers, regulators, energy companies and investors to work more closely together than ever.

5. ASEAN focuses on cross-border interconnection and regional integration

For countries in Southeast Asia, global energy trends in 2026 intersect directly with the region’s growth ambitions and structural transformation plans. Rapid digitalisation, expanding manufacturing and rising living standards are driving sustained increases in electricity demand across the region.

At the same time, trade-related carbon pressures and evolving sustainability standards are influencing investment and competitiveness. In response, the region is increasingly focusing on cross-border grid interconnection through the ASEAN Power Grid (APG), alongside harmonised regulatory frameworks and market mechanisms to enable power trade at scale.

In January 2026, Tenaga Nasional Berhad (TNB) signed a tripartite agreement with the utilities in Laos PDR and Thailand to facilitate the supply of up to 100MW of renewable energy from Lao PDR to Singapore, marking it as an emblematic move reflecting the growing momentum in 2026 for deeper, more coordinated energy cooperation among ASEAN states.

This regional dimension is explored further in our ASEAN energy trends article, which examines how carbon readiness, digital demand, grid integration and diversified baseload are reshaping the region’s competitive trajectory.

Navigating the next phase of the energy transition

As 2026 unfolds, the energy transition is entering a more consequential phase. The constraints are clearer, trade-offs more visible, and the operating environment more complex.

This is less a question of whether to transition and more about how effectively countries and companies can deliver under real-world conditions. Choices made this year on grid investment, industrial strategy, digital demand and regional cooperation will influence competitiveness and resilience well beyond the current cycle.

For policymakers and industry leaders, the focus now shifts to steady execution. Strengthening grid infrastructure, aligning AI growth with energy planning, building domestic capabilities while sustaining cross-border cooperation, and embedding affordability into transition pathways will all shape long-term outcomes.

In a more competitive energy landscape, progress will favour those who align ambition with delivery and cooperation with capability. 2026 offers an opportunity to translate momentum into durable advantage.