Global Energy Transition Market Driven by Renewable Growth

According to a new report published by Allied Market Research, the energy transition market was valued at $2.3 trillion in 2021 and is projected to reach $5.6 trillion by 2031, growing at a CAGR of 9.3% from 2022 to 2031. The rapid shift from fossil fuels to renewable and low-carbon energy sources is significantly accelerating the expansion of the global energy transition market.

Energy transition refers to the transformation of traditional fossil fuel-based energy systems into renewable and sustainable energy sources. This shift reduces carbon emissions, enhances energy efficiency, and supports the production of green energy. The energy transition market encompasses multiple sectors, including renewable energy, energy storage, electric vehicles, hydrogen, heating, nuclear energy, and electrification technologies.

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Renewable Energy Leads the Energy Transition Market

Among all segments, renewable energy emerged as the largest contributor in 2021, attracting $366 billion in global investments, with small-scale systems increasing by 6.5% compared to 2020. Solar and wind energy continue to play a critical role in driving the energy transition market forward.

Solar energy, in particular, holds a significant share within the renewable energy segment. For example, the Netherlands witnessed a 50% year-over-year increase in installed solar capacity in 2018, adding 1,500 MW and reaching 4,400 MW total capacity. Residential rooftop solar installations have been a key growth driver, contributing nearly 2,300 MW in 2018 alone. Additionally, rooftop solar installations in commercial and industrial sectors are expanding rapidly, further strengthening the energy transition market outlook.

Wind energy is also experiencing substantial growth, especially offshore wind projects. Offshore wind offers higher capacity factors and large-scale deployment potential, making it a preferred choice for utilities pursuing net-zero emission goals. As decarbonization efforts intensify globally, offshore wind is expected to remain a key pillar of the energy transition market.

Electrified Transport: The Fastest Growing Segment

The electrified transport sector is emerging as the fastest-growing segment in the energy transition market. In 2021, investments in electrified transport reached $273 billion, reflecting a remarkable 77% growth compared to previous years. The rising adoption of electric vehicles (EVs), expansion of charging infrastructure, and supportive government policies are fueling this growth.

Electrified energy ranked third in investment volume at $53 billion, followed by nuclear energy at $31 billion. These sectors collectively contribute to the diversification and resilience of the global energy transition market.

Technological Advancements Driving Market Growth

Technological innovation is a key factor shaping the energy transition market. In wind energy, manufacturers are developing larger turbines, taller towers, and longer transmission cables to increase efficiency and power output. Offshore wind projects are particularly benefiting from these advancements.

Oil and gas companies, leveraging their offshore expertise, are increasingly investing in both fixed and floating offshore wind projects. This strategic reorientation allows them to secure stable revenue streams while participating in the growing low-carbon economy.

Similarly, solar energy technologies are evolving with improved panel efficiency, cost reductions, and enhanced energy storage integration. These advancements are supporting sustained growth in the energy transition market.

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Market Segmentation Overview

The energy transition market is segmented based on type, application, and region.

By Type

Based on type, the market is categorized into:

Renewable energy (wind, solar, hydropower)

Bioenergy

Electrification

Energy efficiency

Hydrogen

Others

The renewable energy segment accounted for 31.4% of the energy transition market share in 2021 and is expected to grow at a CAGR of 9.8% during the forecast period. The strong performance of solar and wind energy projects continues to expand the share of renewables in the overall energy transition market.

Hydrogen is also gaining attention as a clean fuel alternative, particularly for industrial processes and heavy transportation, creating additional growth opportunities.

By Application

On the basis of application, the energy transition market is divided into:

Residential

Commercial

Utility-scale

The utility-scale segment is the fastest-growing application area and is projected to grow at a CAGR of 9.6% from 2021 to 2031. Utility-scale renewable energy installations are expanding rapidly due to increasing demand for grid decarbonization and large-scale clean energy integration.

Regional Insights

Region-wise, the energy transition market is analyzed across North America, Europe, Asia-Pacific, and LAMEA (Latin America, Middle East, and Africa).

In 2021, Asia-Pacific dominated the energy transition market, accounting for more than 48.7% of global revenue share. Rapid industrialization, modernization, and urbanization in countries such as China and India are driving energy demand, which in turn accelerates investments in renewable energy and electrification projects.

North America and Europe follow Asia-Pacific in terms of market share. Both regions are actively implementing decarbonization policies, promoting renewable energy adoption, and investing in clean technology innovation to strengthen their positions in the energy transition market.

Impact of COVID-19 on the Energy Transition Market

The COVID-19 pandemic initially had a negative impact on the energy transition market due to reduced investments in 2020 and disruptions in supply chains. The slowdown in clean energy funding temporarily hindered the expansion of key technologies.

However, strong electricity demand in residential and utility-scale sectors during lockdown periods partially offset the decline. As economies recover and governments emphasize green recovery strategies, investments in renewable energy and electrification are expected to accelerate, supporting long-term growth of the energy transition market.

Competitive Landscape

Major companies operating in the energy transition market 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.

These companies are adopting growth strategies such as capacity expansion, acquisitions, partnerships, and research & innovation in solar and wind technologies. Continuous industrial development and modernization, along with growing energy demand from sectors such as tourism and infrastructure, are further contributing to energy transition market trends.

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Conclusion

The energy transition market is poised for significant expansion as global economies shift toward sustainable and low-carbon energy systems. With strong growth in renewable energy, electrified transport, offshore wind, and hydrogen technologies, the energy transition market is expected to reshape the global energy landscape and reach $5.6 trillion by 2031.

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Allied Market Research (AMR) is a full-service market research and business-consulting wing of Allied Analytics LLP based in Portland, Oregon. Allied Market Research provides global enterprises as well as medium and small businesses with unmatched quality of "Market Research Reports" and "Business Intelligence Solutions." AMR has a targeted view to provide business insights and consulting to assist its clients to make strategic business decisions and achieve sustainable growth in their respective market domain.

Pawan Kumar, the CEO of Allied Market Research, is leading the organization toward providing high-quality data and insights. We are in professional corporate relations with various companies and this helps us in digging out market data that helps us generate accurate research data tables and confirms utmost accuracy in our market forecasting. Each and every data presented in the reports published by us is extracted through primary interviews with top officials from leading companies of domain concerned. Our secondary data procurement methodology includes deep online and offline research and discussion with knowledgeable professionals and analysts in the industry.

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