Energy Industry Review of 2025: A Year of Transformation and Realignment

The year 2025 has proven to be a pivotal moment in the global energy transition, marked by significant achievements in renewable deployment alongside persistent challenges that have reshaped industry expectations. As the year draws to a close, the energy sector finds itself at a crossroads, balancing ambitious climate commitments against economic realities, geopolitical uncertainties, and infrastructure constraints. This comprehensive review examines the key developments that have defined the energy industry throughout 2025, from the continued expansion of renewable capacity to the evolving dynamics of offshore energy markets and the critical workforce challenges facing the sector.

Globally, renewable power capacity has demonstrated remarkable growth, with projections indicating an increase of nearly 4,600 GW between 2025 and 2030—double the deployment achieved during the previous five years. Solar photovoltaic technology has emerged as the dominant force, representing nearly 80% of worldwide renewable electricity capacity expansion. Low module costs, relatively efficient permitting processes, and broad social acceptance have driven this acceleration in solar PV adoption. However, 2025 has also been characterised by a recalibration of expectations, with several major markets revising their forecasts downwards in response to policy changes, supply chain pressures, and economic headwinds. The International Energy Agency noted that whilst renewable electricity additions remain robust, the pathway to tripling global renewable capacity by 2030—a commitment made at COP28 in Dubai—faces an implementation gap that requires urgent attention.

Renewable Energy Deployment: Progress Amidst Challenges

The renewable energy sector experienced significant expansion throughout 2025, though not without encountering substantial obstacles. Distributed solar PV applications, encompassing residential, commercial, industrial, and off-grid projects, accounted for 42% of overall PV expansion globally. Higher retail electricity prices following the energy crisis, combined with strong policy support, encouraged individuals and businesses to install solar PV systems with the aim of reducing electricity bills. In countries such as South Africa and Pakistan, uptake in commercial and large-scale off-grid solar PV systems rose rapidly, improving electricity access in regions with unreliable grid infrastructure.

Onshore wind capacity additions increased 45% compared to 2019-2024, reaching 732 GW over the forecast period. Despite recent challenges concerning supply chain bottlenecks, inflation, and lengthy permitting and grid connection wait times, strong onshore wind expansion continued as policies in both advanced and developing countries partly addressed these barriers. Annual additions rose in Africa, the Middle East, ASEAN countries, Latin America, and Eurasia, in addition to Europe and India.

However, offshore wind faced considerable setbacks during 2025. Capacity expansion reached 140 GW over the forecast period, more than doubling the growth of the previous five years, yet policy changes in the United States, macroeconomic pressures, and supply chain challenges raised costs and undermined project bankability in several European markets and Japan. This resulted in undersubscribed auctions and project cancellations, leading to a 27% downward revision in the global offshore wind capacity forecast from the previous year. The offshore wind sector's struggles highlighted the vulnerability of capital-intensive renewable projects to policy uncertainty and financing constraints.

China's transition to competitive auctions represented a watershed moment for global renewable procurement. The country phased out fixed tariffs for solar PV and wind benchmarked to provincial coal prices, replacing them with competitive auctions. This policy reform meant that, for the first time, the majority of new capacity additions would have offtake prices set competitively rather than administratively by governments. Competitive auctions now drive almost 60% of gross capacity additions expected during 2025-2030, up from less than 25% in the 2024 forecast, marking a major shift towards market-based mechanisms.

Grid Integration and Curtailment: The Growing Pains of Variable Renewables

As renewable capacity expanded rapidly throughout 2025, grid integration challenges became increasingly apparent. Curtailment of wind and solar resources grew more common and visible in several markets, occurring when power systems could not absorb all generated power because of transmission capacity limitations, system stability requirements, or supply-demand imbalances. Whilst some curtailment is expected and inevitable, persistent or widespread curtailment highlighted gaps in planning, flexibility, and infrastructure investment.

The International Energy Agency refined its analysis of wind and solar PV curtailment during 2025, transitioning from established assumptions to a trend-based assessment supported by historical data. This more sophisticated approach revealed that curtailment rates varied significantly across different markets, depending on grid infrastructure, energy policies, and the integration of flexibility solutions. Countries with high variable renewable energy penetration, such as Germany, Spain, and parts of China, experienced curtailment rates that occasionally exceeded 10% during periods of high renewable generation and low demand.

Reducing curtailment requires a comprehensive strategy involving transmission infrastructure upgrades, enhanced system flexibility through energy storage and demand response programmes, and co-ordinated system planning. Annual additions of pumped-storage hydropower capacity were forecast to double to 16.5 GW by 2030, driven by the growing need for flexibility and long-term storage. China led with over 60% of all worldwide pumped-storage hydropower growth over the forecast period, whilst expansion also gained speed in Europe, particularly in Spain and Austria, as rapid deployment of variable renewable energy systems presented integration challenges.

Grid connection delays emerged as a critical bottleneck constraining renewable deployment in multiple markets. The queue for grid connections in the United Kingdom grew tenfold over the past five years, containing the equivalent of 739 GW—double what is needed to meet 2050 forecasts. These delays led to project cancellations and prompted some developers to explore alternative solutions, including smart microgrids and direct partnerships between producers and consumers, allowing energy to be shared among industries when the grid could not deliver.

Policy Shifts and Market Revisions Across Key Regions

The year 2025 witnessed significant policy changes that reshaped renewable energy forecasts across major markets. The United States experienced the most dramatic revision, with forecasts reduced by almost 50% across all technologies except geothermal. This reflected the earlier-than-expected phase-out of investment and production tax credits, new "foreign entities of concern" restrictions, and an executive order suspending offshore wind leasing and restricting the permitting of onshore wind and solar PV projects on federal land. Wind was impacted most severely, with both offshore and onshore capacity growth revised down by almost 60% over the forecast period.

In the European Union, the forecast was revised upwards slightly, mostly for utility-scale solar PV capacity in Germany, Spain, Italy, and Poland. However, lower retail electricity prices and reduced incentives following the energy crisis made residential projects less economically attractive in many European markets. Furthermore, supply chain challenges and higher costs left multiple offshore wind auctions without bids, leading to several project cancellations and a 24% downwards forecast revision compared with the previous year.

India's forecast was revised upwards by almost 10%, thanks to record auction capacity in 2024 for onshore wind and utility-scale solar PV, rapid recovery of the onshore wind industry, the introduction of a new rooftop-PV support scheme, and more efficient permitting for pumped-storage hydropower. For the ASEAN region, faster implementation of large hydropower projects and the introduction of more ambitious renewable energy goals and auction schemes led to an upward forecast revision.

McKinsey's Global Energy Perspective 2025 highlighted that cost competitiveness and an economically pragmatic energy transition remained paramount. Energy affordability, reliability (including energy security at the national or regional level), and emission reduction continued to form a trio of priorities that drove energy decision-making. However, without affordability—along with bankability—widespread adoption of new low-carbon technologies would not happen. The expected temperature change by 2100 in McKinsey's scenarios ranged from 1.9°C in Sustainable Transformation to 2.7°C in Slow Evolution, with all estimates higher than in previous projections.

The Impact on Hiring: Talent Acquisition Challenges in a Transitioning Industry

The energy sector's transformation throughout 2025 created profound implications for recruitment, talent acquisition, and workforce development. As the industry pivoted towards renewable technologies whilst maintaining existing fossil fuel operations, organisations faced unprecedented hiring challenges that required innovative approaches to talent management and employer branding.

The shift towards renewable energy created acute skills shortages in specialised areas. Offshore wind projects required engineers with expertise in marine operations, high-voltage electrical systems, and complex project management capabilities. Solar PV deployment demanded professionals skilled in power electronics, grid integration, and distributed energy systems. Energy storage projects sought battery technology specialists, power systems engineers, and software developers capable of optimising complex energy management systems. These specialised skill sets were in short supply, creating intense competition among employers and driving significant salary inflation in key technical roles.

Traditional oil and gas companies faced particular challenges in repositioning themselves as attractive employers for the next generation of energy professionals. Many graduates and early-career professionals expressed preferences for working in renewable energy sectors, viewing them as more aligned with climate action and long-term career sustainability. This perception required oil and gas operators to refine their employer branding strategies, emphasising their investments in low-carbon technologies, their critical role in energy security during the transition, and the technical challenges that made careers in the sector intellectually rewarding.

The recruitment landscape was further complicated by the geographical distribution of energy projects. Offshore wind developments in remote coastal areas struggled to attract and retain skilled workers, particularly when competing with urban renewable energy projects offering better lifestyle amenities. This challenge prompted companies to invest in enhanced accommodation facilities, rotation schedules that improved work-life balance, and career development programmes that provided clear pathways to advancement.

Hiring managers increasingly recognised that technical skills alone were insufficient for success in the evolving energy sector. Professionals needed adaptability, systems thinking capabilities, and comfort with uncertainty as technologies and business models continued to evolve. Recruitment strategies consequently emphasised behavioural competencies alongside technical qualifications, with assessment processes designed to identify candidates capable of thriving in dynamic, rapidly changing environments.

The decommissioning sector emerged as an unexpected source of recruitment demand throughout 2025. As the first generation of offshore wind turbines reached the end of their useful lives, and as oil and gas infrastructure continued to be retired, specialists in safe dismantling, environmental remediation, and materials recycling became increasingly sought after. This created opportunities for experienced offshore workers to transition their skills into new applications, though often requiring additional training and certification.

Talent acquisition strategies evolved to address these multifaceted challenges. Progressive energy companies established partnerships with universities and technical colleges, shaping curricula to ensure graduates possessed relevant skills and providing internship opportunities that created talent pipelines. Apprenticeship programmes expanded, offering alternative pathways into the industry for individuals without traditional academic qualifications. Cross-industry recruitment increased, with energy companies actively seeking professionals from adjacent sectors such as automotive, aerospace, and technology, recognising that transferable skills could be adapted to energy applications.

Looking Ahead: Strategic Imperatives for Industry Participants

As 2025 draws to a close, the energy industry faces a complex landscape requiring strategic agility and pragmatic decision-making. Renewable electricity is expected to surpass coal to become the largest source of electricity generation globally by the end of 2025 or mid-2026 at the latest, depending on hydropower availability. The share of renewables in global electricity generation is projected to rise from 32% in 2024 to 43% by 2030, with renewables expected to meet over 90% of global electricity demand growth.

However, achieving the COP28 commitment to triple global renewable capacity by 2030 requires addressing persistent implementation challenges. In the main case scenario, recent cost trends, current policies, and market developments raise cumulative renewable capacity to 9,530 GW in 2030—a 2.6-times increase from 2022, yet falling short of the approximately 11,500 GW needed to meet the tripling target. Bridging this gap requires governments to address key policy, grid integration, financing, and permitting challenges in the short term.

The offshore energy sector must navigate volatile market conditions, with investment levels directly influencing production trajectories. Offshore oil and gas investment is expected to average $57 billion annually between 2026 and 2029, following a dip in 2025. Lower oil prices and inflated supply chain costs are squeezing upstream cash flow and margins, driving renewed focus on cost control and operational efficiency.

For industry participants, several strategic imperatives emerge from the developments of 2025. First, maintaining financial discipline whilst investing in future capabilities remains essential, particularly as economic uncertainties persist. Second, addressing grid infrastructure constraints through innovative solutions—including microgrids, energy storage, and demand-side management—will be critical for unlocking renewable potential. Third, developing workforce strategies that attract, develop, and retain talent across both traditional and emerging energy sectors will determine organisational competitiveness. Finally, engaging constructively with policymakers to create stable, long-term regulatory frameworks will provide the certainty needed to mobilise investment at the scale required for the energy transition.

The year 2025 has demonstrated that the path to a sustainable energy future is neither linear nor without setbacks. Yet the fundamental trajectory towards decarbonisation remains intact, driven by technological progress, economic competitiveness of renewable technologies, and societal commitment to addressing climate change. Success will require resilience, adaptability, and collaboration across the entire energy ecosystem.