Global Energy Landscape Undergoing Historic Transformation: Renewables Surpass Coal in 2025
The global energy sector reached a monumental inflection point in 2025, as renewable sources collectively generated more electricity than coal for the first time in over a century. This pivotal shift, detailed in a recent comprehensive industry analysis, signals a profound structural change in global power markets, presenting significant implications for oil and gas investors navigating the accelerating energy transition.
For the first time since 1919, coal’s share in the global electricity mix dropped below that of renewables. Notably, fossil fuel generation experienced a 0.2% decline in 2025. The analysis highlights that wind and solar alone satisfied a staggering 99% of last year’s increase in global electricity demand. This downturn in fossil fuel generation is not a temporary blip caused by economic crises or unique events, but rather a direct consequence of the sustained and rapidly expanding deployment of clean power technologies, marking a durable shift in energy market dynamics.
Record-setting solar power deployment proved instrumental in reversing the upward trajectory of fossil fuel use. Solar generation surged by 30% year-on-year, single-handedly meeting 75% of the world’s electricity demand growth in 2025. Key findings from the analysis underscore this dramatic transformation:
- Solar power generation achieved an unprecedented increase of 636 terawatt hours (TWh) in 2025, a volume surpassing the electricity equivalent of all liquid natural gas (LNG) exported through the Strait of Hormuz during the same period.
- Wind power secured the second-largest generation increase, adding 205 TWh to the global grid.
- For the first time in recorded history, coal power’s share in global electricity generation dipped below one-third.
- The expanding global electric vehicle (EV) fleet significantly impacted crude oil demand, displacing an estimated 1.8 million barrels per day (mbpd) in 2025, with new EVs introduced that year accounting for 0.5 mbpd of this displacement.
Unprecedented Renewable Surge Reshapes Supply Dynamics
The year 2025 cemented solar and wind power’s position as dominant forces in the electricity generation landscape. Solar witnessed its largest-ever annual expansion, with global generation increasing by 636 TWh. This monumental figure is equivalent to double the United Kingdom’s total annual electricity demand and represents a 33% acceleration over the previous record growth of 479 TWh set just the year prior. This surge in solar generation alone exceeded the electricity that could be generated from all LNG exports passing through the Strait of Hormuz in 2025, which amounted to 81 million tonnes (Mt) or approximately 550 TWh of gas-fired electricity.
This remarkable growth makes solar the largest annual increase of any individual electricity source ever recorded, with the sole exception of the post-pandemic coal rebound in 2021 (719 TWh). Crucially, 2025 marked the fourth consecutive year where solar recorded the largest absolute growth among all electricity sources, driven by structural capacity expansion rather than transient demand fluctuations. Solar capacity additions reached a record 647 gigawatts (GW) in 2025, indicating that this technology will continue to be a primary driver of generation growth in the coming years.
Wind power also delivered a robust performance, increasing generation by 205 TWh (8.2%) in 2025, maintaining the same growth rate as 2024. While slightly below the record absolute increase of 265 TWh seen in 2021, it underscores the consistent expansion of this clean energy stalwart. Nuclear power saw a moderate rise of 35 TWh (1.3%), reaching an all-time high of 2,812 TWh, primarily propelled by new reactors in China (37 TWh) and increased output in France (12 TWh) and Japan (9 TWh), which offset declines elsewhere. Despite this, projections indicate that both solar and wind will individually surpass nuclear generation by 2026.
The growing dominance of solar and wind has fundamentally altered the global electricity mix, enabling renewable technologies to collectively overtake coal not just for half the year, but across the entirety of 2025. This historic achievement means coal power for the first time accounted for less than one-third of global electricity generation. Furthermore, the expansion of clean power sources for the first time structurally pushed overall fossil fuel generation into decline. Previous annual drops in fossil fuel generation were aberrations caused by economic shocks like the 2008-09 financial crisis or the 2020 pandemic; the 2025 decline represents an intentional, market-driven shift.
The Decelerating Role of Fossil Fuels
The last decade has witnessed a dramatic rebalancing of the global electricity supply. The combined share of wind and solar power in the electricity mix has expanded by over 10 percentage points, climbing from 23% to 33.8%. Concurrently, coal’s share has retreated from 38.7% to 33.0% in 2025. It is noteworthy that 81% of all wind and solar generation growth since 2000 has occurred in the last ten years, signaling an accelerating transition. In contrast, only 27% of fossil fuel growth since 2000 has taken place in the same period, underscoring the decisive tipping point towards renewables.
Had wind and solar generation not expanded since 2000, fossil fuel-based electricity generation would have been 30% higher in 2025, resulting in a 28% increase in emissions, equating to an additional 4,065 Mt of carbon dioxide equivalent (CO2e) annually. This analysis suggests that continued robust growth in clean power will firmly push fossil fuel use in the power sector into a sustained decline, concurrently aiding decarbonization efforts in other industries.
Regionally, renewables have now surpassed coal in every part of the world except Asia. Coal power generation saw a modest decline of 63 TWh (-0.6%) in 2025. However, at 10,476 TWh, coal stubbornly remained the single largest source of electricity globally. Gas generation, by contrast, experienced a small increase of 36 TWh (0.5%), reaching 6,919 TWh in 2025, a critical data point for natural gas and LNG investors observing market resilience.
Despite Asia being the last bastion where coal generation outstrips renewables, two of the continent’s largest emitters, China (-56 TWh/-0.9%) and India (-52 TWh/-3.3%), both saw their fossil fuel generation fall due to aggressive clean power deployment and moderate demand growth. Collectively, China and India accounted for 42% of global fossil fuel generation in 2025, effectively offsetting minor increases in the US, EU, and other economies. To contextualize this shift, in 1919, when electricity demand was 300 times smaller, renewables (primarily hydropower) briefly exceeded coal. For over a century thereafter, coal remained the dominant power source, maintaining approximately a 40% share from the 1970s through the mid-2010s.
Implications for Oil & Gas Demand and Emissions Trajectories
The ascendancy of clean power generation is fostering a crucial decoupling between electricity demand growth and emissions growth. Global electricity demand expanded by 2.8% (849 TWh) in 2025. While this represents a moderation from the 4.3% growth in 2024, it aligns with the 10-year average annual increase of 2.7% and still ranks as the sixth-largest absolute annual rise ever recorded. The analysis projects that if current demand and clean electricity growth rates persist, fossil fuel generation will plateau before entering a consistent decline from the early 2030s.
Crucially, with renewable energy growth actively suppressing fossil fuel consumption in 2025, power-sector emissions registered a slight decrease despite the overall rise in demand. In 2025, the global average kilowatt hour produced generated 458 gCO2e, a 2.7% reduction from 2024 (471 gCO2e) and a notable 16% decrease from 2005 levels (543 gCO2e).
The electrification of key sectors, particularly transport and data centers, is poised to drive further increases in electricity demand in the coming years. Electric vehicle (EV) sales surpassed 25% of the global car market in 2025, firmly establishing EVs as a structural driver of electricity demand growth, contributing approximately 8% (66 TWh) to the 849 TWh global rise in 2025, up from 36 TWh in 2024. This burgeoning EV fleet displaced a substantial 1.8 mbpd of oil demand in 2025, with new EVs alone displacing 0.5 mbpd. This additional transport electrification in 2025 will avoid roughly 80 MtCO2e emissions annually, exceeding the total annual power sector emissions of the UK.
Further expansion of renewables to meet this growing demand from sectors like transport is being significantly bolstered by the accelerating rollout of energy storage technologies. Falling battery prices are catalyzing rapid deployment. Battery pack prices for stationary storage applications dropped to a record low of $70/kWh in 2025, representing a steep 45% decline from 2024. Global battery storage capacity additions reached an estimated 247 gigawatt hours (GWh), an impressive 46% increase year-on-year. This capacity is sufficient to shift approximately 14% of daily solar generation to other hours, up from 13% in 2024 and just 5% in 2022, enhancing grid stability and further eroding the rationale for traditional baseload power from fossil fuels.
