The ‘Energy Transition’ May Be Disappearing, but Renewable Energy Isn’t
March 18, 2025
The “energy transition” has been the buzzword for the energy industry in recent years, suggesting a steady shift from fossil fuels to renewable energy. But at the industry’s most important energy gathering last week, it was clear something has changed.
The energy transition as previously envisioned is “troubled,” said Daniel Yergin, S&P Global vice chairman and author of a Pulitzer-prize winning history of energy.
“The energy transition has gone through a really big rethink and a recognition that there’s a much bigger emphasis on natural gas for the future,” said Yergin.
But while policymakers’ new thinking is focused on gas and other fossil fuels, that isn’t likely to reverse the recent gains renewables have made as part of the power mix. The market, not policy, is the real driver of energy supply.
Demand for power and electrification is surging. renewables—like wind and solar—are currently about 15% of the energy mix. They are expected to continue to grow, along with nuclear and oil and gas.
“When you think about the demand we have in the power sector, it’s unlike anything we’ve seen in the past,” said John Ketchum, CEO of NextEra energy. “We are expecting a sixfold increase in power demand over the next 20 years compared with what we saw over the prior 20 years.” Ketchum told the CERAWeek by S&P Global energy conference last week that would be a 55% increase in power demand in 20 years.
Data centers for artificial intelligence comprise 17% of that expected increase, while U.S. industrial activity and manufacturing expansion will make up the balance, he said. “We firmly believe in order to do it, we’re going to have to come up with ‘all of the above’ energy solutions,” Ketchum said.
NextEra is an electric power and infrastructure company. Its power generation portfolio includes renewables, nuclear, and natural gas.
Natural gas will be a winner since it is an abundant resource, relatively cheap, and reliable for power generation. The Trump administration is encouraging more natural gas drilling, while promising to ease regulations and clear the way, pipelines, export facilities and other infrastructure.
The energy transition, as endorsed by the Biden administration, was expected to lead to a world of net zero, where many carbon-heavy fuels would be replaced by renewables by 2050.
The “drill baby drill” policies of the Trump administration are at odds with that idea. The tax incentives for renewable energy from the Biden-era Inflation Reduction Act could be on the chopping block. President Donald Trump also withdrew the U.S. from the global Paris climate accord for a second time.
Energy Secretary Chris Wright said the administration is in favor of any energy supply that is affordable. He also is a supporter of nuclear and geothermal.
“Our view I would say is much more ‘all of the above.’ Anything that adds affordable, reliable, secure energy, this administration is in favor of,” he told reporters at the conference.
Wind power has “a singularly poor record of driving up prices” and is the focus of “increasing citizen outrage,” Wright said. “So wind is a little bit of a different case, but wind is less than 2% of global energy, and the biggest impact by far is higher electricity prices.”
Wright also wants to see the U.S. drill more oil and gas to lower prices.
The future of renewables in the mix could be impacted by what Congress does about incentives for renewables, Yergin said. “Hovering over the entire conference is what happens to the IRA. What survives and what doesn’t survive,” he said.
Twenty-one republican members of congress last week sent a letter to House Ways and Means Chair Jason Smith (R., Mo.) seeking to save credits for renewables, according to Politico. The committee is reviewing what to trim.
“Donald Trump might not like the IRA, but the IRA is employing a lot of people in Republican districts,” said Ed Mills, Washington policy analyst at Raymond James.
Power suppliers agree there needs to be renewables in the mix. Federal Energy Regulatory Commission data show that renewables were 90.5% of all new installed generation capacity last year.
Ketchum said renewables are currently quicker and cheaper to bring on line than gas, but all sources will be important in meeting future demand.
“There’s a timing difference in terms of when those general solutions can be brought to market, and there’s a cost difference,” he said. “Renewables are ready to go now because they have been up and running. Over the last five years, we’ve installed in this country 175 gigawatts of renewables, 13 gigawatts of gas, three gigawatts of nuclear.”
Ketchum said it could take until 2030 or later for a new gas installation to be completed because of a backlog in equipment and the permitting process. The cost of gas-fired generation increased threefold since NextEra built its last gas fired facility in 2022, he said. “There’s a lot of demand for gas turbines right now, so you have to get in a long line. It has pushed the price up,” as have labor shortages, Ketchum said.
GE Vernova CEO Scott Strazik told Bloomberg that his company has a backlog for gas turbines, power transformers, and switchgear stretches that goes into 2028, and he expects to be sold out through 2028 by the end of this summer.
The surprise surge in power demand over the past two years is a good problem to have. The industry will seek out solutions that make sense economically but also guarantee reliability. That means all of the above—renewables and fossil fuels—will continue to win investment.
“Nothing is 100% available, so you always need a backup,” AES CEO Andrews Gluki told the conference. “We aren’t going to build a $50 billion data center and have it backed up by something that is 99% available. It has to be 100%.”
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