The decline of the “fossil era”
The latest IEA report highlights data and trends that point in one direction: the transition is already underway, but without grids, there can be no real revolution.
In 2025, according to the latest report by the International Energy Agency (IEA), global energy investments are set to reach a record-breaking $3.3 trillion, despite an environment marked by economic uncertainty and geopolitical tensions. Over two-thirds of this figure—around $2.2 trillion—will go toward non-fossil technologies.
The report highlights a clear acceleration toward low-emission solutions: renewables, nuclear, batteries, smart grids, clean fuels, energy efficiency, and the electrification of end uses. For the first time, global investments in low-emission solutions (and the resulting electrification of consumption) will consistently surpass those in fossil fuels. This shift is driven not only by climate concerns, but also by energy security and targeted industrial policies.
Among fossil fuels, the trend is shifting: gas is gaining relevance over oil. Methane is still considered a transitional energy source, as its carbon footprint is lower than that of coal or oil.
However, not all that is “non-fossil” is strictly “green.” Solar power is currently leading the way, with around $450 billion in investments. Yet we’re also witnessing a resurgence in conventional nuclear investments, especially in countries seeking a stable, programmable energy base—at least for the next two decades. Fusion, though not yet industrially viable, is no longer seen as a distant dream.
Solar is advancing everywhere, from large-scale plants to rooftop installations. Wind energy, however, is declining proportionally: many areas with favorable resources have already been tapped, and new projects are proving less competitive.
In short, the decline of the “fossil era” and the rise of the “green era” is anything but uniform. This revolution risks leaving some behind. The surge in clean investments often clashes with the technical, geopolitical, and infrastructural realities of a world still heavily imbalanced. The road to the fossil sunset is riddled with uncertainty and paradoxes.
Inadequate Grids
Despite country-specific differences, one trend is clear: Europe, Brazil, India, China, Japan, South Korea, and the United States (combining grid and renewable investments) are massively investing in renewables. As mentioned, solar power is at the heart of this transition, with photovoltaic systems spreading from utility-scale plants to household rooftops.
But one structural issue threatens to slow this momentum: investment in power grids is not keeping pace. Though grids represent the second-largest global expenditure item, they remain insufficient to support the rapid expansion of renewables.
The issue is technical—but crucial. Solar power generates direct current (DC), while traditional power grids operate on alternating current (AC), at 50 Hz in Europe and 60 Hz in the U.S. Integrating solar energy into the grid requires advanced conversion and stabilization systems (inverters). Without a sufficient baseload to synchronize phase and ensure grid stability, the generated energy may not be usable, creating risks of instability or blackouts.
In other words: we may end up with many solar panels and little capacity to use their energy because the grid isn't ready. It would be like trying to funnel highway traffic through a country road.
This issue primarily affects industrialized nations, where existing grids—designed for centralized, not distributed, generation—require deep structural upgrades. Developing countries, on the other hand, could build more modern grids from scratch. But they often lack the economic resources to do so.
Global Disparities
One of the most surprising findings of the IEA report concerns China. Often perceived as a brake on ecological transition, China is in fact the world’s largest investor in clean energy, with projected spending of $627 billion in 2025—well above the $400 billion by the U.S. and $386 billion by the EU.
However, China is also the world’s largest investor in fossil fuels, with $257 billion expected to go to oil, gas, and coal (compared to $187 billion in the U.S.). Its strategy is twofold: on one hand, it leads the world in solar (dominating photovoltaic panel production), batteries, and electric vehicles; on the other, it continues to heavily fund coal to ensure domestic energy security. A paradox with global implications.
India, while starting from a lower baseline, is following a more consistent trajectory: it aims to meet over 50% of its energy demand from renewables by 2030. Solar is expanding rapidly, but structural barriers remain: India’s power grid is not yet equipped for large-scale electrification. Significant investments are needed to prevent bottlenecks that could stall the transition.
The situation in Africa, especially Sub-Saharan Africa, is different again. Despite accounting for 20% of the world’s population, the continent attracts just 2% of global clean energy investments.
With a booming population comes rising energy demand—but financial capital, infrastructure, and technical expertise are lacking. The risk is of a missed transition: without external funding and access to technology, many African countries may remain dependent on fossil fuels—sometimes relying on their own hydrocarbon production, as in Nigeria, Angola, Congo, and Gabon—leading to a significant environmental impact.
A qualitative issue also emerges. The expansion of electric grids in Africa is often carried out at the “bare minimum” due to economic constraints, preventing the development of decentralized energy systems—like local solar installations or microgrids—precisely where they’re most needed. In this way, the transition risks deepening inequality instead of reducing it.
End Uses
Finally, there's another key aspect—though only briefly touched on in the report: the transition is not just about how we produce energy, but how we use it. And here, another challenge emerges: the electrification of end uses—homes, industries, transportation—is still too slow and fragmented.
Take housing, for example. Even in many new homes, the setup is hybrid: rooftop solar panels may be installed, but heating still runs on gas and traditional stoves remain in use. Heat pumps are gaining ground but still face resistance. The result: homes that generate clean energy but don’t use it fully. A full shift to electric would be costly and difficult to afford without significant subsidies.
The same applies to industry. Most energy-intensive plants still run on fossil fuels, and converting them requires major investments. Electrification demands not only new technologies but also workforce training, grid adaptation, and the development of new supply chains. Yet, as the IEA report notes, investments in the electrification of end uses still lag behind those in generation.
The risk is clear: generating more and more renewable energy without the means to use it effectively. A halfway transition, in short. And a challenge that—once again—concerns not just technological innovation, but also political vision and cross-sector coordination.
With contributions from Paolo Dutto, Partner at BIP.
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Our word for this post is baseload
The minimum and continuous amount of electricity that a power grid must supply to ensure stability and constant operation. It keeps supply and demand in balance, preventing fluctuations and outages.
Essential for integrating intermittent sources such as solar and wind, the baseload is traditionally provided by thermal or nuclear power plants, which can deliver energy in a predictable and controlled manner. In the context of the energy transition, the issue of baseload becomes crucial to support the growth of renewables without compromising system reliability.
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