The Transition from Fossil Fuels to Sustainable Energy Sources in Power Generation

The global energy sector is undergoing a pivotal transformation. Electricity generation from fossil fuel sources is now beginning to decline in absolute terms, despite a continuing increase in global electricity demand. This transition is progressing at a notable pace, with Rystad Energy’s base case forecast projecting negative growth for fossil fuels in the current year. However, an immediate and steep decline is not expected. The peak of fossil fuel usage could be deferred until 2026 or even 2027, particularly in the event of extraordinary demand growth or underperformance by renewable energy sources. Nonetheless, a structural decline in fossil fuel-based power generation is anticipated to commence in the near term.

In 2025, fossil fuel generation is expected to decrease by approximately 97 terawatt-hours (TWh). Concurrently, non-fossil energy sources—chiefly renewables—are projected to expand by a record 1,270 TWh. This growth will not only meet the entirety of the global increase in electricity demand but will also lead to a net decline in fossil fuel usage. This shift follows a remarkable performance in 2024, during which non-fossil generation increased by 876 TWh, nearly triple the 308 TWh growth in fossil generation.

This two-year interval represents a fundamental deviation from historical trends in electricity generation. It marks a reversal of the long-standing dominance of fossil fuels, which accounted for approximately 65–70% of net power additions between 1995 and 2007. From 2007 to 2015, this share fell to about 55%. In stark contrast, the period from 2015 to 2025 is expected to see fossil fuels contributing only 20–25% of global net capacity additions, with non-fossil technologies—principally solar and wind—emerging as the primary drivers of growth.

Looking ahead, this trend is projected to accelerate. Non-fossil generation is expected to increase by over 1,000 TWh in 2025 and surpass 1,500 TWh per year by 2035. In parallel, fossil-based generation is forecasted to decline by approximately 250 TWh annually by 2030, with the annual reduction reaching nearly 350 TWh by 2035.

Accordingly, 2025 is positioned to be a defining year for the global power sector, marking a decisive inflection point at which rising electricity demand is met predominantly through renewable sources, while fossil fuel generation begins a sustained phase of structural decline.

Source: Rystad Energy