- New BCG Report Outlines Seven Macro Shifts Reshaping the Energy Transition and Explores Four Major Implications of These Shifts
- Natural Gas and Nuclear See Revival Amid Push for Firm, Dispatchable Power
- Electricity Demand Enters Structural Supercycle, Driven by AI Datacenters and Growing Need in Global South Markets
- Large-Scale Grid Infrastructure Costs Up 6x Since Last Major Build-Out; Capital Intensity Reshapes Energy Economics
- Cost of Capital Set to Become Largest Cost Component on Energy Bill
BOSTON—Energy security and affordability have moved to the forefront in many regions as the global energy transition has entered a more turbulent, complex phase, shaped as much by infrastructure realities and geopolitical risk as by decarbonization ambitions. Drawing on global data and industry analysis, a new report by Boston Consulting Group (BCG) titled The Energy Transition’s Next Chapter identifies seven macro shifts reshaping the transition and explores four major implications raised by these shifts.
The greater urgency around energy security has profound implications for the energy transition. Increasingly, countries are focusing on expanding the share of their energy that comes from indigenous sources, and many are also seeking to build localized value chains for critical low-carbon technologies, often through trade protections and industrial policy.
The cost of delivering large-scale grid infrastructure has increased about sixfold since the last major build-out in the 1960s, driven primarily by permitting delays, labor constraints, rising technical complexity, and supply chain bottlenecks. This is the case not only for electricity grids, but more broadly across all energy infrastructure.
These pressures now risk slowing the energy transition and raising end-user costs. Energy affordability, especially for the poorest households, has deteriorated over the past 25 years, most notably in recent years. This has contributed to an erosion of support among consumers for the transition.
“The evolving and complex environment we observe today does not signal a retreat from the energy transition overall. In many cases, energy security and affordability can be aligned with decarbonization goals,” said Maurice Berns, BCG senior partner and chair of the Center for Energy Impact. “The question now is not whether these transitions will continue, but how and at what pace. It is essential for countries to reduce the overall cost and accelerate the build-out of enabling infrastructure.”
The report outlines a new “build the assets” phase: After decades of focusing on maintaining or upgrading existing energy infrastructure, the industry is moving into new era is characterized by large-scale capital build-out. Global energy capex is expected to rise by roughly 50%, from about $7 trillion to about $10 trillion from 2024 to 2030 (equivalent to approximately 1.5% of global GDP), with much of the investment in grids and renewables. This marks a structural shift, particularly for advanced economies such as the US and Europe.
As a result, the cost of capital is becoming the single largest driver of system economics. But companies and supply chains are not yet configured for this capital-intensive build-the-assets phase.
Other key insights include:
- Electricity demand is booming and has been pushed into a structural supercycle. Fueled in part by AI data centers, as well as by rising demand for cooling and growing electrification of transport, buildings, and industry, demand is projected to rise by more than 7 petawatt-hours (PWh) in the 2020s and 2030s.
- Firm, dispatchable power is resurging. Nuclear power is experiencing a renaissance, and natural gas generation capacity is expected to increase by roughly 40% through 2040 as demand increases, reflecting the need for firm, dispatchable power—electricity generation that can be dialed up or down to balance supply and demand.
- Demand trajectory for oil and gas is higher than expected. Even in accelerated transition scenarios, sectors such as aviation, heavy transport, and petrochemicals currently lack scalable alternatives, keeping oil demand structurally resilient. Meanwhile, gas—particularly liquefied natural gas (LNG)—is seeing a more robust and strategic expansion, with global demand expected to rise 80% by 2040 and 38 new importing countries projected to be joining the market.
- Technology cost trajectories are diverging. While solar, onshore wind, and batteries have achieved cost reductions of up to 90% since 2010, costs for critical strategic solutions such as green hydrogen and long-duration storage remain higher than previously anticipated.
The report concludes with recommendations for role-specific actions that key players such as grid owners and operators, large consumers, and energy producers and suppliers can take to advance the energy transition, along with options for policymakers as they navigate it.
“Roughly two-thirds of energy-related emissions can be addressed using commercially viable and soon-to-be viable technologies, especially in parts of power generation and in electrifying certain end uses. Progress can be accelerated by doubling down on proven technologies and placing strategic bets strengthened through clear and stable policy frameworks,” said Rich Lesser, BCG’s global chair. “That said, no single, one-size-fits-all energy transition exists. Starting points vary widely, and strategies must be tailored—not just at the national level, but in many cases regionally and locally. What works in Germany may not work in Indonesia or the US.”
Download the publication here.
Media Contact:
Eric Gregoire
+1 617 850 3783
gregoire.eric@bcg.com