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Key Trends in Clean Energy for 2026

As we approach 2026, significant shifts are underway in the clean energy landscape, driven by advancements in artificial intelligence (AI) and geopolitical dynamics. According to a newly released report from S&P Global Energy, these shifts are set to redefine energy markets and sustainability practices globally.

The Role of AI in Energy Demand

AI is poised to dramatically increase power demand, with projections showing a surge of 17% growth in energy needs from data centers by 2026. This figure aligns with a growing trend of 14% annual increases through 2030, potentially mirroring the total electricity consumption of India. The report emphasizes that this unprecedented demand will test the capacity and sustainability targets of energy grids worldwide.

Eduard Sala de Vedruna, Vice President and Head of Research at S&P Global Energy, notes that adapting to this rapid change will require enhancing the existing grid capacity and flexibility. As such, modernizing energy grids will become critical for ensuring energy security and maintaining competitive markets.

Solar Energy Installations: A Peak and a Shift

In what could be a temporary peak, solar installations are expected to witness their first annual decline in new additions in 2026. China, which has been a dominant player in global solar installations, will see a drop from approximately 300 GW in 2025 to around 200 GW in 2026, largely due to policy changes that favor competitive bidding over fixed pricing.

Despite this downturn, the cumulative capacity for photovoltaic (PV) technology is expected to double in the next five years, driven in part by innovation and increased adoption in emerging markets. Key factors such as battery storage solutions will also play a role in bolstering solar energy's scalability and accessibility.

Grid Modernization: A Critical Constraint

The aging infrastructure of energy grids poses a severe risk to the transition towards electrification and decarbonization. With significant portions of Europe's grid over 40 years old, the European Commission estimates nearly €584 billion in investments will be necessary by 2030 to support these goals. In the US, similar investments are critical to keeping pace with the demands of AI-driven growth, making grid modernization an urgent necessity for maintaining competitive advantages in the energy sector.

Evolving Power Purchase Agreements

The energy landscape is changing with the rise of flexible Power Purchase Agreements (PPAs). As renewable energy supply increases, traditional pricing models are being replaced by complex hybrid agreements that integrate various technologies and storage solutions. This evolution addresses the growing price volatility in the market, particularly in Europe where PPA indices currently do not reflect the rising costs of production.

The Green Hydrogen Movement

As global transitions continue to evolve, China has emerged as a leader in green hydrogen technology. The country is expected to double its electrolyzer capacity by 2026, positioning itself to not only supply domestic markets but also export technology and energy. This move represents a significant shift in the energy paradigm as economies look to decarbonize industrial processes.

The Expansion of Sustainable Aviation Fuel

In the aviation sector, global capacity for sustainable aviation fuel (SAF) is set to increase significantly, projected to rise by one third in 2026. Much of this capacity will be concentrated in Asia, which, despite having modest regional demand, aims to fulfill a European market that is currently experiencing supply shortages.

Electric Vehicle Adoption

China's electric vehicle (EV) market continues to gain momentum, with forecasts indicating that it could become the world's first major market dominated by EVs. Countries like Thailand, Indonesia, and Malaysia are emerging as new fronts for EV growth, while European nations tighten emissions standards and the US faces consumer demand fluctuations without federal incentives.

The Global Trade and Climate Policy Landscape

As climate impacts become more pronounced, global trade policies are increasingly focused on ensuring transparency in emissions reporting. The introduction of mechanisms like the EU Carbon Border Adjustment Mechanism requires accountability from industries across the globe, prompting companies to reassess their practices to remain compliant.

Conclusion

In conclusion, the evolving landscape of clean energy for 2026 presents both challenges and opportunities. As AI reshapes energy demand and geopolitical tensions influence supply chains, companies must navigate these changes with agility and foresight. Understanding the interconnected nature of these trends will be vital for leaders looking to thrive in the upcoming years. S&P Global Energy's report not only sheds light on these emerging trends but also emphasizes the essential link between energy expansion and sustainability that will define the future.

To explore the full report and its insights further, visit SP Global Energy.