Clean energy deployment continued to expand in 2025, but global energy demand also increased, with fossil fuel consumption remaining significant, according to a new analysis by McKinsey & Company. McKinsey’s report, Investing in the energy transition: Time to look at whole-system value, examines the energy transition through demand, investment and deployment rather than focusing solely on low-carbon installations.
Solar capacity increased by about 30% in 2025, while oil demand rose by roughly 1.3 million barrels per day. Coal consumption also reached a record level. Overall energy demand increased by 1.3%, broadly in line with annual growth rates since 2013.
The trends indicate that different energy sources are continuing to expand in parallel rather than being consistently replaced at the global level. McKinsey notes that this varies significantly by geography.
Around $3.3 trillion was invested across the global energy system in 2025. Approximately $1.8 trillion was directed towards fossil fuels, power generation and low-carbon technologies. Upstream oil accounted for about $540 billion of fossil fuel capital expenditure, while solar was the largest clean energy category at roughly $440 billion.
McKinsey argues that investment volumes do not necessarily reflect the value technologies provide to the energy system. As energy demand and generation increase, infrastructure for connecting, balancing and securing supply, including grids, transmission, storage, dispatchable backup and flexibility, will also need to expand.
The report recommends that energy investment decisions consider system resilience, the technologies providing the greatest system value, economic efficiency and the extent to which clean energy deployment can reduce global emissions.
For policymakers, investors, utilities and industrial companies, McKinsey suggests combining low-carbon power with flexibility, dispatchability and diversified supply chains, while reducing permitting delays and accelerating transmission development.
