From an outsider’s perspective, it can be unclear how well the energy transition is progressing: Are we decarbonising our energy system fast enough? Are we on track to meet net-zero targets? What’s needed to move into the next phase, and what low-hanging fruits could accelerate the process? And… with Trump’s imminent returning to the White House, will the transition survive the policy headwinds that will surely come?

The importance of shifting to a low- or zero-emission energy system cannot be overstated. About 80% of all greenhouse gas emissions stem from our energy use, in some form.

A year ago I embarked on a journey into the energy transition. I was already neck-deep into climate tech, but green energy had not been my focus.
Along the way, I learned about the market’s dynamics, the actual impact of policies, adoption trends, bottlenecks, tail and headwinds and the potential of emerging technologies. I spoke to many investors and startups, read ferociously, consumed countless hours of expert content, and even made a few angel investments. I believe I now have a handle on the complexities and opportunities in this space, and I’d like to share my learnings.

This post is my humble attempt at a high-level snapshot of the state of the energy transition, as of Nov 2024, and at highlighting key technologies that could open critical bottlenecks.
It’s written for the curious reader who isn’t involved in climate or in energy in their day-to-day but cares deeply about our future.

The good news first

Not so long ago, the energy transition was no more than a dream, evangelized by a some bright-eyed idealists.
Happily, those days are over. In most countries, solar and wind projects are already the cheapest option for new energy generation when compared by their levelized Cost of Energy (LCOE), which accounts for all costs throughout a project’s lifetime. More on that below.
Happier still, solar and wind prices continue to fall, and rather fast, thanks to their strong learning curves.

Thanks to this cost decline, direct government subsidies that were once needed to make renewable energy competitive, are increasingly unnecessary. Today, solar and wind generation simply makes financial sense, driving massive private investment. Case in point: this year, solar power projects are expected to account for $500 billion in investments — more than the investment in all other energy sources combined. While the upfront costs (CAPEX) of solar and wind remain higher than fossil fuels, market momentum continues to be strong.
Nuclear is not taking part in the same positive trend . While a source of continuous emission-free generation has considerable advantages compared with intermittent solar and wind, the mature nuclear fission technology is not enjoying a learning curve and is actually becoming more expensive over time. Small modular reactors (SMRs) are still basically emerging technologies, and not free of challenges — mostly unit economics — while nuclear fusion is ever a rather distant moonshot.

The growth of renewable generation has consistently exceeded expectations. Each year since 2000, projections for new renewable installations have been underestimated, with actual installations far surpassing forecasts.

This is fantastic news for the environment, of course. Cheap, scalable renewable energy means we should be able to power our homes, workplaces, transportation, industry, and even food production with clean electricity that’s produced using today’s mature technologies — no need to wait for nuclear fusion or other breakthroughs to become viable. That is, if we overcome the speed bumps and roadblocks that are obviously there.

But all in all — good news indeed!

Can Trump’s anticipated spoke actually make the transition’s wheels stop?

When Trump returns to power, it’s a safe bet that the US will exit the Paris Accords again. Cutting emissions will likely take a back seat to “Drill, baby, drill!” — a signature part of his manifesto.
Republican control of both houses would mean new policies supporting the transition will be few and far between. What’s more, Trump will likely reverse parts of Biden’s Inflation Reduction Act (IRA).

However, it’s unlikely he’ll undo that very important policy entirely. The IRA’s subsidies have significantly boosted the US’s green industries, creating jobs and fostering growth. Trump might hesitate to undermine that.
So yes, there will be setbacks, but stopping the transition altogether? I doubt that very much. The inflection point for renewables is now in the past and the market has taken the lead. Renewable energy is now a runaway train picking up speed.

So are we done?

Can we finally kick back and relax as it’s all going well?
Not so fast I’m afraid. While progress in some areas is faster than we could have even hoped for, there are some major challenges we need to overcome if we want to stay on track towards net zero:

Challenge 1 — Decarbonising Hard-to-Electrify Energy Uses

Certain energy uses are tough to electrify — think long-haul transport (aviation, shipping), heavy industries needing extreme heat (steel, cement), or synthetic fertilizer production. The list does go on, but thankfully it’s not endless.
These applications and sectors require alternatives to burning fossil fuels, along with additional clean energy and robust supply chains.

In some cases, heat for industry, including at very high temperatures, can be generated directly from a nearby clean energy source, stored and then used. But many applications and most locations would need to use what is called an “energy carrier”.

Here’s where “green” hydrogen comes in, produced via the emissions-free process of electrolysis (splitting water using renewable electricity). Hydrogen is versatile — it can fuel engines, power furnaces, or convert back into electricity using fuel cells.

Silver bullet found? Not quite unfortunately. Hydrogen has its own challenges, and the industry is locked in endless debates over how to best use it, or rather — mostly how not to. Alternatives like “e-fuels” (synthetic hydrocarbons such as ammonia, made by combining green hydrogen and CO2) or recyclable energy carriers like iron powder offer promise but need further development of technology and infrastructure.

A variety of solutions will be needed, as each power-hungry application has its own requirements and constraints while each solution comes with its own trade-offs. Scaling them will require massive investments in R&D, infrastructure, and supply chains. This is where a potential Trump administration could considerably slow progress, by limiting subsidies or withholding regulatory tailwinds.

Challenge 2 — Electrifying everything else

Beyond the “hard-to-electrify” sectors I covered already, basically all other fossil fuel uses need to be replaced with renewable electricity. Think road and off-road vehicles, heating of home and offices and various heat-intensive industrial processes like paper or food production.
Electrification isn’t just cleaner — it’s often far more efficient. For example, heat pumps are up to four times more energy efficient than gas boilers.

Widespread electrification will require more than simply replacing old systems. It would also require a lot more electricity to be generated, transmitted and distributed. Add to that the high electricity demand of AI-focused data centers, and it’s clear we’re looking at a dramatic increase in electricity demand over the coming years.

This creates two new challenges, besides simply generating more clean energy, which, as I mentioned above, should now be the least of our problems:

1) Our electric grids can’t keep up: transmission (high-voltage, long distance) and distribution (mid and low voltage, short distances) grids, globally, aren’t built to sustain the additional demand. Upgrading them takes many years, due to hardware shortages (e.g. transformers), lengthy permitting and a chronic shortage in skilled workers.
This leads to an increasing “grid congestion”. In many markets, the grid cannot support additional electricity demand but at the same time, it can also not handle more renewable generation. Overall capacity limitations is one of the reasons for that, while supply-demand timing imbalance — the other.

2) Supply and demand are increasingly out of whack: If we electrify everything without changing when that electricity is consumed, much of that new demand will take place during peak demand hours, when electricity is already scarce. Solar and wind don’t help filling that gap unfortunately, as they work to nature’s drumbeat, and not that of the electric grid. As a matter of fact, adding intermittent renewables can just as easily bring the grid to over-supply, which can lead to severe failures, as much as it can lead to under-supply when the sun doesn’t shine and the wind doesn’t blow.

This mismatch is already a bottleneck for decarbonisation: new solar and wind projects often wait long years for grid connections, and businesses face long delays for new or upgraded connections. Here in the Netherlands, 3.5 GW of renewable generation capacity wait for approval while over 10,000 businesses are stuck in a queue for grid connections. Seems absurd? Temporary imbalances are the reason behind this.

The grid congestion, while in many ways inherent to the energy transition, is a major obstacle to the transition’s progress. It is a far bigger challenge than Trump’s upcoming term in power.

The low hanging fruit

Make no mistake — we need to tackle every challenge I mentioned — and do it simultaneously — if we are to overcome the bottlenecks of the energy transition before the climate crisis spirals out of control. Big infrastructure investments, incremental improvements to technologies and deep-tech solutions will be essential, even though they’ll take years to make an impact.
But alongside those long-term efforts, there’s also plenty we can implement rapidly and influence the pace of the energy transition. These are the low-hanging fruit.

Essentially, they are a set of technologies and business models focused on relieving grid congestion and on quickly balancing supply and demand. Unlike other commodities, electricity prices are specific to a region and a time and fluctuate wildly when supply and demand are out of balance. Negative electricity prices are in effect for hours on end and hundreds of times per year in many western markets while sky-high prices are frequent when renewables aren’t generating. These wild price fluctuations create strong incentives for implementing ways to regulate supply and demand - through technological and business model innovation.

Batteries to the rescue
Electricity has always been tricky to store — but here’s the good news: battery prices have plummeted by 90% over the past decade and their prices are still dropping rapidly. This trend, driven by technological advances and maturing supply chains, is a perfect case of Wright’s Law in action: the more of them we make, the cheaper they become.

At today’s prices, batteries can pay for themselves in just a few years by charging during cheap, abundant energy periods and discharging during expensive peak times. They hold the potential to significantly reduce their owner’s energy bills. Adding sufficient short and long-duration storage — at generation sites, at substations, and even in businesses and homes — would dramatically ease grid congestion, stabilize supply and demand, and accelerate renewables adoption.

Smarter grid-edge management
Managing energy intelligently at the grid’s edges — whether residential, commercial, or industrial — reduces congestion and integrates renewables faster. Examples for that include:

• Homeowners with solar panels and batteries can become largely grid-independent when the generation and consumption is properly orchestrated.
• Industrial zones coordinating and centrally-managing shared energy loads to avoid exceeding capacity limits.
• Communities storing solar-heated water in summer for winter use in swimming pools or district heating.
• EV fleets charging when electricity is cheapest rather than immediately when plugged in.
• Aggregators managing thousands of home batteries, charging when the grid is overloaded and discharging when power is needed most, providing the grid with necessary balancing services.

The possibilities are endless, limited only by our ingenuity and the ability to align incentives.

Looking forward

The past year has convinced me that the energy transition is truly underway. I’m excited by the progress we’ve made, but significant roadblocks remain. There are clear easy wins we can and should act on right away and there are long-term policies and investments we must prioritise.

I’m optimistic. Opportunities to create impact, drive change, and generate value for investors are everywhere. I also see the pathway for the needed technologies to come of age and scale.

What am I missing? Do you see things differently?
I’d love to hear your thoughts, corrections, or additions. Let’s discuss!