Decarbonisation Technology February 2026 Issue

The US energy transition 2025

A year of momentum, volatility, and recalibration has led the US to start building an energy system that can meet rising demand and navigate global uncertainty

Nishadi Davis Wood

E nergy transitions rarely follow linear paths. They move in cycles of ambition, adjustment, and renewed direction as technology, markets, and policy interact in complex ways. In the US, 2025 became a defining year in that ongoing evolution. It was a year shaped by a recalibration of expectations and priorities amid rising demand, global instability, domestic political change, and persistent uncertainty around the policy frameworks meant to govern the transition. The year opened with unusual ambiguity. Much of the Inflation Reduction Act’s (IRA) long- awaited guidance had still not been finalised, leaving investors and developers unclear about qualification rules, credit calculations, prevailing wage requirements, and the boundaries of eligibility for emerging technologies. At the same time, signals from the incoming administration suggested that fiscal restraint, domestic manufacturing, and national energy security would weigh more heavily in policy decisions going forward. These early signals led to questions about whether the US would sustain the same pace in the transition to clean energy seen immediately after the IRA’s passage. By midyear, the One Big Beautiful Bill Act (OBBBA) provided the answer, reshaping the contours of federal clean energy policy. The legislation preserved several core credit structures but reduced their scope. It shortened qualification windows, tightened domestic content requirements, narrowed transferability provisions, and added stronger restrictions related to foreign entities of concern (US Congress, 2025). While these changes did not dismantle the IRA, they pulled back many of its most generous provisions and shifted the ground on which developers had been planning.

However, to characterise 2025 as a reversal would overlook the deeper momentum shaping the US energy system. Even as federal policy placed renewed emphasis on cost discipline and energy security, the broader ecosystem continued to advance the transition. Utilities pressed ahead with grid modernisation, developers restructured but did not abandon clean energy pipelines, and industrial players moved forward with decarbonisation strategies tied to competitiveness and long-term resilience. The national posture shifted toward pragmatism, but the underlying drivers of the transition remained firmly in place. Progress was shaped less by sweeping policy signals and more by practical realities, including long interconnection queues, prolonged permitting timelines, supply chain pressures, and a global environment that elevated reliability and energy security as central considerations. In this landscape, the transition did not stall; it evolved into a more measured, implementation-focused phase. The result is a transition still very much underway, but shaped by a more grounded understanding of how rapid technological change meets the realities of physical infrastructure and complex stakeholder expectations. Demand growth reshapes energy landscape For the first time in nearly 20 years, the US experienced sustained electricity demand growth across consecutive years. Energy Information Administration (EIA) data showed national consumption rising by roughly 2% in both 2024 and 2025, reversing a long period of stagnant demand that began in the mid-2000s. This growth was structural rather than cyclical, driven by several reinforcing forces ( US EIA, 2025d ) (see Figure 1 ).