KPMG analysis shows the global energy transition is splintering into competing regional power models (nuclear SMR, renewables-plus-storage, dispatchable gas) as AI demands outpace unified solutions.

The world is investing in clean energy at unprecedented speed. Solar generation grew by 30% in 2025, battery capacity expanded by 66%, and electrification continues to accelerate. Yet fossil fuels still provide 86% of global energy supply. Energy demand continues to rise across every major source, and so do emissions.

The idea that the world is moving along a single, coordinated energy transition is becoming harder to defend. Instead, we're seeing a more fragmented, regional and competitive energy system emerge. According to Wafa Jafri, Partner and UK Head of Energy Strategy & Global Lead for Energy Transition, the biggest shift in energy today isn't the growth of renewables or the rise of AI. It's that countries are increasingly pursuing different pathways to energy security, based on what will keep economies growing, businesses competitive and societies secure.

Different regions are making very different choices—accelerating renewables deployment while strengthening energy security through fossil fuel reserves; using energy abundance to expand both hydrocarbons and clean power; reducing dependence on Russian gas while navigating new reliance on critical minerals and LNG imports; pursuing electrification to improve energy sovereignty; and expanding renewables while continuing to maximise value from hydrocarbons.

One trend cuts across every region: electrification. Global electricity demand is growing almost twice as fast as overall energy demand, driven by AI, data centres, advanced manufacturing, electric vehicles and cooling. China added the equivalent of Germany's entire electricity system in just one year, all from low-carbon sources. The energy demands of AI are reshaping infrastructure investment—in some parts of the United States, data centres already account for up to 20-30% of electricity demand. As the analysis notes, "The race for electricity is becoming the race for competitiveness."

For businesses, energy is no longer simply an operating cost. It is increasingly a strategic input that influences investment decisions, supply chains, growth plans and resilience. Recent geopolitical disruptions have demonstrated how quickly shocks can ripple through supply chains, and rising energy costs impact everything from food prices and industrial production to data centre operations and consumer spending. "Access to reliable and affordable electricity is becoming a defining competitive advantage."

The winners in the next phase of the transition may not simply be those producing the cleanest energy. They may be the countries and companies investing in the infrastructure that sits behind it. In many markets, businesses are already taking energy security into their own hands through on-site generation, long-term power agreements and investments in resilient supply chains.

In an increasingly fragmented energy landscape, organisations should strengthen financial resilience through energy planning and focus investment on scalable technologies. The energy transition is no longer a race towards a single destination. It is a competition between different models of growth, security and resilience. Businesses that understand that shift will be better placed to navigate the risks and capture the opportunities.