Energy Industry 2026 Outlook: Key Predictions from Rystad Energy

The energy sector is on the cusp of a transformative year in 2026, as detailed in the insightful podcast
“A Glimpse into Energy in 2026 with Jarand Rystad” from Rystad Energy. This analysis provides crucial insights for energy executives, investors, policymakers, and traders eager to understand where the industry is heading amidst geopolitical shifts, technological advancements, and climate commitments.

In this comprehensive overview, we explore the major themes: the shifting landscape of natural gas supply and demand, the dominance of renewables in new power capacity, the stagnation of thermal generation, electric vehicle (EV) trends, and the worldwide push toward peaking emissions by 2026. Let’s delve into the key predictions and what they mean for stakeholders across the energy value chain.

Understanding the 2026 Energy Outlook: Primary Insights

Natural Gas Supply-Demand Imbalances

Rystad forecasts a significant natural gas demand increase of +45 million tons/year juxtaposed with a supply rise of +60 million tons, primarily fueled by LNG exports and pipeline deliveries. This surplus will influence prices and market dynamics, possibly leading to lower prices that favor switching from coal to gas and accelerating LNG trading.

Moreover, resilient US shale and oil demand are expected to peak early in the 2030s, ensuring stable supply in the near term, yet market participants must watch for shifts driven by policy and demand trends.

Renewable Power Expansion and Capacity Growth

The global electricity capacity is set to expand significantly, with a projected addition of 1,100 TWh annually in 2025-2026. Solar remains the dominant source, with capacity expected to grow from 1,868 GW in 2024 to about 2,412 GW by 2025. Wind, geothermal, hydropower, and biomass will contribute as well, pushing the share of clean power from 9% in 2015 to over 14% by 2025.

Onshore wind stability is notable, with Europe, the Middle East, and China leading capacity additions—each adding around 142 GW.

Battery Storage and Grid Flexibility

Battery storage capacity growth is the fastest in the industry, critical for grid flexibility and balancing the intermittent nature of solar and wind. Europe, in particular, is witnessing outpacing solar deployment, leveraging large-scale storage projects to handle increased renewable penetration.

Thermal Power Generation and Market Saturation

Thermal power plants are expected to plateau, with coal-to-gas switching driven by lower prices and cleaner energy policies. Refinery utilization rates will surge, supporting margins amid steady exploration spend (~$60 billion annually).

Despite a robust upstream sector, exploration in offshore frontier regions—such as Africa, Namibia, and Brazil—continues with a success rate of around 38%, up from 23%, indicating increased drilling efforts.

Electric Vehicles and Data Center fueled Gas Demand

EV adoption trends continue to accelerate, complemented by the growth in data centers fueled by AI advancements, which in turn drive gas demand for power generation and cooling solutions.

Market Outlook: Oil and M&A Activity

The industry predicts no OPEC+ production hikes beyond current cuts. Oil prices are expected to follow post-2026 cycles, stabilizing for a period before potential upward trends. A notable trend is the anticipated $150 billion upstream M&A wave post-2026, emphasizing greater consolidation and strategic shifts.

Why 2026 Is a Pivotal Year in the Energy Transition

Amid geopolitical uncertainties—such as Venezuela’s instability, U.S. policy shifts, and evolving trade dynamics—2026 marks a critical inflection point. Renewable capacity surpasses new fossil fuel investments, signaling a possible end to the era of thermal power growth.

Rystad’s emission peaking forecasts—around 2026—are aligned with global efforts to limit temperature rise to 1.9°C or below. This transition unlocks massive opportunities for investors, innovator companies, and policymakers to shape a sustainable and resilient energy future.

Strategic Opportunities in the 2026 Energy Landscape

• Renewable Infrastructure Investment: With solar, wind, geothermals, and storage expanding rapidly, firms should prioritize projects with reliable, long-term returns.
• Upside M&A and Strategic Partnerships: The predicted $150 billion upstream M&A wave presents a prime opportunity for consolidators and explorers to enhance portfolios.
• Storage and Grid Modernization: Investing in advanced battery storage and flexible grid solutions is essential to managing the renewable surge.
• Gas Market Growth: Amidst flattening thermal markets, gas demand driven by data centers and vehicles offers new revenue streams.

FAQs About the 2026 Energy Industry Outlook

What are the main factors driving renewable growth in 2026?

Factors include declining costs, technological innovations in solar and wind, supportive policies, and increasing demand for clean power driven by climate commitments.

Will oil prices increase after 2026?

Post-2026, oil prices are expected to follow new cycles, with potential upward trends influenced by geopolitical events, supply stability, and global demand recovery.

How will storage technology impact the energy transition?

Rapid growth in battery storage offers grid flexibility, supports higher renewable integration, and helps mitigate intermittency issues, making renewables more reliable and economically viable.

What are the risks associated with the 2026 projections?

Key risks include policy uncertainty, geopolitical tensions, technological delays, and potential saturation of storage infrastructure, which could affect market timing and investment returns.

Conclusion: Navigating the 2026 Energy Transition

The 2026 energy landscape promises a dynamic transformation driven by renewables, technological innovation, and strategic industry shifts. While fossil fuels plateau, entrepreneurs and investors who leverage emerging opportunities in renewables, storage, and M&A will be well-positioned to thrive.

Staying informed and agile is critical. As Rystad Energy highlights, this is the fastest energy transition in history, offering unprecedented opportunities for those prepared to adapt.

For ongoing updates and in-depth analysis, visit Rystad Energy’s predictions for 2026 and related industry insights.

Actionable Takeaways

• Invest in renewable capacity and grid flexibility technologies now.
• Monitor geopolitical and policy developments that could impact supply-demand dynamics.
• Prepare for a wave of M&A activity in upstream oil and gas sectors post-2026.
• Leverage AI and data-driven solutions to optimize energy operations and demand forecasts.