Energy investment hits record $3.3t in 2025 despite grid funding gap

Grid upgrades and storage got only $479b of the total investment.

Global investment in the energy system reached a record $3.3t in 2025, with $1.8t directed to fossil fuels, power generation, and low-carbon technologies, according to the McKinsey & Company.

In an analysis published 1 September, McKinsey said the remaining $1.5t was split between grid upgrades and storage ($479b) and energy efficiency and end-use ($773b).

Solar was the largest single low-carbon investment category, drawing about $440b, comparable in scale to the largest fossil-fuel category.

McKinsey said the finding challenges the assumption that capital is the primary constraint on the energy transition.

“Further, whilst generation is expanding quickly, the infrastructure needed to connect, balance, and secure that supply—including grids, transmission, storage, dispatchable backup, flexibility, and fuel security—remains underfunded and underbuilt,” the firm said.

Solar delivers low-marginal-cost electricity with no direct generation emissions, but its variable output must be absorbed by the rest of the system.

Grid and transmission build-out continues to lag generation build-out in many major markets, McKinsey said, citing long connection queues, complex permitting processes, and supply-chain bottlenecks for critical equipment.

McKinsey warned that a system can add generation capacity without becoming more reliable, deploy energy faster without becoming more affordable, and scale its fastest-growing technologies without addressing the vulnerabilities that emerge under stress.

“In a faster-growing and more complex energy system, those gaps may matter more,” it added.