Energy Transition M&A Outlook 2025

In 2024, energy transition M&A reached USD497 billion, representing 13.4% of global M&A activity (USD3.7 trillion). This marks a slight decline from 14% in 2023, attributed to broader market recovery and improved economic conditions. Central banks’ interest rate cuts in late 2024 further supported market growth.

From 2022 to 2024, energy transition deal values showed a consistent upward trend. Modest activity in 2022, impacted by geopolitical tensions and post-pandemic uncertainty, gave way to growth in 2023 as investor confidence improved. The strongest rebound came in 2024, with lower inflation and better capital access driving larger transactions.

Increased demand for critical minerals essential to the energy transition also played a key role in natural resources supply chain transactions. Companies pursued acquisitions that would strengthen their supply chains and secure access to these vital resources. In particular, the energy transition value chain sub-sector saw an increase in both deal volume and value, driven by a variety of factors.

These include a growing focus on energy efficiency to reduce operational costs, manage load growth, and save on energy expenses across various types of equipment. Additionally, the widespread trend toward electrification is accelerating investments in the energy transition value chain sub-sector. Companies are also benefiting from increased opportunities to sell into high-demand sectors such as data centers and new commercial buildings, where energy-efficient solutions are critical.

Our internal survey revealed two distinct perspectives on the motivations behind energy transition deals, with financial considerations identified as the primary driver:

• Businesses are emphasizing favorable deal structures and return on investment as critical factors in pursuing energy transition opportunities.
• They're also recognizing the role of ESG factors. Corporates are becoming increasingly aware that integrating ESG principles into their core strategies can lead to superior long-term results and a competitive advantage.

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The Americas led energy transition M&A in 2022–2024, with deal value rising from USD101 billion in 2022 to USD256 billion in 2024. Europe ranked second, contributing 23% of global deal value (USD114 billion) in 2024. While deal volume in Europe surged by 48%, modest value growth reflects a focus on early-stage projects and strategic partnerships.

China’s deal volume dropped 14% in 2024, though deal value remained stable due to large-scale projects in offshore wind, hydrogen, and energy storage. Africa, with the lowest activity, saw a 140% increase in deal value to USD12 billion, driven by critical mineral acquisitions.

Each region presents its own unique challenges in the context of the energy transition. The results of our internal survey indicate that grid constraints are the most pressing issue in Europe and in Asia-Pacific, with 87% and 67% of respondents from each respective region identifying it as a significant challenge.

Oil and gas companies and other new entrants have been pursuing strategic growth through M&A in the renewable energy generation segment. Many of these companies have set ambitious targets to transform into integrated energy providers, significantly increasing their renewable energy capacities by 2030. This transformation often involves investments in large-scale renewable energy projects, such as offshore wind farms.

The majority of respondents to our internal survey (50%) indicate that new players are entering the energy and natural resources sector through energy transition deals. The primary driver motivating new market entrants seems to be financial metrics (69%), which is understandable given the significant investment required to participate in this sector.

Energy transition M&A is poised to continue to grow in 2025 and beyond, driven by several key factors. First and foremost, accelerating decarbonization efforts and ESG imperatives are expected to continue to have a significant impact on M&A activity. In line with an increasing focus on net zero targets by governments and companies, there will likely be growing interest from investors in acquiring and investing in businesses, technologies, projects and asset portfolios embedded in the energy transition and its myriad supply chains.

The overwhelming majority (69%) of respondents to our survey believe that there will be more energy transition deal activity compared to other sectors over the next 12 months in 2025.

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