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POWER ELECTRONIC TRENDS How is 2025 shaping up for the power electronics industry?

From Nigel Charig 11 min Reading Time

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Worldwide electricity consumption is expected to rise at its fastest rate in recent years; however, the aggregated growth in renewable and nuclear sources is expected to cover this increased demand. This article discusses how diverse technology trends will be helping to maintain this balance.

To meet growing electricity needs and integrate renewables, the power electronics industry in 2025 will rely on advances in semiconductors, smart grids, and energy storage, as this article details.(Source: Emiliia - stock.adobe.com)
To meet growing electricity needs and integrate renewables, the power electronics industry in 2025 will rely on advances in semiconductors, smart grids, and energy storage, as this article details.
(Source: Emiliia - stock.adobe.com)

From horses to solar panels

As a quartermaster responsible for army supplies and logistics in the Napoleonic wars, you would have faced many complex challenges – in particular, the large number of horses needed to provide continuous transportation of heavy equipment and supplies for the war effort.

But all these horses constantly demanded fresh food and water, which had to be carried by further teams. These in turn called for yet more horses, which needed more victuals….

How is all this relevant to the power electronics industry in 2025? Because it’s about a solution which, though effective, exacerbates the problem it was employed to solve. A situation which occurs frequently today as well as in the early 19th century.

For example, production of ostensibly green devices like solar panels, batteries, and electric vehicles (EVs) is energy-intensive, and is expected to contribute substantially to the significant rise in global electricity demand forecast by the International Energy Agency (IEA) for 2025i.

For another example, the IEA predicts that Artificial Intelligence (AI) and related technologies’ growing use for energy efficiency (and, to be fair, other applications) will also increase strain on power grids.

Naturally, there are counter-arguments to these statistics, such as Solar Melon’s calculation that solar panels generate more energy than needed to produce them after around 1 – 4 years’ operation.ii However scenarios like these do show that the power electronics industry’s progress, efficiency improvements, and contributions to a global net zero – and how they are perceived – depend not just on new or evolving technologies, but also on understanding and managing the sometimes unintended consequences.

Yet, subject to these caveats, technology introductions and evolution remain essential, so this article looks at some of the power electronics industry's ongoing and expected developments for 2025. Unsurprisingly, efficiency improvements remain the hottest topics, as they allow users to both reduce their energy costs and progress towards their zero emission targets.

As this article could not realistically cover every electrical power industry trend, it focuses instead on three diverse areas; semiconductors, transmission & distribution, and power equipment.

Power semiconductor technologies

Wide Band Gap (WBG) technologies, particularly gallium nitride (GaN) and silicon carbide (SiC), continue to gain popularity, due to superior performance in terms of higher breakdown voltage, thermal conductivity, and electron mobility; these factors make them ideal for high power and high frequency applications.

A Wide Band Gap Semiconductors market analysisiii from MarkWide Research, published in January 2025, finds that the rapid adoption of electric vehicles (EVs) and the push for renewable energy solutions are major drivers in the demand for WBG semiconductors – and the integration of WBG materials into power electronics has led to enhanced energy efficiency, reduced power losses, and improved system reliability.

They are increasingly finding their way into industrial applications such as motor drives, power supplies, and industrial lighting, as well as aerospace and defense sectors which benefit from their ability to deliver superior performance in extreme operating conditions.

Within renewable energy sources and smart grids, WBG devices play a critical role in ensuring efficient power management and distribution.

They are also being adopted by the telecommunications sector, albeit for slightly different reasons; their higher frequency capabilities support evolving high-speed data transmission and wireless communication technologies. Significant opportunities in this area are being created by the 5G rollout.

Legislation as well as technology is driving WBG market growth. Governments and regulatory bodies worldwide are implementing favorable policies and incentives to promote the use of WBG semiconductors.

Yet the market has restraints as well as drivers. Initial costs are high, because manufacturing processes are complex and require specialized equipment. Meanwhile, integrating WBG semiconductors into existing systems can pose challenges for manufacturers. There may also be problems related to the availability of raw materials, particularly gallium.

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Additionally, the lack of standardized WBG production processes can hinder mass adoption and may lead to performance inconsistencies.

Accordingly, ongoing research and development effort is focused on optimizing WBG production methods which can reduce costs and widen availability.

Smart power transmission and distribution developments

Early power distribution systems were simple in concept; power flowed out from a large, central, municipal utility such as a coal-fired power station through transmission and distribution networks to substations, factories, and other downstream loads. The available capacity remained fixed, as did the power network topology.

However, this model has become disrupted both by ever-increasing demand for power, and by more options for providing it – mainly through smaller, distributed wind or solar renewable energy generators, and battery storage systems that allow consumers to sometimes become providers. As such networks are no longer fixed in either topology or capacity, computer intelligence is essential to keep them running smoothly, safely, and efficiently – which is embodied within smart grids. In addition to the traditional grid’s generating facilities and transmission networks, smart grids employ smart control and measuring devices, digital communications systems, and computer software.

Through 2025 and beyond, evolution of smart grids is set to continue, making the infrastructure more efficient, resilient, secure, and amenable to renewable energy technology. Some key advances include:

  • Advanced Metering Infrastructure (AMI): Smart meters will become more widespread, providing real-time data on energy consumption. This will enable utilities to offer personalized energy-saving recommendations and optimize grid operations.
  • Distributed Energy Resource Management Systems (DERMS): With the increasing integration of renewable energy sources like solar panels and wind turbines, DERMS will play a crucial role in managing the complex flow of electricity from multiple sources. This will help balance supply and demand, ensuring grid stability.
  • Cybersecurity Enhancements: As smart grids become more interconnected, cybersecurity becomes higher priority. AI-powered solutions will be developed to detect and mitigate cyber threats, ensuring the integrity of the grid.
  • Integration of Electric Vehicles (EVs): The growing adoption of EVs will require smart grids to manage the increased demand for electricity. Utilities will need to enhance their infrastructure to meet the charging requirements of millions of EVs.

Above all, though, smart grid technology – like many others – is being pervaded and significantly enhanced by Machine Learning (ML) and Artificial Intelligence (AI). A Mini Review, titled ‘Role of Artificial Intelligence in smart gridsiv’ published by research group Frontiers examines this in detail; some of its findings are shown below.

Smart grids use Energy Management Systems (EMSs) to help balance energy supply and demand while keeping electrical system operations safe, reliable, and cost-effective. EMSs use software and hardware to collect, analyze, and visualize data in real time to control energy flows. Using AI techniques in smart grids has revolutionized the way electricity is produced, transmitted, and distributed. With growing demand for competent and reliable energy supply, AI has become a crucial component in optimizing grid operations, improving energy efficiency, and enhancing customer experience.

Using AI in smart grids also enables the incorporation of renewable energy sources, such as wind and solar power, into the grid. AI algorithms can analyze weather data and energy demand to optimize the output of such energy sources, reducing the dependence on fossil fuels and improving overall sustainability. For instance, a utility company can use AI to analyze data from weather forecasts to predict when solar panels will produce the most energy, and adjust energy production accordingly. AI can also be used to optimize how energy storage devices, such as batteries, store extra energy produced by renewable sources and release it when demand is high. This reduces the stress on the grid during peak hours, and helps to stabilize it and prevent power outages.

However, implementing AI in smart grids also comes with challenges and limitations. One significant issue is the readiness and value of data, which is important for training and validating AI terminologies. Utilities must ensure that they have access to high-quality and relevant data, and that they have the necessary infrastructure and resources to progress and examine it in large quantities.

Another challenge is the need for standardization and interoperability, as AI systems must be able to communicate and integrate with existing grid infrastructure and systems. Utilities must work together to develop industry standards and guidelines for AI implementation in smart grids, and ensure that AI systems are designed to be compatible with existing systems.

Despite these challenges, the use of AI in smart grids is becoming increasingly widespread, and is anticipated to play a critical role in energy production and distribution. As the demand for effective and consistent energy supply continues to grow, AI will become an essential component in optimizing grid operations, improving energy efficiency, and enhancing customer experience.

Energy storage system (ESS) equipment

We have seen how today’s high-intensity and volatile power demands are being processed at component level by devices like WBG semiconductors, while transmission and distribution is increasingly being handled by smart grids. But where is the extra power coming from?

An International Electricity Agency (IEA) report, titled ‘Electricity 2025’,v forecasts that growth in low-emission sources – primarily renewables and nuclear – is sufficient, in aggregation, to cover all expected growth in electrical demand over the next three years.

In particular, generation from solar PV is forecast to meet roughly half of global electricity demand growth through 2027, supported by continued cost reductions and policy support. Electricity generation from solar PV surpassed that from coal in the European Union in 2024, with solar’s share of the power mix exceeding 10 %. China, the United States and India are all expected to see solar PV’s share of annual electricity generation reach 10 % between now and 2027.

But solar power – and wind power too – is by nature intermittent and unpredictable. This puts energy storage systems (ESSs), irrespective of their technology, firmly into the picture. They are essential for bridging the time shifts between power generation and power demand.

The growing ESS market encompasses a range of technologies, including batteries, pumped hydro, and thermal storage, each playing a crucial role in enhancing energy resilience. With significant investments and advances anticipated in the coming years, energy storage is poised to reshape how energy is generated, stored, and consumed across Europe and the world.

According to international law firm Bird & Bird’s ‘Energy Outlook 2025: Energy Storage Reportvi, increases in renewable energy supplies are driven by factors such as declining costs, growing numbers of renewable energy suppliers, and strong government support. This means that the global energy storage market is poised for significant growth in 2025. And by 2030, it is projected to grow at a compound annual growth rate (CAGR) of 21 %, with annual energy storage additions expected to reach 137 GW (442 GWh), with expectations that the COP29 Energy Storage and Grids pledge will increase this rate of growth further.

The Report comments on expected ESS growth across world regions. China will remain a global leader in the energy storage market as it continues to invest significantly into grid-connected batteries, mainly driven by strong government targets, including having at least 40GW of battery storage installed by the end of 2025.

Additionally, any further lithium-ion battery price reductions in China during 2025 will improve battery energy storage systems’ profitability.

The United States’ 2022 introduction of the Inflation Reduction Act included an investment tax credit for stand-alone storage. Since then, there has been huge growth in the sector, which is expected to continue into 2025, with several large-scale battery storage projects set to complete. However, Donald Trump’s election has brought the Inflation Reduction Act’s future into uncertainty as he has pledged to rescind unspent funding.

In the EU, commitment to expanding renewable energy capacity is driving demand for storage systems to balance intermittent sources like wind and solar with the need to stabilize a continuously expanding grid. The European Commission has also pledged significant funding for energy storage projects through programs like the Horizon Europe fund, which allocates extensive sums to support sustainable energy infrastructure. These investments will spur growth across the area , with particular momentum in countries like Germany and Spain, where renewable energy targets are aggressive and demand for storage solutions is high.

The UK is also making significant investment, with work set to begin on the world’s first commercial liquid air energy storage project in 2025, in addition to a number of Battery Energy Storage Systems (BESSs), pumped hydro storage, hydrogen storage and flywheel systems over the coming years. The Government has committed to continued growth in the energy storage market, having identified savings of up to £10 billion per year and 24,000 jobs by 2050, which will allow the market to carry strong momentum into 2025 as the UK looks to align with COP29 targets.

Alternatives to lithium-ion are likely to gain traction in 2025, according to the Report. These will be driven by the need for lower costs and improved performance. Technologies such as sodium-ion batteries, lithium-sulfur batteries, solid-state batteries, and flow batteries are emerging as viable competitors, offering advantages in terms of safety, longevity, and cost.

Conclusion

This article has shown how technologies from WBG semiconductors, through smart grids and AI, to energy storage systems of all types, are influencing the power electronics and energy industries as they evolve.

However, another, more fundamental trend is expected to create a major impact in the months and years to come: As the IEA Electricity 2025 Report puts it, ‘Strong growth in electricity demand is heralding a new Age of Electricity, with demand set to soar through 2027’. It expects global energy consumption to increase at the fastest pace in years over its 2025-2027 forecast period, fueled by growing industrial production, rising use of air conditioning, accelerating electrification, and the expansion of data centers worldwidevii.

At the same time, the report remains upbeat about the role of renewables, along with nuclear, in this scenario. It expects record-high energy generation from these sources to meet all additional global demand over the next three years.

References

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