AI In Energy Market 2025

AI In Energy Market Size

The global AI in energy market reached a value of nearly $19,031.18 million in 2024, having grown at a compound annual growth rate (CAGR) of 16.08% since 2019. The market is expected to grow from $19,031.18 million in 2024 to $50,906.84 million in 2029 at a rate of 21.75%. The market is then expected to grow at a CAGR of 20.56% from 2029 and reach $129,630.91 million in 2034. Growth in the historic period resulted from the strong economic growth, rising electricity generation, increased demand for solar energy systems, rise in deployment of solar energy systems and increase in energy asset management. Factors that negatively affected growth in the historic period were rising security concerns in the energy sector. Going forward, rising residential building construction, increasing urban populations, increasing investments in the energy sector and increasing cloud-based services will drive the growth. Factor that could hinder the growth of the AI in energy market in the future include loss of jobs due to automation.

AI In Energy Market Drivers

The key drivers of the AI in energy market include: Rising Residential Building Construction The rise in residential building construction is expected to drive the growth of the residential energy management market going forward. Residential buildings refer to structures specifically designed and constructed for people. With a focus on sustainability, modern residential constructions often incorporate energy-efficient features, such as solar panels, smart appliances and advanced insulation. AI technologies are integrated into these systems to monitor energy usage, adjust settings for optimal efficiency and provide insights for further improvements. For example, in January 2025, according to ConstructConnect, a US-based software company providing construction information and technology solutions, single-family construction spending will grow by 13.1% in 2025 and 12.4% in 2026, while multifamily construction spending is expected to rise by 9.5% in 2025 and surge by 17% in 2026. Additionally, in November 2024, according to the New York Building Congress, a US-based trade association that advocates for the construction, design and real estate industries, in 2024, building permits for nearly 28,000 new residential units are expected, more than double 2023's volume. New housing investments are 22% costlier, averaging $168,600 per unit. Renovations, however, continue to dominate, with capital spending averaging $600 per square foot, totaling over $19 billion by year-end 2024. Residential spending will grow by over $527 million year-over-year. Nominal residential investment is expected to remain steady at $19 billion in 2025, rising to $22 billion in 2026. Therefore, increasing residential building construction will drive the AI in energy market.

AI In Energy Market Restraints

The key restraints on the AI in energy market include: Loss Of Jobs Due To Automation Loss of jobs due to automation in the energy sector is expected to limit the growth of the AI in energy market going forward. This restraint is particularly challenging, as it not only affects individual workers but also has broader socio-economic implications, including potential unemployment and income inequality. The loss of jobs due to automation can lead to economic dislocation in communities dependent on the energy sector, exacerbating social tensions and widening disparities. For example, according to a report by the World Economic Forum, it is estimated that 75 million jobs may be displaced by automation and AI by 2025. Therefore, the loss of jobs due to automation in the energy sector acts as a restraint on AI in energy market.

AI In Energy Market Trends

Major trends shaping the AI in energy market include: Optimizing Renewable Energy Use In Residential Applications With Advanced Technologies Major players in the AI in energy market focus on optimizing renewable energy use in residential applications through advanced technologies. Integrated systems with solar inverters, long-life batteries and intelligent EV chargers enhance energy efficiency. Scalable, modular designs reduce installation costs, while real-time AI-powered monitoring ensures seamless energy flow and storage, enabling homeowners to maximize renewable energy use and reduce dependence on traditional power grids. For instance, in January 2025, Wondrwall Group, a UK-based energy equipment and solutions management company for energy management, launched an AI-powered Home Energy Management System (HEMS) that maximizes solar energy use, reducing energy bills. This scalable, modular system integrates a long-life battery, solar inverter and intelligent EV charger, offering over 25kWh (kilowatt hour) capacity and halving installation times. Combined with Energy Service Contracts (ESC), it can be installed in most UK new builds with in-roof solar photovoltaic (PV) at no upfront cost to housebuilders, enhancing energy efficiency and affordability. Expanding Capabilities In Energy Management Systems To Optimize Residential Solar Solutions Major companies in the AI in energy market focus on enhancing energy management systems for residential solar solutions. Advanced controllers and connectivity technologies not only enhance energy efficiency but also support the broader transition to renewable energy. These innovations enable real-time energy monitoring, boost efficiency, reduce costs and meet growing demand for interconnected, sustainable residential energy ecosystems. For example, in January 2025, SolarEdge Technologies, Inc., an Israel-based smart energy solutions company that offers advanced solar inverters, power optimizers and energy management systems, launched the SolarEdge ONE, an AI-driven energy management system designed to optimize home energy production and consumption. This innovative system is particularly tailored for homeowners in Germany, where dynamic electricity tariffs are becoming more prevalent. SolarEdge ONE autonomously creates a personalized 24-hour energy plan by learning individual homeowners' solar production and consumption patterns. It utilizes predictive AI algorithms to make real-time decisions based on fluctuating electricity prices and weather forecasts.

Opportunities And Recommendations In The AI In Energy Market

Opportunities – The top opportunities in the AI in energy market segmented by offering will arise in the AI-as-a service segment, which will gain $10,867.16 million of global annual sales by 2029. The top opportunities in the AI in energy market segmented by deployment will arise in the cloud segment, which will gain $20,614.16 million of global annual sales by 2029. The top opportunities in the AI in energy market segmented by application will arise in the demand response management segment, which will gain $9,493.86 million of global annual sales by 2029. The top opportunities in the AI in energy market segmented by end user will arise in the utilities segment, which will gain $10,831.50 million of global annual sales by 2029. The AI in energy market size will gain the most in the USA at $10,287.61 million. Recommendations- To take advantage of the opportunities, The Business Research Company recommends the AI in energy companies to focus on enhancing residential energy efficiency with AI-driven solutions, focus on enhancing residential solar energy management with AI, focus on developing AI-based software solutions for energy efficiency, focus on enhancing residential energy ecosystems with advanced AI connectivity, focus on optimizing energy efficiency in data centers with AI solutions, focus on AI-powered energy management systems for market competitiveness, focus on innovating with generative AI assistants to support energy transition, focus on developing AI-powered home assessment tools, focus on AI-as-a-service to drive growth, focus on cloud solutions for AI in energy, expand in emerging markets, focus on strategic partnerships to accelerate ai innovation in energy, focus on competitive and value-based pricing strategies, focus on targeted digital marketing and thought leadership, focus on strategic partnerships for expanded reach, focus on renewable energy management for growth and focus on energy transmission for maximum growth.