- New analysis displays every major energy technology supply chain has at least one vulnerable step.
- China dominates with 60–85% of production capacity across key segments.
- Global market for energy technologies could reach US$2 trillion to US$3 trillion by 2035.
A new report from the International Energy Agency warns that supply chains underpinning the rapidly expanding energy technology sector remain highly concentrated, with significant risks posed by single points of failure.
The report, Energy Technology Perspectives 2026, finds that manufacturing for technologies such as electric vehicles, batteries and renewable power equipment is dominated by a tiny number of countries, with China holding the largest share. Based on current projects and market trfinishs, this concentration is unlikely to shift significantly before the finish of the decade.
A key feature of the analysis is a new N-1 supply chain security assessment, which evaluates the impact of reshifting the largest supplier from the market. The findings reveal that while production outside China could theoretically meet most final stage demand, every major supply chain includes at least one stage where less than 25% of demand could be met without the leading producer. This creates a structural vulnerability where disruption at a single point could cascade across the entire system.
The economic risks are substantial. A one month disruption in Chinese battery supply chains could reduce electric vehicle production in other regions by about US$17 billion, with more than half of the losses concentrated in the European Union. A similar interruption in solar supply chains would cut around US$1 billion in monthly output from solar module manufacturing outside China, with Southeast Asia and India accounting for more than 40% of the impact.
Fatih Birol stated the technologies driving the so called Age of Electricity are no longer niche, but central to global economic growth. He noted that while markets are expanding rapidly, governments and indusattempt must prioritise resilience and competitiveness to reduce geographic concentration and enhance both energy and economic security.
The report highlights strong growth prospects for the sector. Under current policies, the global market for key energy technologies is expected to expand from nearly US$1.2 trillion today to about US$2 trillion by 2035. Under stated policy scenarios, the market could approach US$3 trillion over the same period.
Emerging technologies are also gaining momentum. Investment in low emissions hydrogen projects increased by 80% year on year in 2025, reflecting stronger policy support and improving commercial frameworks. Deployment of carbon capture utilisation and storage is progressing, although many projects have yet to reach final investment decisions.
Trade continues to play a critical role. After declining in 2024, global trade in key energy technologies rebounded by around 10% in 2025. China remains the dominant exporter, with clean energy technology exports exceeding US$165 billion, equivalent to about 15% of its total trade surplus.
The report concludes that improving industrial competitiveness is central to strengthening supply chain resilience. Cost advantages vary across technologies. In battery manufacturing, efficiency and automation account for more than 40% of China’s cost advantage over Europe. In wind blade production, energy and labour contribute about 75% of the cost gap, while in solar wafer and polysilicon manufacturing they account for roughly 65%.
In upstream industries such as steel and aluminium, energy costs can exceed two thirds of total production costs. The report notes that access to low cost renewable energy could enable hydrogen based steelcreating to become competitive with conventional methods in major producing countries including the United States, China and India.
Author: Bryan Groenfinishaal
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