The global energy innovation landscape is entering a new phase shaped increasingly by energy security, industrial competitiveness and infrastructure resilience, according to the International Energy Agency’s latest State of Energy Innovation report.
The second edition of the report, which will inform discussions at the 2026 IEA Energy Innovation Forum on 18 February, highlights how energy technologies have evolved into multi-trillion-dollar global markets. The sector is now a major innovation engine spanning batteries, transformers, turbines, motors and heat exchangers. Around one in ten patents filed worldwide relates to energy technologies — a larger share than chemicals, pharmaceuticals or transport — underlining the sector’s growing strategic importance for national security and economic performance.
The 2026 report identifies more than 150 major innovation milestones over the past year, including advances in solid-state air conditioning, perovskite solar cells, fusion energy, sodium-ion batteries and next-generation geothermal systems. These developments contributed to 50 upgrades in technology readiness levels among emerging energy technologies tracked by the IEA.
The policy landscape is also shifting. In a survey of experts and practitioners, energy security emerged as the leading driver of innovation in 2025, overtaking affordability and emissions reduction. Initiatives such as the US Genesis Mission and the EU Competitiveness Fund reflect a stronger emphasis on bolstering domestic technological capabilities and securing critical supply chains.
IEA Executive Director Fatih Birol said energy innovation has become a strategic priority for governments worldwide, adding that countries maintaining investment in research, demonstration and early deployment will be best positioned to lead the next generation of energy technologies.
The report emphasises the lasting impact of public support for innovation, citing examples such as floating liquefied natural gas, lithium-ion batteries and next-generation geothermal, where early government funding laid the groundwork for commercial success. Comprehensive evaluations of long-running public R&D programmes suggest economic returns can significantly exceed costs through fuel savings, lower equipment prices and stronger domestic industries.
Energy storage has moved to the forefront of innovation activity, reflecting its growing role in power systems as the world enters what the IEA describes as the “Age of Electricity”. Batteries accounted for 40% of all energy patent filings in 2023 — an unprecedented share for a single technology area — with preliminary data suggesting further increases in 2024 and 2025. China, Korea and Japan remain leading sources of lithium-ion battery patents, while patenting activity in solar innovation has shifted decisively towards perovskite solar cells.
However, funding conditions are tightening. Global public energy R&D spending reached an estimated $55 billion in 2025, down 2% year on year. Corporate R&D growth slowed to 1% in 2024 — its weakest pace since 2015 outside the pandemic-disrupted year of 2020. Venture capital investment in energy start-ups fell for the third consecutive year to $27 billion in 2025, amid higher interest rates, macroeconomic uncertainty and rising competition from artificial intelligence ventures, which now attract nearly 30% of global VC funding.
Despite these headwinds, new growth areas are emerging. Investment in fusion, nuclear fission, critical minerals, geothermal, carbon dioxide removal and low-emissions industry has expanded sharply since 2021, partly offsetting declines in electric mobility funding. Regional innovation patterns are also diverging. China continues to expand its corporate R&D and patenting footprint, particularly in energy storage and industrial efficiency, while Europe’s public energy R&D intensity has climbed close to record levels seen in the 1980s. The United States remains a global leader in venture capital activity, accounting for nearly half of energy VC investment in 2025, while Japan retains strong specialisation in batteries and is advancing in perovskite solar, hydrogen-based fuels and fusion technologies.
The report concludes that sustained and well-targeted public support remains critical amid shifting policy priorities and tighter financial conditions. Aligning innovation strategies with broader competitiveness and resilience objectives, strengthening domestic supply chains and ensuring funding access across all development stages will be essential to maintain momentum.
The findings will be presented at a livestreamed session of the 2026 IEA Energy Innovation Forum, held alongside the 2026 IEA Ministerial Meeting. The IEA continues to support international collaboration on energy research and development through its Technology Collaboration Programme and will also host the Mission Innovation Secretariat to accelerate progress in advanced energy technologies.
