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Energy innovation is increasingly being shaped by geopolitics, competitiveness and energy security, alongside climate goals, according to the International Energy Agency (IEA)’s The State of Energy Innovation 2026.
The report notes that many innovation-relevant policies launched in 2025 prioritised technological leadership and supply chain security. More than 320 new energy start-ups raised first-round funding in 2025, and energy-related patents continue to rise as a share of total global filings.
Public and corporate R&D spending in energy is rising faster than overall R&D, yet public energy R&D intensity has not returned to historic highs, with survey respondents flagging scarce funding for early-stage innovation and difficulties in bridging the “valley of death”.
The IEA, whose 32 member countries include the United States, United Kingdom, Germany, France, Japan and Canada, also works closely with 13 association countries including India, China, Brazil and South Africa.
On technology readiness, the IEA’s Energy Technology Guide tracks 640 technologies across sectors, highlighting that many solutions are technically mature but face non-technical barriers to scale-up.
Electricity grid resilience is identified as a pressing challenge. While many grid-enhancing technologies are already operating in real-world systems, their deployment remains slow due to regulatory, market and institutional barriers. Without faster integration, countries risk longer project connection queues, underutilised infrastructure and rising service disruptions.
In nuclear innovation, including fusion, 2025 saw major scientific milestones. Government-owned research facilities in Germany, the United Kingdom, China, France and the United States reported new records in plasma duration or net energy output. Yet substantial technical hurdles, from advanced materials to fuel cycles, must be resolved simultaneously before grid-scale deployment becomes viable.
The report calls for raising public energy R&D and demonstration spending, suggesting governments consider restoring energy R&D intensity towards 0.1 per cent of GDP — levels achieved by IEA members in the early 1980s. Stable, long-term policy direction is critical to sustain private investment in capital-intensive sectors.
Public procurement is highlighted as a powerful tool to create early markets for emerging technologies, especially in sectors where government demand is significant. The report also recommends regulatory sandboxes and system-level initiatives to accelerate deployment of grid technologies.
The IEA concludes that energy innovation is at a pivotal moment. The ecosystem is dynamic and geographically diverse, but sustaining momentum will require predictable funding, stronger deployment frameworks and co-ordinated international collaboration.
As countries from the United States and Germany to China and India compete to secure technological leadership, the coming decade will determine whether breakthroughs in laboratories can be translated into resilient, affordable and secure energy systems at scale.