The transition to renewable energy systems is accelerating globally, with major implications for capital spending, energy generation, and industrial growth. Here’s what UBS and other sources indicate about this transformative trend.

Current Energy Landscape and Future Shift

Fossil Fuel Dominance: As of today, fossil fuels account for 80% of global electricity generation. However, this dominance is expected to decline over the next three decades.
Renewables on the Rise: By 2050, the International Energy Agency (IEA) projects that 60%-65% of energy generation will come from renewable or clean sources. Sectors hard to decarbonize may still rely on fossil fuels, but renewables are set to lead.
Investment Surge: Annual energy investments are forecast to increase from $2-$3 trillion currently to $4-$5 trillion by 2035, driven by electrification and efficiency-focused projects.

For a detailed breakdown of historical and projected energy trends, the Sector Historical Overview API offers valuable insights.

Electrification and Decarbonization
Electrification is a cornerstone of the energy transition. UBS analysts highlight electrical equipment manufacturers and utilities as primary beneficiaries of rising renewable infrastructure investment:

Capital Goods Sector: This industry constitutes 43% of UBS’s decarbonization portfolio, with companies like Vestas Wind Systems, Schneider Electric, and Siemens positioned to benefit from renewable electricity grids.
Utilities: European utilities are actively replacing thermal power projects with renewable alternatives. Although geopolitical tensions, like the Russia-Ukraine war, have posed challenges, ongoing projects signal future growth.

Access detailed metrics on energy sector P/E ratios using the Sector P/E Ratio API to analyze valuation trends.

UBS Portfolio Highlights
UBS has identified 37 stocks across the Europe, Middle East, and Africa regions likely to benefit from the energy transition:

Sectors Represented: Utilities, capital goods, chemicals, mining, and energy dominate.
Top Picks: Companies like Vestas (wind turbines) and Schneider Electric (grid technologies) are expected to see early gains from renewable investments.

Takeaway for Investors
The energy transition presents a long-term investment opportunity, with electrification and renewables driving growth. Investors should monitor sector-specific developments and align portfolios accordingly, leveraging advanced analytics for informed decision-making.