Global energy innovation trends: What’s next for real estate?

At the mid-point of the tumultuous 2020s, you may be forgiven for feeling pessimistic about the condition of the global energy market, given the alarming state of our climate. 2024 was the hottest year on record, yet our world is more divided than ever on action to address the human causes of climate change. The most recent UN Climate Summit in Azerbaijan (COP29) fell short of expectations, with countries reliant on fossil fuels disagreeing on transitions to sustainable energy solutions.

Despite the political disharmony, there remains a glaring opportunity for global real estate to take responsibility for its share of carbon accumulation. With the sector producing two-fifths (39%) of the world’s emissions, it can lead by example, setting a blueprint for decarbonization that other industries can adopt.

With 68% of the world’s population set to live in urban areas by 2050, innovative energy solutions can rapidly transform our built environment into clean-power safe havens, utilizing green infrastructure and IoT connectivity to create digital-first smart cities that are full of energy-efficient commercial and residential properties which give back to the grid rather than drain precious environmental resource.

In our ever-changing and unpredictable global energy market, what’s next for real estate? This article explores how the sector can adapt to emerging trends and deliver a low-carbon future for the sector and our urban world.

The state of energy consumption in 2025

While European economic activity has slowed since 2018, the world is full of emerging, high-growth economies. In 2024, nine of the 20 fastest-expanding economies are in Africa, and this, combined with India and China’s continued development as global powerhouses, is creating unprecedented electricity demand. According to the International Energy Agency, worldwide electricity consumption is expected to grow by 4% annually by 2027, with 85% of demand coming from emerging economies.

However, this puts immense pressure on fossil fuels as countries develop their clean energy economies. S&P estimates an increase in consumption by three million barrels of oil (or equivalent) per day in 2025, leading to record-high coal, oil, and gas emissions. Despite rapid growth in the electric vehicles market, with one in five cars sold in 2024 leaving factories without an internal combustion engine. 

Current challenges and opportunities

The global energy market is facing a prolonged period of instability. Russia’s invasion of Ukraine in 2022 led to significant price increases across Europe and beyond as government sanctions on Moscow scaled back reliance on its oil and gas pipelines. The second term of Donald Trump threatens progress on climate goals with his “drill, baby, drill” policy, and the administration’s bullish stance on tariffs generates further insecurity within an already complex sphere of geopolitics.

However, this uncertain climate presents opportunities for those willing to take advantage. The revolution of AI technology is making it easier to procure energy supply on the best terms for your business and effectively manage consumption to boost operational efficiency. 

While climate skepticism is on the rise, countries that invest significantly in decarbonization strategies are rewarded. The global green economy reached a market capitalization rate of $7.2tn in 2024, trailing only the technology sector as the world’s most lucrative industry. Countries like Sweden, Japan, and Great Britain are all benefitting from green industrial revolutions as a result.

Impact of energy costs on property operations

The current state of the world presents both opportunities and challenges for the world of commercial real estate (CRE). On the one hand, rising energy costs have made it more challenging for the sector, with lower-margin small firms more likely to feel the impact on their bottom line. Higher energy costs have also impacted households and businesses alike, increasing rents across the sector.

However, the growth of proptech has incentivized CRE businesses to adopt new technologies to save money and reduce energy costs. Building automation systems and cloud-based IoT networks that collect data to integrate with building management systems (BMS) have greatly enhanced the industry’s operational efficiency while enhancing tenancy comfort and security.

5 global energy innovation trends for real estate

With all of this in mind, what does 2025 have in store for global real estate and its energy demands? As energy performance and environmental reporting regulations compel European CRE businesses to run more efficient operations, emerging innovation in the sector can help organizations meet their long-term targets. Let’s explore some of the main trends emerging around energy in the real estate sector for this year and beyond.

Renewable energy storage

Imagine a limitless regenerative power supply that generates the electricity needed to power your CRE portfolio without tapping into the national grid. While thermal and battery electric storage have existed for many years, recent innovation has expanded their use case and increased their affordability in the market – down 18% in 2024 alone from the previous year.

The largest utility-scale batteries can store up to 10 MWh – enough to power 2,000 homes. 2025 will see battery prices decrease further, while continued investment in thermal storage and heat pump technology will make it easier for CRE organizations to consider renewable energy storage and increase their off-grid resilience. 

Hydrogen adoption in real estate

As renewable energy storage becomes increasingly viable, innovation drives towards expanding solutions that can power buildings on the most affordable terms. In 2025, hydrogen is set to emerge in this space. It has been suggested as a resolution to the world’s energy production needs for decades, but as the cost to produce green, low-carbon hydrogen is set to halve by 2030, it may finally have its time.

While limited, trial cases within real estate have centered on solar-powered hydrogen production. In 2023, one of Japan’s largest real estate firms invested in a pilot project to install hydrogen-absorbing alloy tanks that convert and store excess energy generated by solar panels. 

Hydrogen production is a key aspect of the European Green Deal; the EU aims to use it to cover 10% of its energy needs by 2050. Will 2025 be the year we start to see more widespread adoption within CRE?

AI energy management

Building management systems (BMS) have become much more advanced with the development of cloud-based and IoT sensor technology. AI’s growth takes this to another level; its advanced algorithms are adept at analyzing historical trends and real-world data to optimize and fine-tune a building’s energy consumption.

From demand response systems that adjust temperature and lighting based on room occupation levels to AI-based predictive maintenance to protect critical systems from unforeseen downtime. When paired with digital twin systems, AI technology is empowered further to help us understand building performance in a way we have never seen before. It is set to shake up energy management within CRE as more businesses realize its capabilities.

Smart grids and connected cities

‘Smart cities’ might sound like the work of science fiction, yet they are much closer to reality than you might expect. Many US cities, including Austin, Seattle, and New York City are leading the way with IoT-led connectivity and smart city infrastructure. 

As proptech solutions develop and become more commonplace, streets, neighborhoods, and eventually cities can become interconnected through smart grids. These are capable of monitoring and managing all energy use and adjusting appropriately to efficiently meet the demands of end users. 

Tenant demand for green-certified buildings

As prices fluctuate in today’s uncertain energy market, tenants are becoming more energy-conscious in the leasing choices they make. This is especially true in the commercial sector, where low-carbon ‘green leases’ have become widespread as tenants seek to limit their scope 2 and 3 emissions with sustainable office space. 

Benchmarking standards, including BREAAM and LEED will remain the gold standard in this future scenario. Research shows that properties with these certifications earn up to 37% higher rents on the open market. Real estate investment trusts (REITs) are also more likely to receive funding for projects with even modest emission reductions. As tenant demand for green-certified buildings hots up, smart money follows green certification. 

Future-proof your CRE business with ProptechOS

At the heart of the rich innovation culture within the global energy sector is the built-in desire for real estate to meet its carbon reduction obligations and support a decarbonized world with advanced technological solutions. While 2025 adds a layer of unpredictability to this relationship in the face of geopolitical instability, ProptechOS remains at the heart of real estate’s energy digitalization drive.

Our energy toolbox allows your CRE organization to harness data and insight offered by building management systems to optimize power consumption across your portfolio. Save more than a third (36%) on your organization’s heating and cooling costs with AI-led energy analytics and diagnostics, embracing the culture of sustainability and energy-consciousness that will help drive your business towards its ESG goals. 

Your CRE business can sign up for a free trial of ProptechOS today.