Global electricity demand is expected to expand at one of the fastest sustained paces in over a decade despite ongoing economic pressures, according to a new IEA report. Renewables, natural gas and nuclear will all contribute to meet the additional demand as electricity use rises for industry, appliances, cooling, data centres, electric vehicles and more.
The IEA’s Electricity Mid-Year Update finds electricity demand set to rise by 3.3% in 2025 and 3.7% in 2026 – more than twice as fast as total energy demand growth over the same period. While this is slower than the 4.4% surge in 2024, it remains well above the 2015-2023 average of 2.6%.
Renewables are expected to overtake coal as the world’s largest source of electricity as early as 2025 or by 2026 at the latest, depending on weather and fuel prices. Nuclear power output is also projected to reach record highs, driven by reactor restarts in Japan, strong output in the United States and France, and new plants in Asia. Gas-fired power generation will keep displacing coal and oil in many regions. As a result, carbon dioxide emissions from electricity generation are forecast to plateau in 2025 and decline slightly in 2026, although economic or weather shifts could alter this.
“The growth in global electricity demand is set to remain robust through 2026, despite an uncertain economic backdrop,” said Keisuke Sadamori, IEA Director of Energy Markets and Security. “The strong expansion of renewables and nuclear is steadily reshaping electricity markets in many regions. But this must be matched by greater investment in grids, storage and other sources of flexibility to ensure power systems can meet the growing demand securely and affordably.”
Emerging economies in Asia will drive most of the growth, with China and India accounting for 60% of additional demand in 2025-2026. Demand growth will accelerate to 5.7% in China and 6.6% in India in 2026, up from 5% and 4% in 2025. In the United States, data centres are expected to keep demand growth above 2%, more than double the past decade’s average. In contrast, EU demand will grow around 1% in 2025 with a slight acceleration in 2026.
In early 2025, wholesale power prices in the EU and US rose 30-40% year-on-year due to higher gas prices, remaining below 2023 levels but above 2019. The rise in negative wholesale prices highlights the need for better demand response and storage. Electricity costs for EU energy-intensive industries remain double those in the US and far above China’s, challenging EU industrial competitiveness.
Photos: Pixabay
Source: IEA
