Global Electricity Demand Expected to rise in 2026 with Renewables Taking The Lead
According to recent analysis from the International Energy Agency (IEA), worldwide electricity consumption is projected to increase by over 3% annually through 2026. This growth is primarily fueled by expanding usage in Asia and increased electricity needs across industrial sectors, data centers, and transportation systems.
The IEA's mid-year assessment indicates that electricity demand will grow at approximately 3.3% in 2025 and 3.7% in 2026. While this represents a slight deceleration from the 4.4% growth observed in 2024, it remains significantly higher than the 2.6% average growth rate recorded between 2015 and 2023.
Renewable energy sources are expected to overtake coal as the primary electricity generator globally by either 2025 or 2026, depending on weather patterns and fuel pricing developments. Nuclear power generation is also anticipated to reach unprecedented levels, supported by facility restarts in Japan, robust production in the United States and France, and new construction projects across Asia. Natural gas generation continues to replace coal and oil in numerous regions.
These shifts in the energy mix are projected to stabilize carbon dioxide emissions from electricity generation in 2025, with a potential slight reduction in 2026, though actual outcomes remain dependent on weather conditions and economic factors.
Developing economies in Asia will drive approximately 60% of the global increase in demand, with China expected to see 5.7% growth and India 6.6% growth by 2026. In the United States, expanding data center operations will likely maintain annual demand growth above 2% through 2026. European Union demand is forecast to increase by roughly 1% in 2025, with modest acceleration anticipated the following year.
The first half of 2025 saw wholesale electricity prices in the EU and US rise by 30-40% compared to the same period in 2024, attributed to tightening gas markets. Despite remaining below 2023 averages, prices still exceed 2019 levels. The IEA notes that increasing instances of negative wholesale prices indicate an urgent need for enhanced grid flexibility, storage solutions, and responsive demand management.
Industrial competitiveness remains unbalanced, with average electricity costs for energy-intensive industries in the EU still double those in the United States and significantly higher than in China.
The IEA previously projected that global solar module manufacturing capacity could surpass 1.5 terawatts by 2035, driven by increasing demand and technological advancements. However, some researchers from LUT University have criticized the IEA's "World Energy Outlook" reports for consistently underestimating solar growth due to outdated assumptions and slow methodology updates.
