Global electricity demand is expected to grow by over 3% in 2025 and again in 2026, more than double the rate of overall energy demand growth, according to the International Energy Agency.
The IEA’s mid-year electricity report said rising demand will be driven by increased use across industry, appliances, air conditioning, data centres and electric vehicles.
Although the pace is slightly lower than the 4.4% growth recorded in 2024, it remains well above the 2.6% average between 2015 and 2023.
Renewables are on course to overtake coal as the world’s largest source of electricity by 2025 or 2026, depending on fuel prices and weather patterns.
Nuclear generation is also set to hit record highs, supported by restarts in Japan, continued output in the US and France, and new reactors in Asia.
Gas-fired power will continue displacing coal and oil in many regions, according to the IEA.
As a result, carbon dioxide emissions from the power sector are forecast to plateau in 2025 and slightly decline in 2026, though this may be affected by broader economic and weather-related factors.
IEA director of energy markets and security Keisuke Sadamori (pictured) said: “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.”
The report said China and India will drive 60% of global electricity consumption growth in 2025 and 2026, with Chinese demand expected to rise 5.7% in 2026 and India’s by 6.6%.
In the US, rapid data centre expansion is projected to keep electricity demand above 2% annually, more than double the country’s ten-year average.
The European Union is expected to see 1% demand growth in 2025 with a modest acceleration in 2026.
Wholesale electricity prices in the EU and US rose 30–40% in the first half of 2025 compared with the same period in 2024 due to tighter gas markets, although they remain below 2023 annual levels.
The IEA said a rise in negative price events highlights the growing need for flexible grid systems and demand-side measures supported by regulatory reform.
Electricity price disparities also continue to impact industrial competitiveness, with EU energy-intensive sectors still facing costs double those of the US and significantly higher than in China.