Global Electricity Demand To Grow By 3,500 TWh By 2027: Renewables And Grid Modernization Key To Stability – IEA Report

Global electricity demand is set to grow at a rapid pace through 2027, driven by increased electrification, industrial expansion, and rising energy needs for cooling and data centers. According to the International Energy Agency (IEA), electricity consumption is projected to rise by 4% annually over the next three years, adding about 3,500 terawatt-hours (TWh) to global demand. This increase is attributed to economic growth, urbanization, higher air conditioning usage, the widespread adoption of electric vehicles, and the expansion of digital infrastructure, including data centers and 5G networks.

Emerging economies, particularly China and India, will contribute significantly to this growth, accounting for nearly 85% of the increase. In 2024, China alone was responsible for over half of the global electricity demand rise, with an annual growth rate of 7%. This trend is expected to continue, driven by the country’s industrial activities, including solar PV manufacturing, battery production, and the electrification of key sectors. India’s electricity demand is also set to grow at an annual rate of 6.3%, supported by economic expansion and increasing use of air conditioning systems.

In advanced economies, electricity demand is recovering after a period of stagnation. The United States, the world’s second-largest electricity consumer after China, saw a 2% increase in demand in 2024, reversing a decline in 2023. This resurgence is mainly due to the expansion of data centers, semiconductor manufacturing, and a growing number of electric vehicles. Similar trends are observed in Europe, Australia, Japan, and Korea, where electricity consumption is expected to increase steadily through 2027.

Renewable energy sources will play a crucial role in meeting the additional electricity demand. Solar PV is expected to contribute nearly half of this growth, with wind energy also making a significant impact. By 2027, renewables are projected to surpass coal as the leading source of electricity generation worldwide. The expansion of nuclear power, particularly in China, India, and France, will further strengthen clean energy production and reduce dependence on fossil fuels.

Despite the positive outlook, several challenges need to be addressed. Supply chain constraints, extreme weather events, and fluctuations in electricity prices pose risks to grid stability. Many regions have reported negative wholesale electricity prices, highlighting the need for improved flexibility in electricity markets. Additionally, integrating large-scale renewable energy sources requires modernized transmission infrastructure and energy storage solutions.

To ensure a stable and reliable power supply, policymakers and industry leaders must focus on expanding battery storage, upgrading grid systems, and improving demand-side management. Investments in flexible power generation and smart grid technology will be essential to balancing supply and demand, particularly as more variable renewable energy sources are integrated into the grid.

The IEA’s Electricity 2025 report emphasizes the importance of aligning electricity demand growth with clean energy adoption. Governments worldwide need to implement strong policies that encourage investment in renewable energy, energy efficiency, and grid modernization. International cooperation will also be vital in addressing global energy challenges and ensuring that countries can transition smoothly to a low-carbon electricity system.

The next few years will be crucial in shaping the future of the global electricity sector. The push for sustainable energy, combined with the rapid electrification of industries and transportation, will define the energy landscape for decades to come. By prioritizing clean energy solutions and infrastructure development, nations can achieve a more resilient and environmentally friendly electricity system while meeting the increasing power demand worldwide.