Electricity consumption worldwide is projected to grow at nearly 4% annually through 2027, marking the fastest increase in recent years, according to a new IEA report. This surge is driven by rising industrial electricity usage, expanding air conditioning demand, increasing electrification—particularly in transport—and the rapid expansion of data centers.
The latest edition of the IEA’s Electricity 2025 market analysis indicates that global electricity demand growth will add an amount exceeding Japan’s annual electricity consumption each year through 2027. Emerging and developing economies will account for 85% of this increase, with China leading the trend. Since 2020, China’s electricity demand has outpaced its economic growth, rising 7% in 2024 and forecast to grow by an average of 6% annually through 2027. Industrial production, especially in electricity-intensive manufacturing of solar panels, batteries, and electric vehicles, plays a key role in this expansion. Additional factors such as increased air conditioning, electric vehicle adoption, and the spread of data centers and 5G networks contribute to the surge.
Keisuke Sadamori, IEA’s Director of Energy Markets and Security, highlights the surge in global electricity demand as a key shift in energy systems, ushering in a new Age of Electricity. While emerging economies lead this growth, advanced nations are also seeing a rise after stagnation. He emphasizes the need for policymakers to address security, affordability, and sustainability challenges, which will be discussed at the IEA-UK Summit on the Future of Energy Security in London this April.
In the United States, electricity demand is expected to grow substantially, equivalent to adding California’s current consumption to the national total over the next three years. In contrast, growth in the European Union will be more modest, with demand only returning to 2021 levels by 2027 following sharp declines in 2022 and 2023 due to the energy crisis.
The report forecasts that growth in low-emission sources—mainly renewables and nuclear—will be sufficient to meet all additional global electricity demand through 2027. Solar PV alone is expected to contribute nearly half of this increase, driven by continued cost reductions and supportive policies. In 2024, solar PV generation surpassed coal-fired electricity in the European Union, raising its share of the power mix above 10%. China, the United States, and India are also expected to see solar PV’s share of annual electricity generation exceed 10% between now and 2027. Meanwhile, nuclear power is making a resurgence, with its generation poised to hit record highs each year from 2025 onward. Due to these trends, carbon dioxide emissions from electricity generation are projected to stabilize after rising about 1% in 2024.
The report highlights major strains faced by electricity systems in 2024, including extreme weather events such as winter storms in the U.S., Atlantic hurricanes, blackouts in Brazil and Australia, and drought-induced reductions in hydropower generation in Ecuador, Colombia, and Mexico. These challenges emphasize the urgent need to enhance system resilience.
Additionally, the report underscores the crucial role of weather in electricity systems and the increasing volatility of wholesale electricity prices in some regions. This volatility reflects a growing need for system flexibility, as evidenced by a rise in negative wholesale electricity prices in certain markets. While still uncommon on a global scale, these occurrences signal inadequate system flexibility caused by technical, regulatory, or contractual limitations.
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