Enviro News Asia, Paris – Global electricity demand is projected to accelerate over the next two years despite continued volatility in energy markets caused by recent disruptions to global natural gas supplies, according to the International Energy Agency’s (IEA) latest Electricity Mid-Year Update.
The report forecasts global electricity demand to grow by 3.6% in 2026 and 3.8% in 2027, compared with 3% growth recorded in 2025. Global electricity consumption is expected to reach approximately 30,700 terawatt-hours (TWh) by 2027, up from 28,600 TWh in 2025.
The IEA said rising electricity demand continues to be driven by expanding industrial activity, increased adoption of electric vehicles, wider use of air conditioning, growing appliance ownership, and the rapid expansion of data centres worldwide.
Recent disruptions to liquefied natural gas (LNG) shipments through the Strait of Hormuz, linked to the conflict in the Middle East, have significantly increased natural gas prices across Asia and Europe, resulting in higher electricity generation costs and prompting emergency energy-saving measures in several countries.
Despite these challenges, global power systems have remained largely resilient, supported by additional LNG supplies from North America and continued expansion of renewable energy generation. However, higher gas prices have encouraged several countries in Asia and Europe to temporarily increase coal-fired power generation.
Renewable energy is expected to become the world’s largest source of electricity generation in 2026, surpassing coal after nearly matching its output in 2025. Renewable electricity generation is projected to increase by more than 8% in 2026, raising its share of global electricity generation from 33% in 2025 to 37% by 2027.
Solar photovoltaic (PV) power will continue to lead global electricity supply growth. According to the report, solar PV generation is expected to surpass wind power in 2026 to become the world’s second-largest renewable electricity source after hydropower.
Global solar electricity production is forecast to increase by approximately 600 TWh in 2026, matching the record annual expansion achieved in 2025, with similarly strong growth anticipated in 2027.
Among major economies, China is expected to record electricity demand growth of 5.5% in 2026, supported by strong manufacturing activity and expanding electric vehicle charging infrastructure. India’s electricity demand is projected to rebound by 7% following weaker growth in 2025 due to weather-related factors.
Electricity demand in advanced economies is also expected to remain steady, growing by around 2% in both the United States and the European Union. In contrast, higher fuel costs and supply disruptions are expected to constrain electricity consumption in LNG-dependent economies such as Pakistan and Bangladesh.
The IEA warned that weather conditions remain a significant source of uncertainty. A stronger-than-expected El Niño event during 2026 could increase electricity demand by boosting cooling requirements while simultaneously reducing hydropower and wind generation in some regions, increasing reliance on fossil fuel-based electricity generation.
Global carbon dioxide (CO₂) emissions from electricity generation are projected to increase by around 1% in 2026 as higher natural gas prices encourage greater coal use. However, emissions are expected to stabilize in 2027 as continued expansion of renewable energy and increased nuclear power generation offset additional fossil fuel demand.
The report also noted that wholesale electricity prices have risen sharply in regions heavily dependent on LNG imports. During the second quarter of 2026, average wholesale electricity prices increased by more than 30% year-on-year in both the European Union and Japan, while prices remained relatively stable in the United States and rose by less than 10% in India.
As renewable electricity continues expanding globally, the report found that negative wholesale electricity prices are becoming increasingly common in several markets. The IEA said these price patterns highlight the growing need for greater system flexibility through battery energy storage, demand response measures, and modernized electricity grids to ensure reliable and efficient power systems. (*)
