Global electricity demand is set to grow at a faster pace this year than last, even as power systems worldwide contend with energy market turmoil and volatile prices, according to a new report by the International Energy Agency (IEA). The agency’s latest Electricity Mid-Year Update forecasts that global electricity demand will grow by 3.6% in 2026 and by a further 3.8% in 2027, up from 3% growth in 2025. Global electricity consumption is projected to reach 30,700 terawatt-hours (TWh) in 2027, compared with 28,600 TWh in 2025. Strong demand from industry, appliances, cooling, electric vehicles, and data centres continues to drive consumption upward. The findings underline how power systems are adjusting to recent shocks while sustaining growth.
Recent disruptions to liquified natural gas (LNG) flows through the Strait of Hormuz have tested electricity markets globally. Natural gas prices in Asia and Europe reached their highest levels since the 2022-23 energy crisis, prompting emergency measures to curb energy use in some regions. Power systems have for the most part weathered the impacts so far, with additional LNG supplies, particularly from North America, helping to ease market tightness. Spikes in gas prices have nonetheless triggered fuel switching from natural gas to coal in several Asian and European countries. Rising power generation from renewable sources has contributed to diversifying supplies and supporting energy security.
Renewables are on track to become the world’s largest source of electricity generation in 2026, overtaking coal after reaching near parity in 2025. Renewable generation is set to grow by more than 8% in 2026, lifting its share of global electricity generation from 33% in 2025 to 37% by 2027. Solar PV generation is expected to overtake wind power in 2026 to become the second-largest source of renewable electricity after hydropower. Its global output is forecast to increase by around 600 TWh in 2026, matching the record annual growth achieved in 2025. Similarly robust expansion is expected in 2027.
In China, demand growth is expected to accelerate to 5.5% in 2026, pushed higher by manufacturing activity and expanding electric vehicle charging. In India, demand growth is forecast to rebound strongly to 7% following weather-related weakness in 2025. Growth remains robust at close to 2% in the United States and in the European Union. By contrast, sharply higher fuel costs and supply disruptions are weighing on electricity consumption in more price-sensitive LNG-importing markets in Asia, including Pakistan and Bangladesh. Average spot electricity prices in the European Union and Japan increased by more than 30% year-on-year during the second quarter of 2026.
Carbon dioxide (CO2) emissions from electricity generation globally are forecast to increase by around 1% in 2026 before flattening out in 2027. Higher natural gas prices have supported an increase in coal-fired generation, although continued growth in renewables and a strong increase in nuclear power are together expected to prevent emissions from rising further in 2027. The report notes that a stronger-than-expected El Niño event in 2026 could boost electricity demand further by raising cooling needs while reducing hydropower and wind generation in some regions. Negative wholesale electricity prices are also becoming more common in some markets as renewable generation expands. Wider price swings are increasing the importance of flexibility, including battery storage and demand response, for maintaining reliable and efficient electricity systems.
