Global electricity demand to rise in 2026 as renewables lead, says IEA

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Electricity demand is projected to annually grow by more than 3% through 2026, outpacing overall energy demand and reaching one of the fastest sustained growth rates in over a decade, the International Energy Agency (IEA) said in its mid-year update. Renewables, natural gas and nuclear are expected to supply the additional demand, with coal use continuing to decline.

The IEA said global electricity demand could increase 3.3% in 2025 and 3.7% in 2026, driven by greater use in industry, buildings, data centres, and transport. While growth slows slightly from 2024’s 4.4% increase, it remains well above the 2015-23 average of 2.6%.

Renewables are on track to surpass coal as the world’s largest electricity source by 2025 or 2026, depending on weather and fuel price developments. Nuclear generation is also set to hit record levels, boosted by restarts in Japan, strong output in the United States and France, and new builds in Asia. Gas-fired generation is expected to continue displacing coal and oil in multiple regions.

As a result, CO₂ emissions from electricity generation are forecast to level off in 2025 and decline slightly in 2026, though this could vary with weather and economic conditions.

Emerging economies in Asia will account for 60% of global demand growth, led by China and India. Demand is forecast to rise 5.7% in China and 6.6% in India in 2026. In the United States, the expanding data centre sector is expected to keep annual demand growth above 2% through 2026. In the European Union, demand is projected to rise about 1% in 2025, with a modest acceleration the following year.

Wholesale electricity prices in the European Union and the United States rose 30% to 40% in the first half of 2025 compared to the same period in 2024, due to tighter gas markets. Although prices remain below 2023 annual averages, they are still higher than in 2019. The report noted that rising incidences of negative wholesale prices point to the urgent need for more grid flexibility, storage, and responsive demand.

Industrial competitiveness remains uneven: average electricity prices for energy-intensive industries in the EU are still twice as high as in the United States and significantly higher than in China.

In October 2024, the IEA said global solar module manufacturing capacity could exceed 1.5 terawatts by 2035, driven by rising demand and technology improvements. The agency highlighted the need for investment in supply chains and materials to support this rapid expansion.

In April, LUT University researchers claimed that the IEA’s “World Energy Outlook” report systematically underestimates solar growth due to outdated assumptions and slow updates. They urged the agency to revise its modeling to better reflect the rapid pace of solar technology deployment and cost declines.

From pv magazine Global

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