Global electricity demand set to grow four per cent annually

Its latest report, Electricity 2025, outlines how electric mobility and industrial electrification are driving demand, alongside increased use of air conditioning and the rapid of growth of data centres, fuelled by the AI boom. According to the IEA, the year-on-year increase in demand will be equivalent to adding Japan’s annual electricity consumption to the global grid each year.

Developing countries account for the lion’s share of growth, making up 85 per cent. China’s electrification is central to this - electricity consumption there rose by seven per cent in 2024 and is expected to grow by an average of around six per cent through 2027. According to the IEA, electricity-intensive manufacturing of solar panels, batteries and electric vehicles are underpinning the leap in demand, as well as air conditioning, EV adoption and data centres.

“The acceleration of global electricity demand highlights the significant changes taking place in energy systems around the world and the approach of a new Age of Electricity,” said IEA director of Energy Markets and Security, Keisuke Sadamori. “But it also presents evolving challenges for governments in ensuring secure, affordable and sustainable electricity supply.

“While emerging and developing economies are set to drive the large majority of the growth in global electricity demand in the coming years, consumption is also expected to increase in many advanced economies after a period of relative stagnation. Policy makers need to pay close attention to these shifting dynamics, which will be addressed at the international Summit on the Future of Energy Security that the IEA is hosting with the UK government in London in April.”

The report forecasts that growth in low-emissions sources – primarily renewables and nuclear – will be sufficient to cover the increase in global electricity demand over the next three years. In particular, solar PV is forecast to meet roughly half of global electricity demand growth through 2027, supported by continued cost reductions and policy support.

In the EU, electricity generation from solar PV surpassed that from coal in 2024, with solar’s share of the power mix exceeding 10 per cent. China, the United States and India are all expected to see solar’s share of annual electricity generation reach 10 per cent between now and 2027.

Meanwhile, nuclear power is making a strong comeback, with its electricity generation on course to hit new peaks every year from 2025 onward over the forecast period. As a result of these trends, CO2 emissions from global electricity generation are expected to plateau in the coming years after increasing by about one per cent in 2024.