Global electricity demand is projected to grow at a faster pace over the next two years, driven by expanding industrial activity, electric vehicles, air conditioning, household appliances and data centres, according to the International Energy Agency (IEA).
In its latest Electricity Mid-Year Update, released on Wednesday, the IEA forecasts global electricity demand will increase by 3.6 percent in 2026 and 3.8 percent in 2027, up from 3 percent growth in 2025. Global electricity consumption is expected to reach 30,700 terawatt-hours (TWh) by 2027, compared with 28,600 TWh in 2025.
The report says recent disruptions to global liquefied natural gas (LNG) markets, linked to tensions in the Middle East and reduced flows through the Strait of Hormuz, have pushed up electricity generation costs in many regions. However, strong demand and growing renewable energy capacity are expected to support continued growth.
The IEA projects that renewable energy will become the world’s largest source of electricity generation in 2026, overtaking coal. Renewables are expected to account for 37 percent of global electricity generation by 2027, up from 33 percent in 2025, with solar photovoltaic (PV) leading the expansion.
Demand is forecast to remain strong in the world’s largest economies, with electricity consumption expected to grow by 5.5 percent in China, 7 percent in India, and close to 2 percent in both the United States and the European Union.
Despite the positive outlook, the agency warns that geopolitical tensions, higher natural gas prices and weather-related events such as a stronger El Niño could increase electricity demand further while disrupting power generation from hydropower and wind.
The report also notes that the rapid expansion of renewable energy is increasing the frequency of negative wholesale electricity prices in some markets, highlighting the growing need for battery storage, demand response and more flexible electricity systems.