By Mark Jaffe, EUCI energy writer
Global electricity demand is set to grow at its fastest pace in years for the rest of the decade spurred by rising industrial production, use of air conditioning, and the build-out of data centers, according to the International Energy Agency (IEA).
Electricity demand rose 4.3% worldwide in 2024 and is projected to continue to rise nearly 4% annually through 2027, adding 3,500 terawatt-hours (TWh) of demand – more than Japan’s yearly electricity consumption.
The new demand largely will be met by renewable generation – wind, solar, and hydropower. For example, IEA projects renewables will fill 89% of the 1,230 terawatt-hour demand in 2026. Nuclear will account for 5% of the load, natural gas for 2%, and coal 4%.
Photovoltaic solar (PV) is expected to make up nearly half of the new generation. In 2024, PV accounted for 7% of global electricity generation, a 2% increase over 2023. An additional 600 TWh will be generated from solar annually over the next three years.
The bulk of the new demand will come from emerging economies, primarily in Asia. Electricity demand in China is projected to increase 6%, while India and Southeast Asian nations are set to see record demand.
In 2024, more than half of the new electricity demand came from China, which saw a 7% increase. Electricity accounts for 28% of China’s total energy consumption, compared with 22% in the U.S. and 21% in the European Union.
“China’s electricity consumption has been growing faster than its economy since 2020, underscoring the speed at which electrification across all sectors is taking hold,” the IEA said.
Between 2022 and 2024, industry accounted for nearly 50% of electricity demand growth. The commercial and residential sectors combined for another 40%.
In sharp contrast to Asia, Africa continues to lag in electricity demand, despite some progress in recent years, leaving 600 million people in Sub-Saharan Africa without access to reliable electricity.
Electricity demand in advanced economies remained relatively flat in 2024 compared to 2021 and are forecast to account for 15% of the growth in global demand between 2025 and 2027.
“Electricity demand in advanced economies is expected to start rising significantly alongside economic growth, bucking the trend of the past 15 years,” the IEA said. “This is driven by higher consumption from the deployment of electric vehicles, air conditioners, data centers, and heat pumps, among other end-use technologies.”
The U.S. – the world’s second largest electricity consumer – saw demand increase by 2% in 2024. The IEA projects demand continuing to average a 2% annual increase during the next three years, an increase from IEA’s 2024 forecast of 1% growth.
“This is an upward revision from our forecast in January 2024, and is largely due to higher consumption from the data center sector,” the agency said.
Electricity demand in the European Union plummeted 6% between 2022 and 2023 as the region struggled with an industrial slowdown and high energy prices. Demand stabilized in 2024, rising 1.4% year-over-year, but the IEA does not expect a return to 2021 levels before 2027.
In other advanced economies – such as Australia, Canada, Japan, Korea, and the United States – electricity demand has been flat, but is also expected to increase, driven by the electrification of homes and businesses and the growth of data centers.
“At a moment of significant uncertainty across energy markets, one certainty is that global electricity demand is growing much more strongly than it did over the past decade,” Keisuke Sadamori, IEA director of energy markets and security, said in a statement.
“Meeting this demand will require annual investment in grids to rise by 50% by 2030. Expanding flexibility will also be crucial as power networks continue to evolve – so will a strong focus on security and resilience,” Sadamori said.
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