Global electricity demand is set to accelerate despite ongoing energy market disruptions, with consumption projected to rise by 3.6 percent in 2026 and 3.8 percent in 2027, according to the International Energy Agency (IEA).
The latest Electricity Mid-Year Update forecasts global electricity use will increase from 28,600 terawatt-hours (TWh) in 2025 to 30,700 TWh in 2027, driven by expanding industrial activity, electric vehicle charging, air conditioning, household appliances, and rapidly growing data centre demand.
IEA said electricity markets have remained resilient despite disruptions to liquefied natural gas (LNG) flows through the Strait of Hormuz, which pushed natural gas prices in Europe and Asia to their highest levels since the 2022-23 energy crisis. Additional LNG supplies from North America helped ease market pressures, but higher gas prices prompted several Asian and European countries to switch part of their power generation from natural gas to coal.
Renewable energy is expected to become the world’s largest source of electricity generation in 2026, overtaking coal after reaching near parity in 2025. Renewable electricity generation is forecast to grow by more than 8 percent in 2026, increasing its share of global power generation from 33 percent in 2025 to 37 percent by 2027.
Solar photovoltaic (PV) power will remain the fastest-growing electricity source. Solar PV generation is expected to expand by around 600 TWh in 2026, matching the record annual increase achieved in 2025, before continuing strong growth in 2027. The IEA expects solar PV to overtake wind power in 2026, becoming the world’s second-largest renewable electricity source after hydropower.
Among major economies, China’s electricity demand is projected to grow 5.5 percent in 2026, supported by manufacturing and rising EV charging. India is expected to rebound with 7 percent demand growth following weather-related weakness in 2025.
Electricity demand growth is forecast to remain close to 2 percent in both the United States and the European Union, while LNG-importing markets such as Pakistan and Bangladesh are likely to face weaker electricity consumption due to higher fuel costs and supply disruptions.
The report warns that weather conditions remain a major uncertainty. A stronger-than-expected El Niño event during 2026 could further increase electricity demand through higher cooling requirements while reducing hydropower and wind generation in some regions, increasing dependence on other power sources.
Global carbon dioxide (CO2) emissions from electricity generation are forecast to increase by around 1 percent in 2026 before stabilizing in 2027. Although higher natural gas prices are encouraging greater coal-fired generation, continued expansion of renewable energy and strong growth in nuclear power are expected to prevent emissions from rising further next year.
The LNG price shock has also affected electricity markets differently across regions. Average wholesale electricity prices in the European Union and Japan increased by more than 30 percent year-on-year during the second quarter of 2026, while wholesale prices in the United States remained broadly stable. In India, wholesale electricity prices increased by less than 10 percent over the same period.
The IEA also highlighted that the rapid expansion of renewable electricity is leading to more frequent negative wholesale electricity prices in several markets. These price movements reflect insufficient system flexibility and underline the growing importance of battery energy storage, demand response, and other grid flexibility solutions to maintain reliable and efficient electricity systems as renewable generation continues to expand.
BABURAJAN KIZHAKEDATH
