Global electricity demand is expected to grow at a faster pace in 2026 than in 2025 despite higher energy prices and disruptions to global energy markets, the International Energy Agency (IEA) said in its latest Electricity Mid-Year Update.
The IEA forecasts global electricity demand will rise by 3.6% in 2026 and by a further 3.8% in 2027, up from 3% growth in 2025. Global electricity consumption is projected to reach 30,700 terawatt-hours (TWh) in 2027, compared with 28,600 TWh in 2025.
The agency said electricity demand would continue to be driven by industrial activity, wider use of electrical appliances, increased cooling demand, electric vehicle charging and the expansion of data centres.
Disruptions to liquefied natural gas (LNG) shipments through the Strait of Hormuz, linked to conflict in the Middle East, have pushed natural gas prices in Asia and Europe to their highest levels since the 2022-23 energy crisis, increasing electricity generation costs and prompting some governments to introduce measures to curb energy use.
Despite the disruption, power systems have largely remained resilient, supported by additional LNG supplies, particularly from North America, which helped ease pressure on global markets.
Higher natural gas prices have encouraged some countries in Asia and Europe to switch electricity generation from gas to coal. At the same time, increasing renewable energy generation has diversified electricity supplies in many markets, improving energy security and reducing the impact of higher fuel costs.
The IEA said renewable energy is on track 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% in 2026, increasing its share of global electricity generation from 33% in 2025 to 37% by 2027.
Solar photovoltaic (PV) generation is expected to remain the fastest-growing source of electricity supply.
The IEA said solar PV would overtake wind power in 2026 to become the world’s second-largest renewable source of electricity after hydropower.
Global solar PV generation is projected to increase by about 600 TWh in 2026, matching the record annual increase recorded in 2025, with similarly strong growth expected in 2027.
Among the world’s largest economies, electricity demand in China is forecast to grow by 5.5% in 2026, supported by manufacturing activity and rising electric vehicle charging. Demand in India is expected to rebound by 7% after weaker growth in 2025 due to weather-related factors.
Electricity demand growth in advanced economies, including the United States and the European Union, is expected to remain close to 2%. By contrast, higher fuel costs and supply disruptions are projected to weigh on electricity consumption in LNG-importing Asian economies, including Pakistan and Bangladesh.
The report said weather conditions remain a key source of uncertainty. A stronger-than-expected El Niño event in 2026 could increase electricity demand by raising cooling needs while reducing hydropower and wind generation in some regions, leading to greater reliance on other sources of electricity.
Global carbon dioxide (CO2) emissions from electricity generation are expected to rise by about 1% in 2026 before stabilising in 2027. While higher natural gas prices are expected to increase coal-fired generation, continued expansion of renewable energy and higher nuclear power output are projected to prevent further growth in emissions in 2027.
The LNG price shock has also pushed up wholesale electricity prices in markets that rely heavily on LNG. Average spot electricity prices in the European Union and Japan rose by more than 30% year-on-year during the second quarter of 2026. By comparison, wholesale electricity prices in the United States remained broadly stable, while prices in India increased by less than 10%.
The report said the continued expansion of renewable energy is contributing to more frequent periods of negative wholesale electricity prices in some markets, reflecting insufficient system flexibility caused by technical, regulatory or contractual constraints.
It said greater deployment of battery storage, demand response and other flexible technologies would be increasingly important to maintaining reliable and efficient electricity systems as price volatility increases.
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