Electricity consumption worldwide is projected to grow at nearly 4% annually through 2027, marking its fastest growth in recent years. A new report from the International Energy Agency (IEA) forecasts a rise in demand. This demand will exceed Japan’s total annual electricity consumption each year. This trend is projected to continue through 2027.
The global surge in electricity demand is being driven by multiple sectors. These include industrial production and the growing use of air conditioning. Rapid electrification and the expanding role of data centres also contribute. These trends are expected to fuel demand in both emerging and developed economies.
EMERGING ECONOMIES LEAD THE CHARGE
Emerging markets, especially in China, are set to account for 85% of global demand growth over the next three years. China’s electricity consumption grew by 7% in 2024. It is expected to maintain a growth rate of around 6% annually through 2027. Key contributors include industries like electric vehicle (EV) manufacturing, battery production, and solar panel manufacturing.
U.S. AND EU DEMAND FORECASTS
In the United States, electricity demand is expected to increase significantly. It will add the equivalent of California’s current power consumption over the next three years. The European Union is forecast to see demand recover to 2021 levels by 2027. This follows significant declines during the energy crisis of 2022 and 2023.
RENEWABLES AND NUCLEAR TO MEET GROWTH
The IEA report projects that renewable energy sources will meet most of the global electricity demand growth through 2027. The primary contributors will be solar and wind energy. Solar photovoltaic (PV) is expected to supply about half of the rise in electricity demand. This is supported by policy support and falling costs. In 2024, solar PV surpassed coal in the EU’s electricity generation mix, and this trend will continue in major economies like China, the United States, and India.
Nuclear energy is also making a comeback, with generation set to hit new highs each year from 2025 onward.
RISING ELECTRICITY SYSTEM STRAINS
The report also identifies the strain on electricity systems due to extreme weather events in 2024, including winter storms in the U.S., hurricanes in the Atlantic, and droughts affecting hydropower in Latin America. These events underscore the need for more resilient electricity systems worldwide.
ENERGY FLEXIBILITY AND SYSTEM RESILIENCE
As electricity demand rises, the IEA highlights the growing importance of flexibility in power systems. Increased volatility in wholesale electricity prices signals the need for improvements in grid management to prevent negative price occurrences and ensure a reliable power supply.
THE FUTURE OF ELECTRICITY SYSTEMS
As the world enters a new era of electrification, the IEA stresses that governments must address the evolving challenges of energy security. Policymakers must focus on maintaining affordable, secure, and sustainable electricity systems to support future economic growth.
