A new electric age: electricity demand growth will accelerate in coming years

Global electricity demand is expected to grow by an average of 4% per year over the next three years, driven by rising demand from industry and data centers, as well as the electrification of transport and heating and greater use of air conditioning. The additional demand is expected to be met mainly by renewable and nuclear power. The International Energy Agency (IEA) reported.

The International Energy Agency said the expected annual increase in global electricity demand through 2027 is roughly equivalent to Japan's current annual electricity consumption. Most of the new demand is expected to come from developing countries, which account for 85% of projected demand growth.

According to the agency, the rising trend in electricity consumption is particularly significant in China, where electricity demand has grown faster than the economy since 2020. In 2024, it rose by 7% year on year and is expected to grow by an average of 6% annually through 2027.

"The acceleration in global electricity demand growth points to significant changes taking place in the energy sector around the world, and the arrival of a new 'electric age'. At the same time, however, it brings new challenges for governments as they seek to ensure a secure, affordable and sustainable electricity supply," said Keisuke Sadamori, the IEA's Director of Energy Markets and Security.

Sadamori added that although growth will be driven mainly by developing countries, electricity consumption is also set to rise in a number of developed countries where it has stagnated in recent years.

"In the United States, electricity demand is expected to increase over the next three years by an amount equivalent to California's current consumption. The European Union is expected to see more modest growth, returning to 2021 consumption levels by 2027 after steep declines in 2022 and 2023 caused by the energy crisis," the IEA said.

Solar will meet half of new demand

The IEA outlook assumes that additional electricity demand will be met by rising generation from low-emissions sources, particularly renewables and nuclear power. Solar power is expected to meet roughly half of it, thanks to continued reductions in technology costs and policy support.

The agency noted that in 2024, electricity generation from solar power plants in the European Union surpassed coal-fired generation for the first time, accounting for 11% of total electricity generation. The published outlook expects solar to exceed a 10% share of electricity generation within three years in China, the United States and India as well.

In addition to rising renewable generation, the IEA expects nuclear power generation to reach new all-time highs in each of the next three years.

"As a result, greenhouse gas emissions from global electricity generation are expected to remain flat in the coming years, after rising by around 1% in 2024," the agency added.