Electricity consumption is projected to increase at an average rate of approximately 4% annually through 2027, driven by heightened demand in various sectors such as industry, air conditioning, electrification, and data centers.
According to a recent report from the International Energy Agency (IEA), the global electricity consumption is anticipated to experience its most significant growth in recent years, nearing 4% per year until 2027. This increase is equivalent to adding an amount greater than Japan's total annual electricity usage each year during this period. The primary factors contributing to this surge include a strong rise in electricity use for industrial activities, a growing need for air conditioning, accelerated electrification—particularly in the transportation sector—and the rapid growth of data centers.
The majority of this additional demand over the next three years is expected to originate from emerging and developing economies, which will account for 85% of the overall demand increase. This trend is especially notable in China, where electricity demand has been outpacing economic growth since 2020.
In 2024, China's electricity consumption increased by 7%, with an average growth rate projected at around 6% through 2027. This demand surge in China is largely driven by the industrial sector, which includes not only traditional energy-intensive industries but also the rapidly growing electricity-intensive manufacturing of solar panels, batteries, electric vehicles, and related materials. Additional factors contributing to this demand include air conditioning, the adoption of electric vehicles, data centers, and the expansion of 5G networks.
“The acceleration of global electricity demand highlights the significant changes taking place in energy systems around the world and the approach of a new Age of Electricity. But it also presents evolving challenges for governments in ensuring secure, affordable and sustainable electricity supply,” said IEA Director of Energy Markets and Security Keisuke Sadamori. “While emerging and developing economies are set to drive the large majority of the growth in global electricity demand in the coming years, consumption is also expected to increase in many advanced economies after a period of relative stagnation. Policy makers need to pay close attention to these shifting dynamics, which will be addressed at the international Summit on the Future of Energy Security that the IEA is hosting with the UK government in London in April.”
In the United States, a significant rise in electricity demand is anticipated, potentially adding an amount equivalent to California's current power usage to the national total within the next three years. In contrast, the European Union is expected to experience a more gradual increase in electricity demand, projected to return to its 2021 levels by 2027 after substantial declines in 2022 and 2023 due to the energy crisis.
The latest report indicates that the growth in low-emission energy sources, particularly renewables and nuclear power, will collectively meet the entire increase in global electricity demand over the next three years. Notably, solar photovoltaic (PV) generation is expected to account for approximately half of the global electricity demand growth through 2027, bolstered by ongoing cost reductions and supportive policies.
In 2024, electricity generation from solar PV in the European Union surpassed that of coal, with solar contributing over 10% to the energy mix. Countries such as China, the United States, and India are projected to achieve a 10% share of solar PV in their annual electricity generation by 2027. Concurrently, nuclear power is experiencing a resurgence, with generation levels anticipated to reach new highs annually from 2025 throughout the forecast period. Consequently, carbon dioxide emissions from global electricity generation are expected to stabilize in the coming years after a projected increase of about 1% in 2024.
The report also addresses several significant challenges facing electricity systems in 2024, including winter storms in the United States, hurricanes in the Atlantic, blackouts due to extreme weather in Brazil and Australia, and droughts impacting hydropower in Ecuador, Colombia, and Mexico. These incidents underscore the necessity for enhancing the resilience of electricity systems, as highlighted in the report.
The text examines the essential impact of weather on electricity systems and the increasing fluctuations in wholesale electricity prices in certain areas, highlighting an escalating demand for system flexibility. Instances of negative wholesale electricity prices have been increasing in specific power markets, although they remain relatively rare on a global scale. These events generally reflect a lack of flexibility within the system, attributed to technical, regulatory, or contractual factors.