Asia Power Markets Hit by Higher Gas Costs Amid Chinese Demand Surge

Asia's power markets are facing higher natural gas costs and supply disruptions due to strong electricity demand growth in China and India, according to the International Energy Agency (IEA).

The IEA's Electricity Mid-Year Update forecasts global electricity demand growth of 3.6% in 2026 and 3.8% in 2027, up from 3% in 2025.

China is expected to drive electricity demand growth with a 5.5% increase in 2026, driven by manufacturing activity and electric vehicle charging, while India's demand is forecast to rise 7% after weather-related weakness in 2025.

The disruptions to liquefied natural gas (LNG) flows through the Strait of Hormuz have pushed natural gas prices in Asia and Europe to their highest levels since the 2022-23 energy crisis, increasing electricity generation costs in many regions.