Global Electricity Demand Set to Accelerate Despite Higher Power Prices
Global electricity demand is expected to accelerate over the next two years despite higher power prices and ongoing energy market disruptions, according to the International Energy Agency's (IEA) latest report. The IEA's Electricity Mid-Year Update 2026 projects global electricity demand will rise by 3.6% this year and another 3.8% in 2027.
Worldwide electricity consumption is forecast to climb from 28,600 terawatt-hours (TWh) in 2025 to 30,700 TWh by 2027, driven by expanding industrial activity, greater use of air conditioning and household appliances, growing electric vehicle adoption, and rapidly increasing electricity needs from data centers.
The report points to recent disruptions to liquefied natural gas (LNG) shipments through the Strait of Hormuz as the cause for higher electricity generation costs in many parts of the world. Natural gas prices in Asia and Europe climbed to their highest levels since the 2022-2023 energy crisis, prompting emergency energy-saving measures in some regions.
Despite these challenges, the IEA says electricity systems have largely remained resilient, aided by additional LNG supplies, particularly from North America, and continued growth in renewable energy generation. Higher natural gas prices have also prompted some countries to shift electricity production from natural gas back to coal, while expanding renewable generation has helped diversify electricity supplies, strengthening energy security and softening the effects of higher fuel costs.