Global electricity demand growth surges through 2027
The world is entering a new Age of Electricity, with global demand forecast to grow at an unprecedented rate through 2027. Driven by industrial expansion, increased electrification of transport and buildings, and the rise of energy-intensive data centres, this shift is reshaping energy markets worldwide. According to the International Energy Agency’s Electricity 2025 report, electricity consumption will grow by nearly 4% annually, adding over 3,500 TWh – the equivalent of Japan’s annual electricity use – each year.
The increasing role of electricity in global energy consumption is being fuelled by rapid industrialisation, rising air conditioning demand, and expanding digital infrastructure. While advanced economies have seen stagnating electricity use in recent years, demand is now surging again, particularly in the United States, the European Union, and Asia-Pacific regions.
China, already the world’s largest electricity consumer, is leading this transformation. Its demand is projected to grow at an annual rate of 6%, with nearly half of this expansion coming from industrial sectors such as electric vehicle (EV) manufacturing, battery production, and solar panel fabrication. Meanwhile, India’s electricity demand is set to increase by 6.3% per year, outpacing its historical growth rate, as air conditioning ownership and industrial activity expand. In Africa, however, electrification efforts remain slow, with millions still lacking access to reliable power, underscoring the uneven nature of this energy transition.
Renewable energy to meet demand growth
The surge in electricity consumption will be met largely by low-emissions sources. Renewables are expected to supply 95% of the additional demand by 2027, with solar PV leading the charge. In 2025, renewables will account for more than one-third of total electricity generation, overtaking coal for the first time in history.
The expansion of solar power is particularly striking, with annual global solar PV generation forecast to exceed 2,000 TWh by 2024. China, the United States, and India are all expected to see solar’s share reach 10% of total generation in the coming years. Wind power is also growing, set to contribute a third of additional global electricity supply by 2027. Meanwhile, nuclear power is rebounding, with new reactors in China, India, and Korea reinforcing its role as a stable, low-emissions energy source.
Despite these promising trends, integrating renewables into power grids remains a significant challenge. Weather-dependent generation from solar and wind can create supply volatility, requiring advanced energy storage and improved grid management. The rise of battery storage systems and smart grid technologies will play a crucial role in stabilising electricity networks and ensuring a reliable supply of power.
Rising challenges: Emissions, prices, and security
Despite the growth of clean energy, emissions from electricity generation remain a concern. While CO2 emissions are expected to plateau after 2024, electricity generation still accounts for the highest emissions of any sector, at 13,800 million tonnes. Although coal-fired generation is declining in Europe and the U.S., increases in India and Southeast Asia are offsetting reductions elsewhere.
Wholesale electricity prices have also become more volatile, with negative pricing emerging in some markets due to insufficient system flexibility. Countries such as Australia, Germany, and the U.S. are experiencing more frequent periods of negative wholesale prices, highlighting the need for improved grid management and energy storage solutions. Meanwhile, extreme weather events – from heatwaves to storms – are increasing pressure on electricity networks, necessitating greater investment in resilience and security.
As global demand rises, balancing supply and demand will become increasingly complex. More nations are investing in interconnections and cross-border electricity trade to enhance energy security. Large-scale regional transmission networks can improve grid stability and facilitate better use of renewable energy resources, particularly in regions with high variability in generation.
Data centres and digitalisation drive demand
Another major factor contributing to the surge in electricity demand is the exponential growth of data centres and digital infrastructure. The proliferation of artificial intelligence (AI), cloud computing, and 5G networks is driving significant increases in energy consumption. In China, for instance, electricity demand from data centres is projected to double by 2027, requiring new strategies to improve efficiency and sustainability.
Leading technology firms are increasingly looking towards renewable energy procurement and innovative cooling technologies to reduce the carbon footprint of their operations. Meanwhile, governments are considering new efficiency standards and incentives to encourage greener data centre development.
The future of electricity
As the world transitions into this new Age of Electricity, governments and industries face the challenge of ensuring reliability, affordability, and sustainability. The race to expand renewable generation, improve grid flexibility, and integrate emerging technologies such as energy storage and smart grids will be crucial. With electrification reshaping industries and daily life, the electricity sector’s transformation over the next three years will define the energy landscape of the future.
Long-term planning and policy intervention will be necessary to meet the increasing energy demands of a digital and electrified world. While technological advancements in grid management, energy storage, and renewables integration offer promising solutions, sustained investments and international cooperation will be essential in securing a resilient and low-carbon electricity future.
