IEA forecasts 3.6% global electricity demand growth in 2026 as renewables overtake coal

Global electricity demand is projected to accelerate in 2026 and 2027 despite recent energy market disruptions, according to the International Energy Agency’s Electricity Mid-Year Update 2026 (iea.org). The report forecasts demand growth of 3.6% in 2026 and 3.8% in 2027, up from 3% in 2025. This would lift worldwide electricity consumption to 30,700 terawatt-hours (TWh) in 2027 from 28,600 TWh in 2025 (iea.org).

Structural factors underpin the rise, including industrial expansion, higher appliance ownership, faster uptake of electric vehicles, air conditioning and heat pumps, and growing data centre capacity, the IEA stated in its executive summary (iea.org). The agency described the period as the dawn of the “Age of Electricity.”

China’s demand is expected to grow 5.5% in 2026, supported by manufacturing and EV charging, while India’s is forecast to rebound to 7% after weaker weather-affected growth in 2025. Demand in the United States and the European Union is each projected to rise by close to 2% (iea.org). Some price-sensitive LNG-importing economies, such as Pakistan and Bangladesh, have seen curtailed consumption due to higher costs and supply issues.

On the supply side, electricity generation from renewables is set to overtake coal-fired output in 2026 after the two sources reached near parity in 2025, the IEA reported (iea.org). Renewable generation is forecast to expand by more than 8% in 2026, with its share of the global mix rising from 33% in 2025 to 37% by 2027. Solar photovoltaic output is expected to increase by around 600 TWh in 2026, matching the prior year’s record addition, and to overtake wind as the second-largest renewable source after hydropower (iea.org).

The outlook incorporates impacts from disruptions to liquefied natural gas flows through the Strait of Hormuz linked to the Middle East crisis. These have driven natural gas prices in Asia and Europe to their highest levels since the 2022-2023 energy crisis and prompted temporary fuel switching from gas to coal in several countries, according to the IEA (iea.org). Additional LNG supplies, particularly from North America, have helped ease tightness, while rising renewable output has supported supply diversification and energy security. Gas-fired generation is forecast to remain broadly flat in 2026 before rebounding in 2027.

Nuclear generation is expected to rise more slowly in 2026 due to delays and outages, then accelerate by more than 4% in 2027 with new reactors and higher output in key markets. Carbon dioxide emissions from electricity generation are projected to increase by about 1% in 2026 before plateauing in 2027 as renewables, nuclear and gas meet additional demand and displace some coal use (iea.org).

Wholesale electricity prices rose more than 30% year-on-year in the second quarter of 2026 in the European Union and Japan amid the gas price shock, while remaining more stable in the United States and rising less than 10% in India. The report also notes increasing periods of negative wholesale prices in some markets with high renewable shares, underscoring the need for greater system flexibility through storage, demand response and grid modernisation (iea.org).

A stronger-than-expected El Niño in 2026 could further raise cooling demand while reducing hydro and wind output in some regions, adding uncertainty, the IEA cautioned. The mid-year update builds on the agency’s fuller Electricity 2026 report, which extended longer-term forecasts to 2030.