Global electricity demand is expected to grow by more than 3.5% a year on average for the rest of the decade, with renewable energy, natural gas and nuclear power generation all expanding to keep up, according to a new report from the International Energy Agency (IEA).
Power 2026, published today, is the IEA’s annual report on global electricity systems and markets. It includes detailed analysis of recent trends and policy developments, and includes forecasts for electricity demand, supply and carbon dioxide (CO₂) emissions for the five years to 2030.
According to the report, electricity demand is expected to grow at least 2.5 times faster than overall energy demand by 2030 as the electric era takes hold. This is being driven by increased electricity usage in industry, continued adoption of electric vehicles, increased air conditioning usage, and expansion of data centers and AI. While emerging and developing countries remain the main drivers of electricity demand growth, developed countries are also increasing consumption after 15 years of stagnation, contributing to one-fifth of the total increase in electricity demand by 2030.
The report finds that record penetration of solar power has boosted global renewable energy generation, effectively on track to match that of coal by 2025, based on the latest available data. Nuclear power output also set a new record. The momentum for low-emission power generation is expected to continue until 2030, when renewables and nuclear power combined will account for 50% of the world’s electricity, up from 42% today.
Natural gas-fired power generation is also expected to increase through 2030, supported by increased electricity demand in the United States and the continued shift of electricity demand from oil to gas in the Middle East. With the expansion of renewable energy, coal-fired power generation will lose its position globally, returning to 2021 levels by the end of the 2010s. As a result, global CO₂ emissions from electricity generation are expected to remain roughly flat from now until 2030.
The report highlights that these trends, including increased demand, an increasingly weather-dependent mix of generation sources, and evolving electricity consumption patterns and technology, require rapid and efficient expansion of both grid and system flexibility. More than 2,500 gigawatts of projects are currently stuck in connection queues around the world, including heavy-duty projects in renewable energy, storage, data centers, and more.
The report’s new analysis finds that as the grid expands, the introduction of grid-strengthening technologies and implementation of regulatory reforms that allow for more flexible grid connections and utilization could enable the consolidation of up to 1,600 gigawatts of standby projects in the short term. Together, these measures will enable more efficient use of the electricity grid and free up substantial capacity.
“While there is great uncertainty across energy markets, one thing is certain: global electricity demand is growing much more strongly than in the past decade. In this electricity era, the increase in global electricity consumption by 2030 will be comparable to adding two or more European Unions,” said Keisuke Sadamori, Director of the IEA’s Energy Markets and Security Directorate. “Meeting this demand will require a 50% increase in annual investment in the electricity grid by 2030. As electricity networks continue to evolve, greater flexibility will also be important, and there will also be a focus on security and resilience.”
The report found that utility-scale battery storage installations are rapidly increasing and are becoming an important source of short-term flexibility. Markets such as California, Germany, Texas, South Australia, and the United Kingdom have seen significant increases in utility-scale battery capacity deployments in recent years.
Power 2026 also notes that electricity affordability remains important and a growing concern. Since 2019, household electricity prices have risen faster than incomes in many countries. Rising prices are also putting pressure on industries and businesses. As a result, policymakers are focusing on policies, market designs, and regulations that increase flexibility and efficiency across all parts of the electricity system, including demand, supply, and infrastructure use, as well as additional investment.
The report says more efforts are needed to improve the security and resilience of power systems around the world in the face of increasing risks related to aging infrastructure, extreme weather events, cyber threats and other emerging vulnerabilities. To combat these threats, the report emphasizes, it is essential to modernize the way systems are operated and strengthen the physical protection of critical infrastructure.
