Global Electricity Demand Soaring

The world’s electricity consumption is forecast to rise at its fastest pace in recent years, growing at close to 4 per cent annually through 2027, according to a new report by the International Energy Agency (IEA).

The “Age of Electricity”

This IEA report states that the sharp acceleration is being driven by a combination of industrial expansion, the rapid rise of data centres, increasing air conditioning demand, and the global push towards electrification. The report’s findings therefore (as the world enters what the IEA describes as the “Age of Electricity,”) can renewable energy and sustainability measures keep up with surging demand?

What’s Driving The Surge in Demand?

According to the IEA’s Electricity 2025 report, global electricity demand surged by 4.3 per cent in 2024 and is expected to continue rising at a similar rate, adding the equivalent of Japan’s entire annual electricity consumption to the grid each year! The scale of growth looks to be unprecedented, with global consumption set to increase by a massive 3,500 terawatt-hours (TWh) between 2025 and 2027.

Most of this additional demand looks likely to come from emerging economies, particularly China, India, and Southeast Asia, which will account for 85 per cent of global growth. China alone saw a 7 per cent increase in electricity consumption in 2024 and is projected to maintain an average growth rate of 6 per cent through 2027. The key drivers include the rise of electricity-intensive industries, particularly in manufacturing sectors linked to clean energy technologies such as solar panels, batteries, and electric vehicles (EVs). For example, in 2024, these industries consumed over 300 TWh of electricity, the equivalent of Italy’s entire annual power usage!

Meanwhile, India’s electricity demand is projected to grow at an annual rate of 6.3 per cent, outpacing its 5 per cent average growth over the past decade. Also, air conditioning use in India is soaring as temperatures rise due to climate change, with electricity demand for cooling contributing significantly to the overall increase.

The Rise of Energy-Hungry Sectors

Beyond industrial production, the global appetite for electricity is being fuelled by the rapid expansion of data centres and digital infrastructure. The explosion of artificial intelligence (AI), cloud computing, and 5G networks is contributing to massive and unprecedented electricity consumption. For example, in the United States alone, electricity demand from data centres is expected to grow so significantly that it will add the equivalent of California’s current power consumption to the national grid within three years.

Electric vehicle (EV) adoption also appears to be a major factor. The IEA notes that China’s EV fleet grew to 30 million vehicles in 2024, a near tenfold increase from 2021. Charging infrastructure expansion is set to push electricity demand even higher in the coming years.

Air conditioning is another major player in this surge. With climate change causing increasingly severe heatwaves, demand for cooling systems is soaring, particularly in emerging economies where AC penetration is still relatively low. The IEA highlights that in China, cooling already accounts for up to 40 per cent of peak electricity demand in some provinces, and demand is set to rise sharply.

Can Low-Carbon Energy Keep Up?

Thankfully, there is some good news, which is that renewables and nuclear power are expanding rapidly and, according to the IEA, should be able to meet nearly all the additional electricity demand by 2027. Solar photovoltaic (PV) energy, in particular, is leading the way. Solar generation surpassed coal in the European Union in 2024 and is expected to account for roughly half of global electricity demand growth through 2027.

China, the US, and India are all expected to see solar power exceed 10 per cent of their total electricity generation within the next three years. Wind power is also set to play a key role, meeting about one-third of the additional demand.

Also, it seems that nuclear power is undergoing a revival. The IEA forecasts that nuclear electricity generation will hit record highs each year from 2025 onwards, driven by a resurgence in nuclear projects in China, India, Korea, and France, as well as the reopening of previously shuttered plants in Europe and the US.

The Carbon Emissions Challenge

Despite the strong growth in renewables, global CO2 emissions from electricity generation are projected to plateau rather than decline in the coming years. The IEA warns that while coal-fired electricity generation is stagnating, fossil fuel use remains high, particularly in India and Southeast Asia. Although emissions in Europe and the US are declining, overall global emissions from electricity generation stood at a staggering 13.8 billion tonnes of CO2 in 2024.

Volatile Electricity Prices

One other critical issue highlighted in the report is the increasing volatility of electricity prices, largely due to the growing reliance on weather-dependent renewables. Instances of negative electricity prices (something that UK users can only dream about) where energy producers pay customers to use power, are becoming more common in markets where renewable output outpaces grid flexibility. The IEA states, “Negative pricing events highlight the need for greater system flexibility and storage solutions to accommodate variable renewable generation.”

The Risk of Grid Instability

Extreme weather events are also adding pressure to electricity systems worldwide. The IEA report details how winter storms, hurricanes, droughts, and heatwaves have caused widespread power outages in multiple countries. In 2024, severe weather disrupted electricity supply across the US, Australia, and Latin America, exposing vulnerabilities in grid resilience.

As Keisuke Sadamori, IEA Director of Energy Markets and Security, warns: “Ensuring a secure, affordable, and sustainable electricity supply is becoming increasingly complex. Policymakers need to urgently strengthen grid infrastructure, improve storage capacity, and enhance flexibility to cope with changing energy dynamics.”

The report stresses the need for significant investment in grid modernisation, energy storage, and demand-side management to prevent blackouts and price spikes as electricity consumption continues to soar.

What Does This Mean For Your Organisation?

The IEA’s findings paint a picture of a world that’s entering a new era of electricity consumption at an unprecedented pace. The rapid growth in demand (largely driven by industrial expansion, data centres, EV adoption, and air conditioning) looks like presenting some major challenges. While the acceleration of renewable energy and nuclear power is encouraging, it’s difficult not to ask the question ‘can these clean energy sources keep pace with the soaring appetite for electricity, especially in emerging economies?’

One of the most pressing concerns is, of course, the impact on global carbon emissions. Despite the expansion of renewables, the fact that emissions from electricity generation are likely to plateau rather than decline is a stark reminder of the continued reliance on fossil fuels. This highlights the urgency for policymakers to not only scale up clean energy but also implement stronger measures to phase out coal and gas-fired power generation. Grid instability and electricity price volatility further complicate the landscape, raising concerns about energy security and affordability, especially as extreme weather events become more frequent.

For UK businesses, these developments have significant implications. On one hand, the transition towards renewables could present opportunities for investment in energy-efficient technologies, on-site solar generation, and demand-side management solutions. Businesses with high energy consumption will need to adapt to potential price fluctuations and grid challenges, making resilience and sustainability key priorities. Furthermore, with data centres and AI-driven industries driving much of the global electricity surge, UK tech firms will need to assess the long-term viability of their energy strategies to remain competitive in an increasingly power-hungry digital economy.

It seems, therefore, that the world’s ability to navigate this energy transformation will depend on a combination of strategic investment, technological innovation, and policy reform. The rise in electricity demand is not inherently problematic (after all, electrification is crucial for decarbonisation) but without the right infrastructure and regulatory frameworks, it could become a bottleneck rather than a catalyst for progress. As we move deeper into the “Age of Electricity,” striking the right balance between growth, sustainability, and stability will be paramount.