IEA Mid-Year Analysis 2026: Global Electricity Demand Grows Faster Despite Energy Crisis – Renewables Overtake Coal for First Time
Paris — Global electricity demand continues to grow significantly faster than in the years before the pandemic, despite the recent energy crisis. According to the mid-year analysis by the International Energy Agency (IEA), global electricity consumption is expected to rise by 3.6 percent in 2026 and by a further 3.8 percent in 2027.
According to the IEA's assessment, this reflects the continuation of the long-term trend toward the electrification of the economy and society. Despite geopolitical tensions and higher energy prices, global electricity demand remains on a growth trajectory. At the same time, however, the power mix is undergoing a fundamental shift, with renewable energy sources continuing to gain ground while fossil fuels lose market share.
Global Electricity Demand Rising: Electrification Drives Growth as Renewables Overtake Coal for the First Time
According to the IEA report, global electricity consumption will rise to around 30,700 terawatt-hours (30,700 billion kWh) by 2027. Key drivers include the ongoing electrification of industry, transport and heating, the growing use of air conditioning, and the expansion of energy-intensive data centers. With an expected increase of 3.6 percent in 2026, electricity demand is growing significantly faster than the long-term average.
At the same time, the expansion of renewable energy is continuing unabated. As early as 2026, wind, solar, hydro and bioenergy will generate more electricity than coal-fired power plants for the first time, making renewables the world's largest source of power generation. By 2027, their share of global electricity generation will rise to around 37 percent. Solar power alone will increase its output by around 610 terawatt-hours (610 billion kWh) in 2026, remaining the most important growth technology. In the European Union, the IEA forecasts that the share of coal-fired power generation will fall below 10 percent in 2026 for the first time in more than 100 years, while the share of low-carbon electricity generation overall will rise to around 76 percent by 2027.
Regional Differences: China and India Drive Demand – Solar Power and Battery Storage Lower Electricity Prices in Australia
The IEA again expects the strongest demand growth in Asia. Electricity consumption in China is forecast to rise by around 5.5 percent in 2026, while India is expected to see even stronger growth of about 7 percent. In the European Union, electricity demand continues to recover following the declines seen during the energy crisis, with the IEA forecasting an increase of around 2.1 percent for 2026. In the United States, by contrast, demand growth is comparatively modest at around 1.8 percent, driven mainly by data centers.
Australia stands out as a notable exception. While wholesale electricity prices in Europe and Japan rose by more than 30 percent year-on-year in the second quarter of 2026 due to higher natural gas prices, prices in Australia were around 45 percent lower. According to the IEA, high solar power generation and the rapid expansion of battery storage helped reduce reliance on costly gas-fired power plants during evening hours, significantly lowering wholesale prices. The example of Australia illustrates how a high share of renewable energy combined with battery storage can limit the impact of rising gas prices on the electricity market.
Market Disruptions and Electricity Prices: Volatile Gas Prices Drive Up Power Costs
The escalation in the Middle East has once again put significant pressure on international gas markets. In the second quarter of 2026, Asian spot prices for liquefied natural gas averaged more than 65 percent above pre-crisis levels and around 40 percent higher than a year earlier. European TTF gas prices were also significantly higher, exceeding pre-crisis levels by more than 50 percent and standing around one-third above the previous year's value.
The higher gas prices fed directly through to electricity markets, particularly in regions where gas-fired power plants frequently set the wholesale price under merit-order pricing. In the European Union, the average wholesale electricity price stood at around USD 105 per megawatt-hour in the first half of 2026, 15 percent higher than a year earlier. For Germany, the IEA reports a 17 percent increase in the wholesale electricity price.
The outlook remains tight as well. Forward market prices evaluated by the IEA point to continued high price levels in the second half of 2026. Forward prices in the EU are around 25 percent higher for the second half of the year and about 35 percent higher for the fourth quarter compared with the previous year. This development underscores the ongoing price volatility of fossil fuel–dominated electricity markets and their dependence on international gas and LNG supply chains.
Outlook: Grid Expansion and Flexibility Gain Importance
The IEA expects global electricity consumption to continue growing strongly in 2027 as well. As the expansion of renewable energy continues, power grids, storage and flexibility options are moving increasingly to the center of the energy transition. They are becoming essential prerequisites for safely and reliably integrating rising electricity demand and a growing share of renewables into power systems.
Source: IWR Online, Jul 07 2026