IEA sees global electricity demand growing by over 3.6% in 2026; India demand growth at 7%

While recent disruptions to global natural gas markets due to the war in the Middle East have pushed up electricity generation costs in many regions, global electricity demand will grow by 3.6% in 2026 and by a further 3.8% in 2027 – up from 3% growth in 2025. In India, demand growth is forecast to rebound strongly to 7% following weather-related weakness in 2025.

Global electricity consumption is projected to reach 30,700 terawatt-hours (TWh) in 2027, compared with 28,600 TWh in 2025, driven by demand from industry, appliances, cooling, electric vehicles and data centres, says the International Energy Agency (IEA)’s latest Electricity Mid-Year Update.

IEA said renewables are on track to become the world’s largest source of electricity generation in 2026, overtaking coal after reaching near parity in 2025. Renewable generation is set to grow by more than 8% in 2026, and it is poised to increase its share of global electricity generation from 33% in 2025 to 37% by 2027.

Solar power continues to lead growth in electricity supply worldwide. Solar PV generation is set to expand strongly over the next two years, overtaking wind power in 2026 to become the world's second-largest source of renewable electricity generation after hydropower. Solar PV’s global electricity output is forecast to increase by around 600 TWh in 2026, matching the record annual growth achieved in 2025, with similarly robust expansion expected in 2027.

The disruptions to liquefied natural gas (LNG) flows through the Strait of Hormuz have tested electricity markets around the world, driving natural gas prices in Asia and Europe to their highest levels since the 2022-23 energy crisis and prompting emergency measures to curb energy use in some regions. Power systems have for the most part weathered the impacts of the crisis so far, with additional LNG supplies – particularly from North America – helping to ease market tightness. Nevertheless, spikes in gas prices have prompted fuel switching from natural gas to coal in several Asian and European countries. At the same time, rising power generation from renewable sources has contributed to the diversification of electricity supplies in many countries, supporting energy security and helping cushion the impacts of the shock.

Meanwhile, IEA Executive Director Fatih Birol said the agency is closely monitoring the situation in oil markets following recent developments in the conflict in the Middle East. The escalation in hostilities affecting the Strait of Hormuz and energy infrastructure in the region increases security of supply concerns and uncertainty over the market outlook. Threats to the Bab el-Mandeb Strait, which has become increasingly important as a route to bypass the Strait of Hormuz, exacerbate these concerns further.

For the moment, crude oil markets continue to benefit from several cushioning factors. These include significant supplies from Gulf producers – notably through major efforts by Saudi Arabia and the United Arab Emirates – that are continuing to reach global markets via alternative routes to the Strait of Hormuz, as well as volumes still managing to pass through it. We estimate that Gulf exports are below their late-June highs but are still considerably higher than the levels seen between early March and mid-June.

In addition, oil producers in other regions – notably the United States, Brazil, Venezuela and Kazakhstan – have increased exports, offsetting some of the supply losses from the Gulf. On the demand side, China has played an important role in stabilising markets by reducing its crude oil imports by nearly 50% compared with pre-war levels, he said.