Global electricity demand to rise 3.6 percent in 2026, 3.8 percent in 2027 as renewables overtake coal

Global electricity demand is set to climb 3.6 percent in 2026 and 3.8 percent in 2027 as industry, cooling systems, electric vehicles, household appliances and data centers consume more power. This follows an estimated 3 percent rise in 2025, with worldwide consumption projected to grow from about 28,600 terawatt-hours in 2025 to roughly 30,700 terawatt-hours by 2027, underscoring the rapid pace of electrification across major economies.

Growth is expected to continue despite volatile energy markets, higher generation costs and emergency conservation efforts in some regions. However, ongoing military conflict in the Middle East and broader geopolitical tensions could soften the global outlook.

LNG shock absorbed

Electricity markets have weathered a major disruption stemming from constraints on liquefied natural gas shipments through the Strait of Hormuz. The temporary loss of nearly one-fifth of global LNG supply pushed gas prices in Asia and Europe to their highest levels since the 2022–2023 crisis, lifting costs for gas-fired power and triggering conservation measures in some places.

Even so, systems largely met rising demand. New liquefaction capacity—especially in North America—and higher exports from other suppliers eased tightness and offset part of the shortfall. Elevated gas prices prompted fuel switching from gas to coal in several Asian and European countries, while accelerating renewable generation diversified supply and bolstered energy security.

Renewables to overtake coal

Renewables are on track to become the world’s largest source of electricity in 2026, overtaking coal after reaching near parity in 2025. Global renewable output is expected to rise more than 8 percent in 2026, lifting its share of generation from about 33 percent in 2025 to around 37 percent by 2027.

Solar photovoltaic will remain the biggest driver of new supply, adding roughly 600 terawatt-hours in 2026—matching 2025’s record—and delivering another strong increase in 2027. With this momentum, solar is set to surpass wind in 2026, becoming the second-largest renewable source after hydropower.

As deployment accelerates, expanding and modernizing grids, increasing system flexibility, sharpening locational price signals and making better use of existing infrastructure will be essential to integrate more variable wind and solar while maintaining reliability.

Major economies accelerate

• China: Demand growth is projected at 5.5 percent in 2026, up from 5.2 percent in 2025, supported by manufacturing and EV charging.
• India: Demand is set to rebound 7 percent in 2026 after just 1.6 percent in 2025, when an early monsoon curbed consumption.
• United States: Nearly 2 percent growth in 2026, driven by expanding data centers, higher air-conditioning load and industrial use.
• European Union: About 2 percent growth, underpinned by electrification, a colder first quarter and stronger cooling needs during heatwaves.

By contrast, price-sensitive Asian markets heavily reliant on imported LNG, including Bangladesh and Pakistan, have curtailed consumption due to higher fuel costs and supply constraints.

Weather and fuels: uncertainty ahead

A stronger-than-expected El Niño in 2026 could lift global demand by intensifying cooling needs across multiple regions while simultaneously reducing hydropower and wind output in parts of Latin America and Southeast Asia. Lower renewable availability would push systems to rely more on coal and gas, pressuring fuel markets and generation costs.

Globally, gas-fired generation is expected to be broadly flat in 2026 due to high prices—only the third year in a decade without significant growth—before recovering in 2027. Coal-fired output is likely to rise in 2026 as countries switch away from expensive gas, then fall in 2027 as renewables, nuclear and recovering gas generation meet more of the additional demand.

Nuclear recovery

Nuclear generation is forecast to increase in 2026 despite delays to new units and maintenance outages, with faster growth—above 4 percent—anticipated in 2027. New reactors in China and India, solid performance in the United States and France, and the completion of delayed projects are expected to drive the rebound.

Emissions trend

Global CO2 emissions from power generation are projected to rise by about 1 percent in 2026, reflecting higher coal use amid expensive gas and weather-driven shifts to coal and oil in the first half of the year. Emissions are then expected to stabilize in 2027 as growth in renewables, nuclear and natural gas displaces more coal. Rapid clean-power expansion is limiting emissions growth even if immediate declines are challenging when demand is surging and fuel shocks persist.

Prices diverge across markets

The LNG supply shock lifted wholesale electricity prices most sharply where gas has a major role in power generation. Average spot prices in the European Union and Japan rose by more than 30 percent year on year in the second quarter of 2026. The United States saw little change from 2025, while India’s average prices increased by less than 10 percent given LNG’s small role in its mix. Australia moved the other way, with wholesale prices down about 45 percent as strong renewables and fast-growing battery capacity reduced reliance on gas during peaks. These contrasts underscore how generation mix, storage and access to fuels shape consumer exposure to global gas volatility.

Negative prices and volatility

More renewable output has brought more frequent negative wholesale prices, typically when supply exceeds immediate demand and systems lack the flexibility to adjust. In the first half of 2026, South Australia and California recorded negative prices during roughly 20 percent of market hours, similar to 2025. Spain’s share rose to about 17 percent from 10 percent, while Sweden and Finland fell to around 2 percent from roughly 6 percent as measures improved flexibility. Intraday volatility also remained high; during European heatwaves in June, spreads between midday lows and evening peaks reached about $600 per megawatt-hour in several countries.

Why grid flexibility matters

Large intraday price swings create opportunities for technologies that shift consumption or supply across hours. Battery storage can absorb excess midday solar and discharge during evening peaks, while demand-response programs encourage consumers to shift usage. These resources can capture price spreads and help balance systems more efficiently.

Frequent negative prices do not mean renewables are uneconomic; they signal that grids, storage, market design and flexible demand have not expanded as quickly as wind and solar capacity. Without sustained investment in transmission and flexibility, curtailment will rise even as total electricity demand continues to grow.