The IEA reported in July 2024 that falling electricity consumption in advanced economies restrained growth in global power demand in 2023. The world’s demand for electricity grew by 2.2% in 2023, less than the 2.4% growth observed in 2022.
While China, India and numerous countries in Southeast Asia experienced robust growth in electricity demand in 2023, advanced economies posted substantial declines due to a lacklustre macroeconomic environment and high inflation, which reduced manufacturing and industrial output. [But the SMRs are on the way.]
Global electricity demand is expected to rise at a faster rate over the next three years, growing by an average of 3.4% annually through 2026. The gains will be driven by an improving economic outlook, which will contribute to faster electricity demand growth both in advanced and emerging economies. Particularly in advanced economies and China, electricity demand will be supported by the ongoing electrification of the residential and transport sectors, as well as a notable expansion of the data centre sector. The share of electricity in final energy consumption is estimated to have reached 20% in 2023, up from 18% in 2015. While this is progress, electrification needs to accelerate rapidly to meet the world’s decarbonisation targets. In the IEA’s Net Zero Emissions by 2050 Scenario, a pathway aligned with limiting global warming to 1.5 °C, electricity’s share in final energy consumption nears 30% in 2030.
Electricity consumption from data centres, artificial intelligence (AI) and the cryptocurrency sector could double by 2026. Data centres are significant drivers of growth in electricity demand in many regions. After globally consuming an estimated 460 terawatt-hours (TWh) in 2022, data centres’ total electricity consumption could reach more than 1,000 TWh in 2026. This demand is roughly equivalent to the electricity consumption of Japan. Updated regulations and technological improvements, including on efficiency, will be crucial to moderate the surge in energy consumption from data centres.
About 85% of additional electricity demand through 2026 is set to come from outside advanced economies, with China contributing substantially even as the country’s economy undergoes structural changes. In 2023, China’s electricity demand rose by 6.4%, driven by the services and industrial sectors. With the country’s economic growth expected to slow and become less reliant on heavy industry, the pace of Chinese electricity demand growth eases to 5.1% in 2024, 4.9% in 2025 and 4.7% in 2026 in our forecasts. Even so, the total increase in China’s electricity demand through 2026 of about 1 400 TWh is more than half of the European Union’s current annual electricity consumption. Electricity consumption per capita in China already exceeded that of the European Union at the end of 2022 and is set to rise further. The rapidly expanding production of solar PV modules and electric vehicles, and the processing of related materials, will support ongoing electricity demand growth in China while the structure of its economy evolves.
China provides the largest share of global electricity demand growth in terms of volume, but India posts the fastest growth rate through 2026 among major economies. Following a 7% increase in India’s electricity demand in 2023, we expect growth above 6% on average annually until 2026, supported by strong economic activity and expanding ownership of air conditioners. Over the next three years, India will add electricity demand roughly equivalent to the current consumption of the United Kingdom. While renewables are set to meet almost half of this demand growth, one-third is expected to come from rising coal-fired generation. We also expect Southeast Asia to see robust annual increases in electricity demand of 5% on average through 2026, led higher by strong economic activity.
While electricity use per capita in India and Southeast Asia is rapidly rising, it has been effectively stagnant in Africa for more than three decades. Per capita consumption in Africa even declined in recent years as the population grew faster than electricity supply was made available, and we only expect it to recover to its 2010-15 levels by the end of 2026 at the earliest. Thirty years ago, a person in Africa consumed more electricity on average than someone living in India or Southeast Asia. However, strong increases in electricity demand and supply in India and Southeast Asia in recent decades – which have gone hand in hand with a boom in economic development – have transformed these regions at a spectacular pace. Meanwhile, Africa's per capita electricity consumption in 2023 was half that of India and 70% lower than in Southeast Asia. Our forecast for Africa for the 2024-26 period anticipates average annual growth in total electricity demand of 4%, double the mean growth rate observed between 2017 and 2023. Two-thirds of this growth in demand is set to be met by expanding renewables, with the remainder covered mostly by natural gas.
Electricity demand in the United States fell by 1.6% in 2023 after increasing 2.6% in 2022, but it is expected to recover in the 2024-26 outlook period. A key reason for the decline was milder weather in 2023 compared with 2022, though a slowdown in the manufacturing sector was also a factor. We forecast a moderate increase in demand of 2.5% in 2024, assuming a reversion to average weather conditions. This will be followed by growth averaging 1% in 2025‑26, led by electrification and the expansion of the data centre sector, which is expected to account for more than one-third of additional demand through 2026.
Electricity demand in the European Union declined for the second consecutive year in 2023, even though energy prices fell from record highs. Following a 3.1% drop in 2022, the 3.2% year-on-year decline in EU demand in 2023 meant that it dropped to levels last seen two decades ago. As in 2022, weaker consumption in the industrial sector was the main factor that reduced electricity demand, as energy prices came down but remained above pre-pandemic levels. In 2023, there were also signs of some permanent demand destruction, especially in the energy-intensive chemical and primary metal production sectors. These segments will remain vulnerable to energy price shocks over our outlook period.
EU electricity consumption is not expected to return to 2021 levels until 2026 at the earliest. Electricity demand in the European Union’s industrial sector fell by an estimated 6% in 2023 after a similar decline in 2022. Assuming the industrial sector gradually recovers as energy prices moderate, EU electricity demand growth is forecast to rise by an average 2.3% in 2024-26. Electric vehicles, heat pumps and data centres will remain strong pillars of growth over the period – together accounting for half of expected gains in total demand.
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