Diverse and resilient energy production is needed to meet future demand, global report says

Global Electricity Demand Set to Outpace Energy Growth, IEA Report Finds

Electricity demand is projected to rise significantly faster than overall energy consumption in the coming decades, highlighting an urgent need for diverse energy sources, according to a new analysis released Wednesday by the International Energy Agency (IEA).

The annual World Energy Outlook report, coinciding with UN climate negotiations in Brazil, forecasts that renewable energy—particularly solar power—will outpace all other major energy sources in growth over the next few years. It also predicts that global demand for coal and oil will likely peak before the end of this decade.

“When we look at the history of the energy world in recent decades, there is no other time when energy security tensions have applied to so many fuels and technologies at once,” said IEA Executive Director Fatih Birol in a statement accompanying the report.

The assessment highlights a significant shift in electricity consumption patterns. “In a break from the trend of the past decade, the increase in electricity consumption is no longer limited to emerging and developing economies,” Birol noted, pointing to rising electricity use in advanced economies as well.

During a conference call Wednesday, Birol emphasized the dramatic nature of this change: “We will still use oil, we will still use gas. But the growth of electricity demand is spectacular.”

The report indicates that investment in data centers is expected to reach $580 billion this year, exceeding investment in oil supply. This surge reflects the growing energy demands of digital infrastructure, along with increased needs for heating, cooling, and broader electrification efforts.

While China has dominated global energy growth—accounting for half the increase in oil and gas demand and more than half for electricity since 2010—other regions are increasingly shaping energy market dynamics. Growing economies in India, Southeast Asia, the Middle East, Africa, and Latin America are positioned to play larger roles, particularly in solar power development.

The IEA emphasizes that transportation, which accounts for 45% of global oil consumption, represents a critical sector for energy transition. “How the electrification of transportation takes place, especially in countries beyond China and Europe, will determine the shape of oil demand and growth,” Birol explained.

Despite policy shifts in the United States, where the Trump administration has withdrawn from the Paris climate agreement and rolled back numerous climate regulations while supporting fossil fuel industries, energy analysts observe that the transition to clean power continues globally.

“The evidence on the ground is overwhelming. EV sales are taking off in many emerging countries, solar is permeating even through the Middle East,” said Dave Jones, chief analyst at global energy think tank Ember. “Renewables and electrification will dominate the future.”

The report also highlights that nuclear power capacity is set to increase by at least a third by 2035 after years of stagnation. Additionally, many natural gas projects were approved in 2025 due to U.S. policy changes, suggesting worldwide supply will rise despite uncertainties about future demand patterns.

The IEA advocates for greater energy system resilience through diversified energy sources and international cooperation in expanding supply chains for critical minerals used in batteries, electric vehicles, and renewable energy components. It also calls for rapid improvements to power grids, energy storage, and broader infrastructure.

Despite progress in the energy sector, significant challenges remain. Around 730 million people still lack access to electricity, and nearly one-quarter of the global population relies on inefficient cooking methods that harm health or the environment. Meanwhile, 2024 has been recorded as the hottest year in history, underscoring the urgent climate challenges facing the energy sector.

Some critics, however, question whether the IEA outlook fully captures the momentum in renewable energy deployment. Ben Backwell, CEO of the Global Wind Energy Council, suggested the report does not adequately reflect the accelerating trajectory of renewable energy, driven by decreasing costs, supportive policies, and electrification trends.

“We’re accelerating,” Backwell said. “You can see it all around the world and we can see it in our numbers for last year, but also in our numbers for the first half of this year. It looks very, very exciting, both for wind and for solar.”

While the outlook acknowledges the likelihood of surpassing the 1.5 degrees Celsius warming threshold established in the Paris Agreement, environmental advocates maintain that staying below this critical point remains possible with appropriate action and policy support.