The IEA says global electricity demand is forecast to accelerate through 2027, driven by industry, EVs, cooling, household appliances, and data centers
It expects solar PV to become the world's second-largest renewable electricity source in 2026, as renewables overtake coal in power generation
Higher LNG prices and geopolitical tensions will continue to influence electricity markets, according to the report, increasing the importance of grid flexibility and battery storage
Rising electricity demand from industry, electric vehicles (EVs), air conditioning and data centers is reshaping the global power mix. At the same time, volatile fossil fuel prices and geopolitical uncertainty continue to strengthen the case for renewable energy.
Against this backdrop, the International Energy Agency (IEA) projects that renewables will become the world's largest source of electricity generation in 2026, overtaking coal after almost matching its output in 2025.
According to the IEA’s Electricity Mid-Year Update 2026, renewable electricity generation is forecast to grow by more than 8% in 2026, increasing its share of global power generation from 33% in 2025 to 37% by 2027. Solar PV is expected to account for the largest increase in electricity supply.
The IEA forecasts global solar PV generation to rise by around 600 TWh in 2026, matching the record growth achieved in 2025. This would allow solar PV to overtake wind power and become the world's second-largest renewable electricity source after hydropower in 2026. It expects similar growth for solar PV in 2027.
The growing share of renewable energy generation has helped diversify electricity supplies and improve energy security, even as the world has faced higher generation costs due to the Middle East conflict that began early this year. While additional LNG supplies, particularly from North America, have helped ease market pressures, report authors highlight that higher gas prices have led several countries in Asia and Europe to switch part of their electricity generation from natural gas to coal.
The IEA expects global electricity demand to grow by 3.6% in 2026 and 3.8% in 2027, compared with 3% growth recorded in 2025. Global electricity consumption is projected to increase from 28,600 TWh in 2025 to 30,700 TWh by 2027.
Among major economies, China's electricity demand is projected to grow by 5.5% in 2026, supported by manufacturing and EV charging. India's demand is expected to rebound by 7% after a subdued 1.6% in 2025, while electricity consumption in both the US and the European Union (EU) is forecast to grow by around 2%, driven by electrification, cooling demand and data centers.
Authors warn that weather conditions remain a key uncertainty in the scheme of things. A stronger-than-expected El Niño event could increase electricity demand through higher cooling needs while reducing hydropower and wind generation in some regions. This may increase dependence on fossil fuel generation.
At the same time, the expansion of renewable energy is making negative wholesale electricity prices more frequent in some markets, highlighting the growing need for grid flexibility, battery energy storage, and demand response to maintain reliable electricity systems.
The complete IEA report is available for free download on its website.
