Global electricity demand is poised for a strong and sustained increase through 2030, powered by electrification of transport, industry and digital services — but electricity grids and system flexibility must be expanded rapidly to prevent bottlenecks and maintain reliability, according to a new International Energy Agency (IEA) report.
The IEA’s annual Electricity 2026 report — released February 6 — finds that world electricity demand is set to grow by more than 3.5 per cent annually on average through the end of the decade, more than two-and-a-half times faster than overall energy demand. The report underscores that this surge is reshaping power systems around the world and accelerating what the agency calls the “Age of Electricity.”
IEA Director of Energy Markets and Security Keisuke Sadamori said the forecast reflects a fundamental transformation in how people and industries consume energy. “Meeting this demand will require annual investment in grids to rise by 50 per cent by 2030,” he said, adding that expanding system flexibility — including storage, demand-side management and market reforms — is equally critical.
Growth driven by electrification and digitalisation
The report identifies multiple drivers of rising electricity use. The global transition to electric vehicles, widespread adoption of heat pumps and air conditioning, and the burgeoning infrastructure for digital services and data processing all contribute to demand growth.
Independent analysis by Axios highlights how data centres — particularly those serving artificial intelligence and cloud computing — are emerging as some of the fastest-growing sources of U.S. power demand, with projections showing these facilities could account for roughly half of increased U.S. electricity consumption through 2030. This reflects a broader global trend in digital electricity demand.
Moreover, the expansion of electrification in emerging economies — especially China and India — is expected to account for the bulk of global demand growth over the next decade, reaffirming long-standing IEA forecasts that these regions will drive power sector expansion.
Renewables and supply mix evolution
The rapid increase in demand is being met largely by low-emissions sources and natural gas. The IEA report shows that renewables, bolstered by record solar and wind deployment, and nuclear power are together set to generate about half of global electricity by 2030. That would mark significant progress toward decarbonising power systems, even as natural gas output expands to meet demand and coal’s share declines.
Despite these gains, global electricity generation from fossil fuels is not disappearing in the near term, and utility planners are being challenged to integrate variable renewable output with reliable supply across regions. Bloomberg’s analysis of future grid capacity needs notes that integrating high levels of renewables without additional grid flexibility and storage creates technical and economic challenges that could slow emissions reductions.
Grid investment and flexibility imperative
A central theme of the IEA report is the imperative of modernising and expanding electricity grids. Existing infrastructure — much of which was built in the 20th century — was not designed for the scale and variability of today’s power systems. The agency warns that grids could become the “weak link” in clean energy transitions unless policymakers and investors act quickly.
Current grid investment levels lag behind the pace of renewable deployment, with thousands of gigawatts of wind, solar and battery projects stalled in connection queues worldwide. Without faster buildout of transmission and distribution lines, grid congestion and curtailment — where renewable output goes unused — could rise, reducing the economic and environmental benefits of clean power.
Beyond physical infrastructure, the IEA and analysts emphasise system flexibility measures such as energy storage, demand response, digitalisation and market reforms that can help balance variable supply and demand more efficiently. A recent World Economic Forum report highlights that enhancing grid flexibility could underpin resilience, reduce costs and unlock greater renewable integration by 2030.
Affordability and reliability challenges
Rising electricity demand also intersects with concerns about affordability and reliability. In parts of the United States, electricity prices have surged as ageing infrastructure and demand spikes from data centres strain existing grids, prompting political pushback and highlighting the social dimensions of power system evolution. Financial Times reporting notes that rising wholesale power costs are becoming a contentious issue in industrial and policymaker circles alike.
India, the U.S., and China are all projected to see notable increases in electricity demand through the decade, prompting varied responses from national policymakers on grid investment, electrification incentives and energy security measures.
As the world heads deeper into the Age of Electricity, experts and energy officials warn that investment in grids and flexibility is not optional — it is central to satisfying rising demand, reducing emissions and ensuring reliable power for economic and social needs through 2030 and beyond.
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