Electricity 2025: Analysis and forecast to 2027

Abstract

Strong growth in electricity demand is raising the curtain on a new Age of Electricity, with consumption set to soar through 2027. Electrification of buildings, transportation and industry combined with a growing demand for air conditioners and data centres is ushering a shift toward a global economy with electricity at its foundations.

The International Energy Agency’s Electricity 2025 provides a deep and comprehensive analysis of all these trends as well as recent policy developments. For the period 2025 through 2027, it forecasts electricity demand, supply and carbon dioxide (CO2) emissions for select countries, by region and worldwide. The report explores emerging trends such as growing electrification, expanding power systems and an increasing share of weather-dependent energy sources in the generation mix. Through this lens, it assesses resource adequacy and the methods needed to ensure the security, resilience and reliability of power systems and electricity supply. This year’s report, now in its sixth year, includes a special feature on China’s evolving power demand as well as a section on the phenomenon of negative wholesale electricity prices in some markets.

Executive summary

Strong growth in electricity demand is heralding a new Age of Electricity, with demand set to soar through 2027

Global electricity consumption is expected to increase at the fastest pace in years over the 2025-2027 forecast period of this report, fuelled by growing industrial production, rising use of air conditioning, accelerating electrification, and the expansion of data centres worldwide. Global electricity demand rose by 4.3% in 2024 and is forecast to continue to grow at close to 4% out to 2027. Over the next three years, global electricity consumption is forecast to rise by an unprecedented 3 500 TWh. This corresponds to adding more than the equivalent of a Japan to the world’s electricity consumption each year. This is also a sharp acceleration over the 2.5% increase in 2023, when strong gains in China, India and Southeast Asia were tempered by declines in advanced economies.

Emerging and developing economies, led by China, are the main drivers of electricity demand growth

Most of the additional demand for electricity through 2027 will come from emerging economies, which are expected to make up 85% of the growth. More than half of global electricity demand growth in 2024 came from China, where it grew by 7% in 2024, similar to the previous year. Electricity demand in China is forecast to increase on average by 6% annually out to 2027. India, Southeast Asian countries and other emerging markets are also expected to record strong demand growth, supported by economic expansion and rising air conditioner ownership. India’s electricity demand is forecast to grow at an average 6.3% annually over the next three years, stronger than the 2015-2024 average growth rate of 5%. While many emerging economies are seeing robust electricity demand growth, Africa is lagging. Although significant progress has been made in recent years, 600 million people in sub-Saharan Africa still do not have access to reliable electricity.

Electrification is progressing rapidly in China, where the share of electricity in final energy consumption (28%) is much higher than in the United States (22%) or the European Union (21%). China’s electricity consumption has been growing faster than its economy since 2020, underscoring the speed at which electrification across all sectors is taking hold. In the three-year period 2022-2024, industry accounted for almost 50% of electricity demand growth, with the commercial and residential sectors combined making up another 40%. The industrial sector became more electricity intensive, with one-third of the growth in demand coming from the manufacturing of solar PV modules, batteries and electric vehicles. In 2024, these industrial sectors consumed more than 300 TWh of electricity annually – as much as Italy uses in a year. Over our forecast period, the industrial sector will continue to make up the largest share of China’s demand growth. At the same time, the rising stock of air conditioners, growing electric vehicle charging demand and the expansion of data centres and 5G networks will continue to play a significant role in China’s increasing electricity consumption over the next three years.

The rapid expansion of ever cheaper solar PV is expected to account for roughly half of global electricity demand growth to 2027, up from 40% in 2024. Globally, solar PV generation hit the 2 000 TWh mark in 2024, producing 7% of global electricity generation, up from 5% in 2023. Over the next three years, roughly 600 TWh of additional electricity will be generated from solar each year, equivalent to Korea's annual consumption. Solar PV is thriving globally, setting records in both emerging markets and advanced economies. Electricity generation from solar PV surpassed that from coal in the European Union in 2024, with its share in the generation mix exceeding 10%. China, the United States and India are all set to see solar PV’s share reach 10% over the forecast period as well. The strong growth trend in solar PV is accompanied by continued expansion in wind generation, which is forecast to meet around one-third of additional global electricity demand in 2025-2027.

Nuclear power generation will reach a new high in 2025 and continue to rise steadily over the following two years, setting further records. The strong growth will be fuelled by the recovery in French nuclear power output, restarts in Japan and new reactors entering operation in China, India, Korea and other countries. The growth trend in nuclear generation also reflects a strong comeback for the technology in policy circles, highlighting its importance as a stable backbone in low-emissions energy systems for an increasing number of countries.

Emissions from electricity generation are plateauing as renewables limit fossil-fired output

Over the 2025-2027 forecast period, global carbon dioxide (CO₂) emissions from electricity generation are expected to plateau after increasing by 1% in 2024. This is a slight slowdown compared with the rise of 1.4% in 2023, owing to the expanding use of renewables and a levelling off in fossil fuel-fired generation. However, at about 13 800 million tonnes of CO₂ in 2024, emissions from electricity generation remain the highest of any sector. Global coal-fired generation is expected to stagnate over the forecast period, after increasing by 1% in 2024. Declining emissions in the European Union and the United States are mostly offset by increases in India and Southeast Asia in our forecast period. Nevertheless, the strong expansion of low-emissions energy sources in many regions will reduce the share of global coal-fired generation below 33% for the first time this century over the forecast period. Trends in China, where more than half of world’s coal-fired electricity generation takes place, will continue to be the largest source of uncertainty, since weather events or economic fluctuations can considerably affect coal-fired generation in individual years.

Several short-lived Dunkelflaute events, when electricity generation from wind and solar PV combined reached very low levels, resulted in extremely high price spikes during several hours in the winter of 2024/2025 in Northern Europe. The price spikes only had a very limited impact on average prices but acted as important signals to incentivise flexible generators to produce more and for flexible consumers to reduce their consumption, as well as facilitating efficient imports and exports of electricity. Such events can act as potential stress tests for the system, and the recent occurrences were managed successfully without any impact on the supply of electricity, highlighting the resilience of the power systems and the underlying short-term market structures.

Increasing weather impacts on power systems highlight the importance of enhancing electricity security

Extreme weather events such as storms, droughts and heatwaves led to widespread power disruptions in 2024. The United States saw large-scale power outages in early January due to massive winter storms that affected a wide area ranging across multiple states. Hurricanes were particularly frequent in the Atlantic in 2024, which affected many US states and Caribbean countries during the summer, causing extensive damage and power supply disruptions. Victoria, Australia, was similarly hit by a major outage due to a storm that damaged transmission infrastructure. At the same time, reduced hydropower output due to droughts strained power systems across the world, with Ecuador and Colombia strongly affected by El Niño weather effects. Mexico faced supply tightness during elevated electricity demand periods amid heatwaves and low hydropower generation. Such events highlight the need to increase resiliency against the impacts of extreme weather on power systems.

Having sufficient dispatchable capacity and storage, among other flexibility options such as demand-side response and interconnections, will be essential for enhancing electricity security. As both electricity supply and demand become more weather dependent, temporary periods with reduced weather-dependent supply may put significant strain on the power system. This is especially the case if such events coincide with elevated electricity demand due to extreme weather such as winter storms or intense heatwaves and fuel supply disruptions or outages in power plants. When planning for resource adequacy to reliably meet electricity demand with available supply, taking into consideration the unpredictable nature of weather events is becoming increasingly important.

Demand

Entering the Age of Electricity

Strong growth in global power demand in 2024, fuelled by the expansion of electrification, is ushering in the new Age of Electricity. All the additional demand in our 2025‑2027 forecast is set to be covered by low emissions technologies. Electricity consumption rose by an estimated 4.3% y-o-y in 2024, up from 2.5% in 2023, with growth expected to continue at a robust 3.9% in our outlook period. In 2024, most of the growth in global electricity demand occurred in emerging economies, with the People’s Republic of China (hereafter, “China”) accounting for 54% of the total. Out to 2027, developing economies will remain the engines of growth, accounting for around 85% of additional global electricity demand, with China providing more than half of the gains.

Since 2020, China’s power demand has been growing faster than its economy, boosted by an array of factors, including rapid growth in electricity-intensive manufacturing of clean energy technologies, rising ownership of air conditioners, increasing penetration of electric vehicles and expanding data centres and the 5G sectors.

Electricity demand in China has been growing faster than GDP since 2020

Alongside the traditional energy-intensive sectors, the rapidly expanding electricity-intensive manufacturing of solar modules, batteries, electric vehicles and associated materials played a significant role. The manufacturing of these new energy products as they are referred to in China, are estimated to have consumed more than 300 TWh of electricity in 2024 – roughly as much electricity as Italy uses in a year. The increase in consumption of these sectors has been remarkable in recent years, which rose by about 230 TWh over 2022-2024. During this period, new energy products made up nearly 35% of the increase in industrial electricity demand and 16% of the growth in total electricity use across China. Including the numerous electricity-intensive upstream processes associated with these products that take place in China, such as the refining and processing of the related materials, can further boost these numbers.

Industrial electricity demand has been growing faster in recent years than industrial value added, indicating that the Chinese industry is becoming more electricity-intensive. This is particularly the case in light industries, such as textile, food and tobacco, and mechanical and electrical products.

Apart from the growth in electricity-intensive manufacturing of new energy products, one other trend of industrial electrification is the replacement of fossil fuel-based heating for certain processes with electric heating in some industries such as chemicals and refineries. At the same time, industrial heat pumps are also increasingly being installed, after China announced plans to increase the number of heat pumps in light industries.

In sectors outside of industry, important catalysts of higher electricity consumption include the growing stock of air conditioners, expansion of data centres and 5G, and stronger EV charging demand.

Strong growth in peak electricity load in India amid economic growth and rising AC usage

Following a strong 8.3% increase in 2023, electricity demand in India grew 5.8% y-o-y in 2024 amid strong economic growth. While electricity consumption rose by a robust 8.5% during the first half of the year due to intense and long heatwaves, the second half saw a more subdued growth in demand amid milder weather. Supported by rapid economic expansion and increasing electrification, India’s electricity demand is forecast to grow at a high rate of 6.3% annually from 2025 to 2027 on average. Rising air conditioner ownership will continue to bolster electricity demand growth.

While the previous decline trend in EU industrial electricity demand seems to have stabilised, there is still significant uncertainty surrounding the electricity demand recovery in European industries. Electricity prices remain above pre-crisis levels for energy-intensive industries, which are also higher than in most competing regions. At the same time, domestic demand for many industrial products remains weak. Nevertheless, slight increases in primary metal and chemical production were observed in 2024. The extent of the recovery in these sectors is uncertain, however, as negative business sentiment is prevalent across multiple countries, with many companies experiencing difficulties. In addition to energy-intensive industries, among leading manufacturing sectors, the automotive industry is increasingly coming under pressure from weakening domestic demand and growing competition in export markets.

High electricity prices continue to undermine competitiveness of European energy-intensive industries

After easing in 2023, preliminary data for 2024 shows that average electricity prices for energy-intensive industries in the EU decreased only by 5% compared to the previous year and are still 65% higher than in 2019. Despite declining from the record highs in 2022 and slightly lower compared to 2023, electricity prices for energy-intensive industries in the European Union in 2024 were, on average, still double those in the United States and 50% higher than in China.

References

1.The forecast is made based on the policy framework as of December 2024.

2.

Similarly, the GDP growth rate in 2024 for the US economy is revised by the IMF to 2.8%, up from 1.5% in the previous IMF October 2023 outlook.

Reference 1 Close dialog

Reference 2 Close dialog

Supply

Renewables dominate as coal’s share continues to contract

Clean energy sources in global power generation are on track to break new records over the 2025-2027 forecast period. Low-emission sources – renewables and nuclear – are expected to meet all global demand growth out to 2027. Solar PV is set to become the second largest low-emissions source of electricity generation in the world by 2027, after hydropower. Renewables, collectively, will surpass coal-fired generation in 2025 and coal’s share will decline below 33% for the first time in the last 100 years. Nuclear generation will reach a new record high in 2025, driven by a recovery in output in France and Japan, and new reactors entering operation in China, India and Korea, among other countries. Nuclear energy will continue to set a new record every year thereafter. The share of low-emissions sources is forecast to increase from 41% in 2024 to 47% in 2027.

As the share of renewable energy sources in the electricity generation mix rises, understanding periods with reduced wind and solar PV generation due to weather conditions becomes important. While such events can potentially strain the power system, having enough dispatchable capacity and long-duration storage will be essential.

Dunkelflaute events as potential stress tests

Temporary periods with reduced wind and solar PV generation may put additional strain on the power system, especially if they occur during periods of high electricity demand, such as during colder winter seasons with increased heating demand, or hotter summers with higher cooling load. During these periods, power demand is met predominantly by dispatchable power plants and using various flexibility measures. These events can also lead to temporary and briefly higher prices on the wholesale markets if supply is tight. Having sufficient (low-emissions) dispatchable capacity and long-duration storage, among other flexibility options such as demand-side flexibility and interconnections, is important to effectively manage such periods.

In November and December 2024, there were several occasions in Northern Europe when combined wind and solar PV electricity generation was very low, the so-called compounded VRE droughts or Dunkelflaute events, which led to tighter supply and several hours of extremely high electricity prices on the wholesale markets. In 5-7 November and 11-12 December Germany and the surrounding regions were affected. In early 2025, on 8 January, the United Kingdom had a relatively localised Dunkelflaute that lasted for about a day. Low wind availability during the nighttime combined with interconnector unavailabilities, power plant maintenance outages and elevated electricity demand led the national energy system operator (NESO) to issue a notice due to low system margins.

All these events were managed successfully without any impact on the supply of electricity, showing the resilience of the power systems and the underlying market mechanisms. The price spikes observed during the period of a few hours only had a very limited impact on average prices but acted as important signals to incentivise flexible generators to produce more and for flexible consumers to reduce their consumption, while also facilitating the efficient import and export of electricity.

As the share of renewable energy sources in the electricity generation mix rises in many regions and they enter higher phases of VRE integration, understanding VRE droughts better and preparing for them accordingly becomes more important. If the VRE drought lasts only 1-2 days, short-term storage capacities and demand-response can help with smoothing the residual load. However, if the situation persists for longer durations, it becomes increasingly difficult to recharge storage capacities and utilise short-term flexibility options. Enhanced grid interconnection across different geographies can help balance the overall energy supply to an extent, given the locational price signals are reflective of the system costs during such events. However, as meteorological conditions can affect the wind and solar output for multiple neighbouring power systems, expanding interconnection capacity may not be enough on its own.

Consequently, having sufficient dispatchable capacities and long-duration storage becomes important to effectively manage longer-lasting VRE droughts. In the short-term, pumped hydro storage is a proven and mature technology for longer duration storage that can provide flexibility over a timescale of days to weeks, with thermal energy storage and hydrogen storage being relevant low-carbon technologies in the longer term where the timescale of flexibility can be extended to months (seasonal flexibility).

As highlighted in the IEA report Managing the Seasonal Variability of Electricity Demand and Supply, hydro and dispatchable thermal power plants will remain important providers of secure capacity, alongside other sources of system flexibility discussed above. In a low-emissions power system, these thermal capacities also need to be correspondingly based on low-emissions fuels or include carbon capture and storage. Ensuring sufficient dispatchable capacity in the long-term may require mechanisms and market designs that properly value these generators' critical services, even if they operate infrequently over the course of a year. When conducting resource adequacy assessments, it is crucial to consider the unpredictable nature of weather impacts, which can influence the planning of investments, potential generator retirements, and policy decisions.

Emissions

Clean energy mitigates CO2 power emissions in 2025-2027

Global CO₂ emissions from power generation rose by a modest 1% in 2024, following a 1.4% rise in 2023, due to a 1.3% y-o-y increase in fossil fuel-based generation amid global electricity demand growth of 4.3%. At about 13 800 million tonnes of CO₂ in 2024, emissions from electricity generation remain the highest of any sector.

In our 2025-2027 outlook period, global CO₂ emissions from the power sector are expected to stay relatively flat (-0.1%), due to substantial growth in clean energy sources, even as demand is forecast to grow by an annual average of 3.9%. It should be noted that economic shocks, volatile commodity prices and deviations from normal weather conditions such as heatwaves, extreme cold spells or low water availability for hydropower generation can cause the subsequent rate of emissions to vary in individual years. Nevertheless, the trend of clean energy sources limiting fossil-fuelled generation is anticipated to remain robust.

Global CO2 intensity continues to decline as the share of clean energy sources expands

Global emissions intensity from electricity generation is on a sharply contracting trend, with a record 3% reduction in 2024 compared to 1% in 2023. This improvement reflects the rapid growth in renewable energy and nuclear electricity production relative to rising demand. By 2027, emissions intensity is forecast to fall significantly in major regions, with reductions in the European Union, China, the United States, and India all contributing to the global trend. Over the forecast period of 2025-2027, global CO₂ intensity is expected to fall by an average of 3.6% annually, declining from 445 g CO₂/kWh in 2024 to 400 g CO₂/kWh in 2027.

Prices

Wholesale electricity prices fell further in 2024 as energy commodity costs declined

Wholesale electricity prices declined further in many countries in 2024, following the sharp contractions in 2023. This downward trajectory largely tracked the fall in global energy commodity prices, but in some regions local market issues dictated diverging trends. The European Union, India, the United Kingdom and the United States all posted around 20% lower wholesale electricity prices on average in 2024 compared to previous year. Nevertheless, prices in these regions, with the exception of the United States, are still significantly above the pre-Covid levels.

Negative prices highlight the need for more flexibility in supply and demand

Though still relatively uncommon in many power markets on a global basis, some regions are seeing an increase in the occurrence of negative wholesale prices in recent years. There are various reasons why negative prices may emerge in some markets where they are allowed, but broadly they signal a lack of flexibility in the system due to technical, regulatory or contractual reasons, particularly during times of low electricity demand and abundant electricity generation. The magnitude and duration of negative price occurrences vary across countries and regions, as they are subject to market conditions.

In South Australia, negative prices accounted for about 25% of the hours on average annually in both 2023 and 2024. Across the world in southern California, the share of hours with negative prices surged to 15% in 2024, up from only 4% a year earlier. The number of hours with a negative wholesale electricity price has been increasing in Europe since 2022. Finland led the continent with the highest number of negatively priced hours in 2024, at 8% of the time (700 hours). Similarly, the occurrence of negative prices in Sweden rose from 5% in 2023 to 7% in 2024, in the Netherlands from 4% to 5%, and in Germany from 3% to 5%.

Despite the growth trend, most European markets had negative electricity prices less than 5% of the time in 2024. In other markets across the world where regulations allow negative electricity prices, this share is even less. For example, in Houston, Texas it was slightly above 1% in 2024, while in some parts of Mexico it was less than 1% on average.

Even though negative prices are becoming more common, compared to the average wholesale electricity prices, they have generally remained largely within a moderate range of USD -1/MWh to USD -30/MWh, with extreme low prices rare. In 2024, for example, they averaged USD ‑2/MWh in Finland, USD -7/MWh in Houston, Texas, USD -12/MWh in Germany, USD -25/MWh in Victoria and USD ‑30/MWh in South Australia. However, the vast majority of negative prices were only slightly below zero in most regions. For comparison, the average wholesale electricity price in 2024 in Victoria was USD 80/MWh and in Germany around USD 85/MWh.

Negative prices are not yet a dominant feature in most markets, but their strong growth trend in various regions in recent years is highlighting the growing need for more flexibility in electricity supply and demand. Negative prices can serve in some cases as an incentive for the adoption of storage solutions and demand-side response. However, negative prices alone may not suffice for increased system flexibility. Adequate regulatory frameworks, market designs and tariff structures are essential for flexibility in the system.

Reliability

The new era of electricity has heightened the need for secure and resilient power systems

As power systems continue to expand with continued electrification and both the demand and the supply of electricity becomes more weather-dependent, ensuring the security and reliability of electricity supply is imperative. Many power systems around the world face adequacy issues during periods of elevated electricity demand, such as during peak seasonal heating needs in winter and cooling in summer. Extreme weather due to winter storms or intense heatwaves, especially when compounded with impacts on the supply side such as droughts, fuel supply disruptions or power plant outages, can put significant strain on the power system.

Extreme weather events such as storms, droughts and heatwaves led to widespread power disruptions in 2024. Large-scale power supply interruptions plagued a broad swath of countries and regions. In the United States, massive winter storms in early January led to large-scale outages across multiple states. The Atlantic hurricane season was particularly intense, bringing severe storms that disrupted power supplies in several US states and Caribbean nations. In Australia, Victoria experienced a major outage when a storm damaged key transmission infrastructure. Meanwhile, droughts reduced hydropower output worldwide, with Ecuador and Colombia significantly impacted by El Niño conditions. In Mexico, heatwaves and low hydropower generation created supply shortages during peak demand. These events underscore the urgent need to enhance the resilience of power systems against extreme weather.

As electricity makes up a larger share of final energy demand, safeguarding its supply is key to ensure a range of services vital for modern societies. Recent power shortages underscore evolving uncertainties in the power sector to consistently meet demand, particularly under extreme – yet possible – conditions.

Planning for resource adequacy: Emerging risks and trends in assessment methods

Historically, in power systems dominated by fossil fuels and large generators, supply shortages often stemmed from a combination of unrelated outages of large generators or interconnectors during periods of high demand. In emerging economies, these challenges were at times compounded by rapid demand growth outpacing new supply, leading to systemic load shedding to manage shortages.

Looking forward, growing risks stem from changing weather patterns and extreme weather events. In particular, extreme weather events have been identified as the main risk to reliability in many regions, for example by the North American Electric Reliability Corporation (NERC), which can have simultaneous, large impacts on power generation, grids and demand. These events can also put upstream fuel supply at risk, particularly evident for natural gas in freezing conditions if the infrastructure is not winterised sufficiently. Thus, power shortages due to extreme weather events can have a much wider impact, particularly if their effect on electricity demand and renewables output is coupled with thermal generator outages or fuel supply risks.

In this context, resource adequacy refers to the ability of power systems to reliably balance electricity supply and demand within an area under normal conditions in terms of weather and generator outages (among others), with the precise definition of normal conditions varying by jurisdiction. Adequacy is normally analysed in forward-looking studies that assess whether the available resources would allow the power system to meet certain reliability targets – such as specified limits on loss of load hours – in the period and conditions analysed.

Recent events have highlighted adequacy risks worldwide. At the same time, several jurisdictions have been improving their resource adequacy studies, aiming to be better prepared for evolving demand, generation and weather conditions. In light of the increasing impact of weather on power systems. The need to incorporate the stochastic nature of weather impacts and the evolving changes on the generation and demand side into these assessments is becoming more important. Our analysis of recent adequacy-related power shortages illustrate that there is a range of measures that can be implemented. Improvements in adequacy assessment methods, adoption of more refined and multiple metrics in adequacy studies and more universal reliability standards could all help more effectively manage simultaneous and widespread impacts on power generation, grids and supply.