Global electricity demand growth is accelerating despite a Middle East-driven gas price shock, with renewables set to overtake coal in 2026 for the first time — a faster shift than IEA’s own February forecast anticipated.
Demand: growth is speeding up, not slowing down
Demand is forecast to grow 3.6% in 2026 and 3.8% in 2027, up from 3% in 2025 — the acceleration is the headline, not the absolute number. China’s growth rate is rising too (5.5% from 5.2%), driven by an unusual mix: high-tech manufacturing and EV charging up sharply while crude steel and cement output actually fell year-on-year, a reversal from prior cycles when heavy industry drove Chinese demand. India’s swing is starker: growth rebounds to 7% in 2026 from a subdued 1.6% in 2025 (that dip was a one-off monsoon effect, not a trend). The U.S. holds a steadier line, up to 1.8% from a 2.6% rise in 2025, with data centers now the explicit lead driver — a shift in framing from prior reports that gave more weight to industrial reshoring.
Supply and prices: renewables cross a threshold, gas market shock diverges by region
The prior-year story was renewables approaching parity with coal. This update reports the crossover: renewables overtake coal-fired generation in 2026, with share rising from 33% (2025) to 37% by 2027 — coal actually grows slightly this year (+1.4%) on gas-to-coal switching, but loses the generation-mix race anyway as renewables grow faster. Solar PV overtakes wind for the first time. On price, the divergence from 2025 is sharp: EU and Japan wholesale prices up over 30% y-o-y in Q2 on the Strait of Hormuz disruption, while the U.S. was nearly flat and Australia fell ~45% — a much more uneven regional pass-through than the 2022 Russia-Ukraine shock, per the IEA’s own comparison.
edited and authored by Dave with close collaboration by Claude