Recent reports from authoritative institutions including the International Energy Agency (IEA), the Energy Transitions Commission (ETC), and the International Renewable Energy Agency (IRENA) indicate that global electricity demand will continue robust growth, while renewables are rapidly displacing fossil fuels through cost advantages and technological breakthroughs. By 2025 or 2026, renewable energy generation is expected to surpass coal for the first time, becoming the world’s largest power source. This transformation not only reshapes the energy market landscape but also injects new momentum into achieving global climate goals.
Surge in Electricity Demand: Asia Leads, AI Drives New Growth
According to IEA’s latest *Mid-Year Electricity Market Update 2025*, global electricity demand will grow by 3.3% in 2025 and accelerate further to 3.7% in 2026—far exceeding the 2.6% average annual growth rate from 2015–2023. Emerging Asian economies are the primary drivers, with China and India projected to contribute 60% of the global demand increase in 2026, growing at 5.7% and 6.6%, respectively. Meanwhile, U.S. demand will remain above 2% annually—double the past decade’s average—due to data center expansion.
The explosive growth of artificial intelligence (AI) has become a critical variable. Studies show that AI-related electricity consumption will rise from 20% of global data center power usage in 2023 to 49% by end-2024, doubling every three to four years thereafter. The U.S. Department of Energy predicts that by 2028, data centers could account for 6.7%–12% of national electricity consumption, with load growth already tripling over the past decade. ETC further estimates that by 2050, electricity will comprise 70% of global final energy consumption (up from 20% today), with total demand potentially reaching 90,000 TWh—triple current levels.
Renewables Outcompete Fossil Fuels, Accelerating Green Transition
Technological innovation and economies of scale continue to drive down renewable energy costs. IRENA’s 2024 Renewable Power Generation Costs Report reveals that in 2024:
- Solar PV averaged 41% cheaper than the lowest-cost fossil fuel alternative ($0.043/kWh)
- Onshore wind was 53% cheaper ($0.034/kWh)
- 91% of new renewable projects were more cost-effective than fossil fuels, displacing ~$57 billion in fossil fuel expenditures annually.
Regional disparities persist: Asia, Africa, and South America benefit from efficiency gains and abundant resources, while Europe and North America face higher costs due to permitting delays and grid constraints. IRENA warns that trade tariffs and material shortages may temporarily raise costs, but the long-term trend remains irreversible.
Power sector emissions reflect this transition. IEA projects global electricity-related CO₂ emissions will stabilize in 2025 before declining slightly in 2026, driven by a record 582 GW renewable capacity addition and gas displacing coal.
