The International Energy Agency’s “Electricity Mid-Year Update 2025” report paints a dynamic picture of the electricity sector: a rapid transformation in which growing demand is colliding with structural changes in supply. Despite weaker global economic growth, electricity consumption rose sharply in the first half of 2025, driven by industry, household appliances, air conditioning, expanding data centers, and ongoing electrification. Demand growth is forecast to be 3.3% in 2025 and 3.7% in 2026 — well above the historical average — with China and India seeing the strongest growth. The United States continues to see strong growth thanks to the spread of data centers, while the European Union’s recovery remains modest after an earlier decline in manufacturing.

The International Energy Agency’s regular report, “Electricity Mid-Year Update 2025,” provides a detailed and up-to-date assessment of the changing dynamics of global energy markets — a sector undergoing one of the fastest transformations in modern energy history. Despite the slowdown in the global economy, electricity demand is growing significantly in the first half of 2025, thanks to industrial production, the spread of household appliances, the accelerated introduction of climate control systems, the continued expansion of data centers, and the deepening electrification of transportation, heating, and other end users. This trend is expected to continue over the next two years, with global electricity consumption forecast to grow by 3.3% in 2025 and 3.7% in 2026. Both figures are well above the 2015–2023 average of 2.6% and more than twice the growth rate of total energy demand.

China and India remain at the center of this expansion, together accounting for about 60% of projected global demand growth through 2026. In China, electricity demand is expected to grow by 5% this year, following remarkable growth of 7% in 2024, while growth in India will slow to 4% in 2025 before accelerating to 6.6% in 2026. Both countries are seeing strong contributions from electrified transportation, the production of new energy technologies, and rapid growth in electricity consumption in the services sector. The United States continues to see above-trend growth, strongly driven by energy-intensive consumption of cloud services and data centers, artificial intelligence infrastructure, semiconductor and battery manufacturing, while demand in the European Union is slowly recovering after two years of sharp declines in manufacturing, slowed by continued weakness in energy-intensive sectors.

On the supply side, renewable energy sources are achieving results that would have seemed ambitious just a few years ago. Solar and wind energy production will cover over 90% of the increase in global electricity consumption in 2025, with their combined share of global production rising from 15% in 2024 to almost 20% in 2026. — compared to just 4% a decade earlier. The IEA forecast indicates that renewable energy production could surpass coal-fired power generation as early as this year, which would be the first time in more than a century that coal’s share of global electricity supply falls below one-third. This structural change is supported by record capacity increases, particularly in China, where installed photovoltaic capacity will exceed 1 terawatt in May 2025.

Natural gas and nuclear energy are also setting new records. Gas-fired power generation is expected to increase by 1.3% in both 2025 and 2026, with the strongest growth expected in Asia and the Middle East, while nuclear power generation is benefiting from the resumption of activity in Japan, stable performance in the US and France, and the commissioning of new units in China, India, Korea, and other countries. Nuclear production is expected to reach 3,000 terawatt hours by 2026. In contrast, coal-fired power generation is entering a period of slight decline globally, with a 0.5% contraction in 2025 and a further 1.3% in 2026, as declining production in China and Europe offsets growth in India, the US, and Southeast Asia.

This shift in the energy mix is already transforming the emissions profile of the energy sector. After growing by just 1.2% in 2024, global CO_₂ emissions from electricity production are expected to stabilize in 2025 and decline slightly in 2026, even though electricity demand continues to grow. The carbon intensity of electricity production is projected to decline by an average of 3.7% per year, with the EU leading the way at 10% per year and China also achieving reductions of over 5% per year. The combination of accelerated deployment of renewable energy sources, steady expansion of nuclear power, and increased efficiency in the electrification of final consumption is gradually reducing the role of fossil fuels in meeting growing demand.

In the first half of 2025, global market prices were uneven, reflecting differences in fuel price trends, weather conditions, and energy mix. Wholesale electricity prices jumped by around 30–40% year-on-year in the European Union and the United States, driven by higher natural gas prices and, in the case of Europe, reduced wind and hydro power generation. Japan is also seeing price increases of around 15% due to higher liquefied natural gas costs. In contrast, prices are falling in Australia (-6%) and India (-15%), where increased supply from thermal and renewable sources, together with lower coal prices, are easing pressure on markets. It is noteworthy that the share of hours with negative wholesale prices increased in several markets with high renewable energy penetration, reaching 8-9% in Germany, the Netherlands, and Spain in the first half of the year — a clear signal that flexibility in both supply and demand is becoming a critical operational priority.

The report highlights the growing competitive pressure on energy-intensive industries, particularly in Europe, where electricity prices for large industrial consumers are currently around twice as high as in the US and 50% higher than in China. This gap has widened sharply since 2019, raising concerns about the competitiveness of industry and the potential for production to shift to lower-cost regions.

Security of electricity supply is another important issue. Major power outages in Chile, Spain, and Portugal in early 2025 highlight the vulnerability of increasingly complex energy systems. The IEA stresses that with the spread of electrification across different sectors and the integration of more variable renewable sources into electricity grids, the need for secure, flexible, and well-coordinated infrastructure has never been greater. Solutions range from strengthening transmission networks and diversifying supply chains to updating market rules, network codes, and reserve requirements to better respond to storage needs, demand response, and emerging technologies.

Overall, the report paints a picture of an energy sector in accelerated transition: demand growth is robust despite macroeconomic challenges, low-emission technologies are advancing at an unprecedented pace, and the market, policy, and infrastructure frameworks supporting electricity systems are being stress-tested by both the scale and speed of change. The IEA reminds us that the global energy sector is not simply adapting to the new energy landscape, but is actively shaping it, with the pace of change accelerating.