Global power demand is on track to rise faster in 2026 and 2027 than in 2025, even as the Middle East crisis temporarily increases electricity generation costs and as emergency energy conservation measures are implemented in some regions. Electricity demand is forecast to grow by 3.6% in 2026 and accelerate further to 3.8% in 2027, up from 3% in 2025. Structural drivers – including industrial growth; increasing appliance ownership; the accelerating uptake of electric vehicles, air conditioning and heat pumps; and expanding data centre capacity – will continue to support growth in power consumption during the dawn of the Age of Electricity. As a result, global electricity consumption is set to reach 30 700 terawatt hours (TWh) in 2027, up from 28 600 TWh in 2025. Nevertheless, downside risks to the forecast remain amid ongoing military hostilities in the Middle East and broader geopolitical tensions, which could further weigh on the global economy and impact electricity demand.

Major economies have so far adapted to the loss of liquefied natural gas (LNG) supplies from the Strait of Hormuz while meeting rising power demand. New gas liquefaction projects, particularly in North America, and higher output from various LNG exporters, have helped ease market tightness. Nevertheless, the temporary loss of nearly 20% of global LNG supply has triggered significant price volatility, pushing natural gas prices in both Asia and Europe to their highest levels since the 2022-2023 energy crisis. The elevated gas prices have, in turn, prompted fuel switching from natural gas to coal in several Asian and European countries, while the continued expansion of power generation from renewables has played a key role in diversifying electricity supplies, thereby supporting energy security and helping limit the impacts of the shock.

The world’s largest economies are set to see strong rises in electricity consumption, while higher energy prices and supply disruptions are curbing consumption in some price-sensitive markets. In China, electricity demand growth is expected to accelerate to 5.5% in 2026, from 5.2% in 2025, supported by higher manufacturing activity and increasing EV charging. In India, demand growth is forecast to rebound to 7% this year, up from a subdued 1.6% in 2025, when an early monsoon dampened electricity consumption. In the United States, electricity demand continues its strong upward trend, with consumption forecast to rise by close to 2% this year, led by growing power use from data centres, air conditioning (AC) and industries. In the European Union, demand growth is set to strengthen to 2%, supported by ongoing electrification, as well as colder winter weather in the first quarter and increased cooling needs during heatwaves. By contrast, some emerging economies – particularly Bangladesh and Pakistan, which rely on LNG imports and are much more price-sensitive than many advanced economies – have been acutely affected by the crisis, prompting fuel conservation measures that have curtailed electricity consumption.

A stronger-than-expected El Niño event in 2026 could increase global electricity demand further by raising cooling needs in many regions. The El Niño weather pattern also typically affects electricity supply by reducing hydropower and wind generation, especially in regions such as Latin America and Southeast Asia, leading to greater reliance on coal and gas to prevent shortfalls.

Electricity generation from renewables is set to overtake coal-fired output in 2026, widening their share in the global electricity supply mix. After reaching near parity with coal in 2025, global generation from renewables is forecast to grow by more than 8% in 2026. Its share in the electricity generation mix is set to rise from 33% in 2025 to 37% by 2027. As the deployment of renewables increases, the expansion and modernisation of grids, the enhancement of system flexibility, stronger locational price signals, and the more efficient use of existing infrastructure will all be critical to integrate growing shares of variable renewable energy such as wind and solar PV into systems.

Solar PV remains the largest contributor to electricity supply growth on a global basis. Output is forecast to increase by around 600 TWh in 2026, broadly matching the record annual expansion seen in 2025, with similar growth expected in 2027. As a result, solar PV is set to overtake wind power in 2026 to become the world's second-largest renewable source of electricity generation after hydropower.

Higher natural gas prices are expected to limit growth in natural gas-fired generation in 2026 while supporting increased coal-fired output. Globally, gas-fired output is forecast to remain broadly flat in 2026, which would make it the third year in the past ten without significant annual growth. A rebound in gas-fired generation is expected in 2027, although geopolitical uncertainties may continue to affect the outlook.

Nuclear power generation is expected to increase again in 2026, albeit at a slower pace, before accelerating strongly in 2027. Delays in getting new reactors online, as well as maintenance-related outages, are tempering growth this year. By contrast, in 2027, the addition of new reactors in China and India, continued strong output in the United States and France, and the completion of projects that had been delayed are set to underpin growth of more than 4%.

Carbon dioxide (CO2) emissions from electricity generation are expected to increase by 1% in 2026 and then plateau in 2027. The forecast rise in emissions this year comes as some countries have been switching from gas to coal for power generation amid high natural gas prices and as weather-related factors boosted coal- and oil-fired generation during the first half of the year. Electricity sector CO₂ emissions are expected to remain broadly flat in 2027 as renewables, nuclear and natural gas all meet rising power demand, displacing coal-fired generation on a global level.

The Strait of Hormuz crisis drove spikes in LNG prices, translating into higher costs for gas-fired electricity generation and pushing up wholesale electricity prices in several regions from March onward. In the second quarter of 2026, average spot wholesale electricity prices in the European Union and Japan increased by more than 30% year‑over‑year. However, the United States was much less affected by the LNG price shock, with the average wholesale electricity price in the second quarter largely unchanged from the previous year. And in India, average electricity prices increased by less than 10%, since LNG plays a relatively minor role in the power generation mix. Meanwhile, wholesale electricity prices in Australia were about 45% lower, as strong generation from renewables and rapidly expanding battery storage capacity helped reduce reliance on gas-fired plants during peak electricity demand periods.

While negative electricity prices have become a common occurrence across multiple markets, wide hourly price spreads during the day continue to highlight the growing value of flexibility. Negative prices are typically associated with insufficient flexibility in the system, reflecting technical, regulatory or contractual constraints. In South Australia and California, negative prices occurred during around 20% of wholesale market hours in the first half of 2026, similar to 2025 level. Meanwhile, in Spain, the share of hours with negative wholesale prices rose to 17% in the first half of 2026 amid strong renewables output, up from 10% in 2025. By contrast, the share of negative-price hours in Sweden and Finland declined from around 6% to just 2% over the same period as flexibility measures increased for both supply and demand. At the same time, intraday price volatility remained elevated across many markets. During the European heatwaves in June, price spreads between midday lows and evening peaks reached USD 600 per megawatt hour in several markets. Such conditions can create significant opportunities for flexible resources, including battery storage and demand response, which can shift generation and consumption across hours, capture value from price differentials, and support overall system flexibility.