A recent report from the International Energy Agency (IEA) [48.8°N, 2.3°E] forecasts an unprecedented surge in global electricity demand between 2025 and 2027. With electrification accelerating across industries, transport, and buildings, the world is entering what the IEA calls a new “Age of Electricity.”
This rapid transformation raises urgent questions: Can renewables keep pace with demand? Will grids be able to handle extreme weather events? And what do volatile electricity prices mean for consumers? Wasn’t electrification supposed to be a good move? The IEA’s Electricity 2025 report provides both challenges and reasons for optimism.
Electrification is Reshaping Energy Demand
Electricity consumption is expected to grow by 3,500 terawatt-hours (TWh) over the next three years—equivalent to adding an extra Japan-sized economy to global electricity use every year.
This surge is driven by:
- Data centres and AI computing, requiring vast amounts of energy to power servers worldwide.
- Electric vehicle (EV) adoption, replacing petrol and diesel with electricity.
- Air conditioning growth, especially in emerging economies.
For decades, electricity demand in many advanced economies had remained flat or declining due to efficiency improvements. But the report shows that this trend is reversing, with countries like the UK, US, and EU seeing electricity demand rise again due to the electrification of heating, transport, and industry.
Renewables Must Scale at Record Speed
The good news? The report predicts that low-carbon energy sources will meet 100% of the additional demand—but only if they continue expanding at breakneck speed.
By 2027:
- Solar PV will generate half of new electricity demand, surpassing coal in Europe.
- Wind energy will contribute a third of additional power, strengthening grids worldwide.
- Nuclear power will rise to a new global high, as countries reinvest in reactors.
Despite this progress, fossil fuel dependency is far from over. While coal use is projected to plateau, natural gas is still expected to grow 1% annually due to its role in balancing renewables.
The Dark Side of Renewable Energy Growth
Even as renewables take over, challenges remain:
- Negative electricity prices are appearing more frequently, especially in Europe and California, as surging solar power floods the grid at times when demand is low.
- Dunkelflaute events — when both wind and solar generation drop dramatically — are becoming stress tests for power systems, demanding more flexible energy storage solutions.
- Extreme weather events are causing grid instability, as seen in the US, Australia, and Latin America, where storms and heatwaves have led to blackouts.
These challenges highlight the need for grid flexibility, with solutions like battery storage, demand response, and smarter grid interconnections playing a critical role in stabilising power supplies.
A Roadmap for the Future
The IEA’s message is clear: The transition to a fully electrified world is happening fast—but managing it wisely and efficiently is now the greatest challenge.
To stay on course, countries must:
- Scale renewables even faster, ensuring wind and solar deployment keeps up with surging demand.
- Strengthen grid resilience, investing in interconnections, battery storage, and flexible power systems.
- Develop better policies for price volatility, preventing the economic shocks of sudden energy price drops and spikes.
If the world succeeds in this balancing act, electricity could become the dominant energy source of the 21st century, powering industries, transport, and daily life without the carbon footprint of the past.
Source
Electricity 2025: Analysis and Forecast to 2027, International Energy Agency, 2025-02
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