The world’s electricity consumption is forecast to rise at its fastest pace in recent years, growing at close to 4% annually through 2027, with data centres contributing significantly to the growing need for power.

The International Energy Agency’s latest report, Electricity 2025, predicts that the global demand will be the equivalent of adding an amount greater than Japan’s annual electricity consumption every year, driven by electrification across sectors as new technologies take hold.

The spike in electricity demand is rapidly becoming more urgent, with data from research firm Gartner finding that 40% of existing AI data centres will be operationally constrained by power availability by 2027, with the power required to run each one reaching 500 terawatt-hours (TWh) per year.

According to the IEA’s research, most of the additional pressure over the next three years will come from emerging and developing economies, accounting for 85% of the growth in demand, a trend most pronounced in China, where the need for electricity has been growing faster than the overall economy since 2020.

The IEA said that China’s electricity consumption rose by 7% in 2024 and is expected to grow by an average of around 6% through 2027, fuelled in part by the industrial sector, which has seen the expansion of electricity-intensive manufacturing for items such as solar panels, batteries, and electric vehicles.

However, electricity consumption by data centres in China could double by 2027 as the global race to develop advanced AI heats up, and could account for 6% of the growth in demand alone.

Meanwhile, in the United States, a strong increase in electricity demand is expected to add the equivalent of California’s current power consumption to the national total over the next three years, a rising trend fuelled by ever higher consumption from the US data centre sector.

A report from the US Department of Energy in December highlighted that data centres already accounted for 4%, or 176 TWh, of America’s electricity consumption in 2023, a trend which could see data centres in the US reaching between 325 TWh to 580 TWh by 2028, accounting for 6.7% to 12% of total US electricity demand. 

Although demand is forecast to be more modest across the EU, rising back to levels seen in 2021 following major declines in 2022 and 2023 triggered by the energy crisis, electricity prices across the bloc have remained higher than those in the US and China, despite increasing demands for electric vehicle production and data centres from many member states.

The good news is that, despite the ongoing spike in demand, the IEA’s research shows that low-emissions sources – primarily renewables and nuclear – are now sufficient, in aggregate, to cover the growth in global electricity demand over the next three years.

Generation from solar PV is forecast to meet roughly half of global electricity demand growth through 2027, having already surpassed that from coal in the European Union last year, while China, the US and India are all expected to see solar PV’s share of annual electricity generation reach 10% between now and 2027.

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At the same time, nuclear power is expected to bring substantial benefits, with its electricity generation on course to hit new highs every year from 2025 onward, and as a result, see carbon dioxide emissions from global electricity generation plateau in the coming years after increasing by about 1% in 2024.

“The acceleration of global electricity demand highlights the significant changes taking place in energy systems around the world and the approach of a new Age of Electricity,” said Keisuke Sadamori, the IEA director of energy markets and security.

“While emerging and developing economies are set to drive the large majority of the growth in global electricity demand in the coming years, consumption is also expected to increase in many advanced economies after a period of relative stagnation. 

“Policy makers need to pay close attention to these shifting dynamics, which will be addressed at the international Summit on the Future of Energy Security that the IEA is hosting with the UK government in London in April.”