Global electricity demand grows much faster than overall energy use and renewables grow faster than any other major energy source in all scenarios of the latest World Energy Outlook (WEO) from energy watchdog the IEA.
"Last year, we said the world was moving quickly into the age of electricity — and it's clear today that it has already arrived," said IEA executive director Fatih Birol.
The rise in electricity demand stems from households, for mobility, for cooling, and "increasingly for data and AI-related services", the IEA said. It sees power demand rise by around 40pc to 2035, from current levels, in two scenarios and by more than 50pc in the same timeframe across its Net Zero Emissions (NZE) by 2050 scenario.
The growth in renewable energy deployment in all scenarios is led by solar power, the IEA said, and it envisages "a revival of fortunes for nuclear energy" across all scenarios, for large plants and small modular reactors.
The lift in power consumption "is no longer limited to emerging and developing economies", Birol said, as electricity demand, driven by data centres and AI, is rising in advanced economies. Birol said the IEA estimates global investment in data centres to reach $580bn in 2025, which "surpasses the $540bn being spent on global oil supply."
The IEA sets out three scenarios in its 2025 WEO, none of which are a forecast. The Current Policies Scenario (CPS) is based on policies and regulations already in place, the Stated Policies Scenario (Steps) looks at "a broader range of policies" including some that have been proposed but not formally adopted. The NZE scenario considers a path to reach the 2050 goal, in line with the Paris climate agreement, "while recognising that each country will have its own route."
Global investment in electricity generation has jumped by almost 70pc since 2015, the IEA said. But it said annual spending on grids has risen at less than half that pace, with relatively slow investment, "slow permitting" and "tight markets" for some components holding back grid projects.
The watchdog also warned of the energy sector's "need to prepare for the security risks brought by higher temperatures." The global rise in temperature in all scenarios exceeds 1.5°C above pre-industrial levels "on a regular basis by around 2030", the IEA said. The Paris agreement seeks to limit the rise in temperature to "well below" 2°C above the pre-industrial average, and pursues a 1.5°C threshold.
Annual global energy-related CO2 emissions reached a record high of 38bn t in 2024 and remain around this level to 2050 in the IEA's CPS. The 2050 emissions level is 10bn t lower than the last time the IEA modelled it in 2019, the organisation said.
CPS and Steps indicate a temperature rise of nearly 3°C and 2.5°C, respectively, in 2100. In the NZE, global warming "peaks around 2050 at about 1.65°C and declines slowly after that, largely due to active measures to remove CO2 from the atmosphere," the IEA said.
