Global electricity demand enters a period of rapid growth

Economic Reference Daily Reporter Zhou Wuying

Driven by artificial intelligence, electrification, and the development of emerging economies, global electricity demand is experiencing unprecedented rapid growth. It is expected that in the coming years, the growth rate will significantly surpass the overall energy demand increase. The International Energy Agency recently released “Electricity 2026,” which predicts that by 2030, the additional electricity consumption worldwide will be equivalent to more than twice the current electricity usage of the European Union.

Global Electricity Demand Continues to Grow

Global electricity demand shows structural growth and regional differentiation.

“Electricity 2026” states that the current global growth rate of electricity demand is much higher than in the past decade. From now until 2030, the annual growth rate is expected to exceed 3.5%, at least 2.5 times the overall energy demand growth, driven mainly by rising industrial electricity use, the continued popularity of electric vehicles, increased air conditioning demand, and surging electricity consumption in data centers and artificial intelligence.

Emerging and developing economies remain the main engines of global electricity demand growth. For example, in China, the total social electricity consumption in 2025 will historically surpass 10 trillion kWh, a 5% year-on-year increase. The booming development of digital economy and advanced manufacturing industries has driven rigid growth in electricity demand. Meanwhile, some developed economies, after experiencing over a decade of stagnation, are beginning to see a rebound in electricity consumption. EU data shows that factors such as congested grids, national taxes, and the EU’s carbon emission prices have collectively driven up electricity prices, with industrial electricity prices in Europe now more than double those in the US and China.

The large-scale application of artificial intelligence is a key driver of the surge in electricity demand. The International Energy Agency predicts that by 2030, the electricity demand of global data centers will more than double, reaching approximately 945 TWh.

Recently, Reuters reported that data centers used for training and deploying AI models require massive amounts of energy for processing and cooling. Currently, the largest data center site in the US consumes over 1 gigawatt of continuous load. In 2025, the US’s annual electricity consumption will hit a record high for the second consecutive year, reaching 4,195 TWh. Government data shows that as of January 2026, the average electricity price nationwide in the US has increased by 7%.

In the US, Google has purchased about 1.2 GW of carbon-free energy to power its data centers, and Nvidia is working to optimize solar and wind power plants using AI to cope with the enormous energy pressure. However, due to the surge in demand, the ambitious expansion plans of the US AI industry may face serious bottlenecks in power infrastructure, including turbine shortages, slow grid expansion, and cumbersome regulatory processes.

A boom in data center construction is also emerging in Southeast Asia. According to a report by KPMG, driven by a tenfold increase in AI electricity demand, data center capacity in Southeast Asia is expected to triple by 2030 compared to 2025. Despite strong demand and growing investment interest, countries like Thailand, Indonesia, and the Philippines still face structural obstacles, leading to slow project progress. AFP reported on February 26 that Indonesia’s projects are relatively slow due to unreliable coal-fired power, slow renewable energy approvals, grid access uncertainties, and lengthy permitting procedures.

European data center construction is also accelerating, with projections that by 2030, the electricity demand of data centers in Sweden, Norway, and Denmark will triple current levels.

Transforming Power Structures to Meet Growing Demand

To meet the increasing electricity demand and achieve green transformation, the global power structure is undergoing profound changes.

The International Energy Agency predicts that by 2030, renewable energy and nuclear power will together account for 50% of the global electricity mix. Driven by record deployments of solar power facilities, renewable energy generation is gradually approaching coal-fired power, with both nearly equal in 2025.

The Global Energy Internet Cooperation Organization forecasts that in 2026, wind, photovoltaic, and hydropower capacities will grow by 6%, 7%, and 4%, respectively, supporting the increase in clean energy share.

The EU’s energy transition is accelerating, with renewable energy generation surpassing coal-fired power for the first time. AFP reported that the solar market in Europe continues to grow. According to SolarPower Europe, 2025 will be another strong year for photovoltaic growth in the EU. Germany leads in annual growth rate, followed by Spain, France, Italy, and Poland. The importance of solar energy in meeting Europe’s electricity needs continues to rise.

Data from Ember shows that by 2030, Indonesia’s data center electricity consumption could quadruple from current levels, but nearly 70% of Indonesia’s electricity still comes from coal. AFP reported that Microsoft recently signed an agreement with Indonesia’s state electricity provider to increase renewable energy capacity by about 200 MW over ten years.

According to Vietnam News Agency, Vietnam has developed plans for renewable and new energy industries, aiming to become a regional clean energy industrial hub and export country, establishing clean energy centers in the northern, central-southern, and southern regions. By 2030, Vietnam’s green hydrogen production capacity is targeted at 100,000 to 200,000 tons annually, with a long-term vision of reaching 10 million to 20 million tons per year by 2050. By 2030, renewable energy is expected to supply 30.9% to 39.2% of electricity, increasing to 67.5% to 71.5% by 2050.

Supply and demand pressures are forcing grid investments to expand

Faced with enormous pressure on power grids worldwide, the International Energy Agency points out that to meet the 2030 electricity demand, annual grid investments need to increase by 50%, and the safety and resilience of grid systems must also be highly prioritized.

A Goldman Sachs research report states that from 2025 to 2030, global grid investments will reach $12 trillion.

Most US grid equipment was built before the 1970s, with over 60% exceeding their service life. It is estimated that by 2030, the US alone will need over $700 billion in investments. In the UK, high-voltage transmission lines needed will be five times the total of the past 30 years. Developing countries face huge financing needs for grids; the International Atomic Energy Agency indicates that grid financing in developing countries must increase from the current $280 billion annually to $630 billion annually.

Italian power giant Enel recently announced increased investments in renewable energy, planning to invest over €26 billion in energy production and distribution by 2028, with €20 billion allocated to renewables. More than three-quarters of new capacity will come from wind power and “battery energy storage systems and other programmable technologies,” focusing on European and US markets.

According to the Associated Press, some industry insiders believe that major tech companies have a responsibility to independently address part of their power needs. These companies can build their own power plants and integrate them into their facilities, which can not only avoid sharp electricity price increases but also, in many cases, significantly lower community electricity costs.

Reuters reported that energy consulting firm Cleanview has identified 46 data centers planning to build their own power plants, mainly gas-fired. These self-built plants have a total capacity of 56 GW, accounting for about 30% of all planned data center capacity in the US.