As the world navigates a complex energy landscape in 2025, global electricity demand is poised for significant growth, anticipated to increase by 3.3% in 2025 and 3.7% in 2026. These figures represent some of the most accelerated growth rates witnessed in over a decade, driven by persistent industrial demand, advancements in electrification, expanding air conditioning usage, and the burgeoning requirements of data centers.
However, this growth does not come without its challenges. Global CO2 emissions from electricity generation are showing signs of plateauing. Following a modest growth of 1.2% in emissions in 2024, 2025 is expected to see little change, with potential declines beginning in 2026 as the energy mix becomes increasingly dependent on low-emissions sources. The transition is largely supported by the rapid deployment of renewable energy technologies. In particular, solar and wind energy are slated to cover over 90% of the incremental global electricity demand in 2025.
The geographical variance in electricity supply and demand highlights systemic challenges. In China, coal-fired power generation saw a decline of 2.6% year-on-year during the first half of 2025, offset by record growth in solar PV and wind generation. These renewable resources, coupled with nuclear energy, are anticipated to significantly reduce reliance on coal as their capacity grows beyond 1 TW. In contrast, the United States and European Union are grappling with higher prices, largely driven by elevated natural gas costs amidst a transition from coal to gas generation.
Despite robust renewable energy growth, the report identifies critical points of concern, especially in emissions management across different regions. Declines in emissions in China, the EU, and the Americas are expected to counter the rise seen in India and Southeast Asia, where coal-fired generation continues to expand.
Strategically, the focus remains on the balance between maintaining high growth in renewable capacities and managing regional disparities in energy demand and pricing structures. While global coal-fired generation is forecast to slightly reduce in 2025, this is not uniform across all regions, with some areas like India and Southeast Asia showing increases. The concerted effort to transition these markets towards cleaner energy sources appears essential to maintain emission targets.
High levels of renewable energy penetration in markets like the Nordics have driven electricity prices down significantly due to increased wind power generation. Conversely, in markets such as Germany and the UK, higher natural gas prices and issues with wind power generation have caused electricity prices to soar, highlighting the market’s sensitivity and reliance on gas as a transitional fuel.
In conclusion, while the global electricity demand and supply landscape in 2025 presents a promising blueprint for growing renewable energy, it does so amid complex geopolitical and economic influences. Regions must navigate through diverse challenges such as balancing demand with sustainable supply chains and mitigating price volatility due to variable renewable energy outputs or shifts in primary energy import costs. These strategic movements will shape not just future emissions trajectories but also the economic resilience of energy markets worldwide.
