Global electricity demand growth is now outpacing total energy demand growth, a structural shift that is forcing policymakers and investors to rethink how energy systems are measured and planned.
According to the February 2026 analysis Reframing Energy for the Age of Electricity, the conventional supply-side framing of energy statistics increasingly obscures what is actually happening in the system: electrification is winning not because more energy is produced, but because far less is wasted between source and end use.
The report, authored by Daan Walter, Kingsmill Bond, Sam Butler-Sloss, Antoine Issac, and Michael Liebreich, argues that energy should be counted from the consumer perspective rather than the supplier perspective. Drawing on final energy data from the International Energy Agency and conversion analysis from the International Institute for Applied Systems Analysis, the authors show that the transition is less about replacing fuels one-for-one and more about replacing inefficient energy pathways altogether.
At the core of the argument is the distinction between final energy and useful energy. Fossil-based systems lose a large share of primary energy to conversion losses, particularly in internal combustion engines and thermal power generation. Electrified technologies, by contrast, convert a much higher proportion of final energy into useful work. Electric vehicles, heat pumps, and electric motors deliver the same or greater services with significantly lower energy input, a dynamic that is already visible in demand data across advanced economies.
The paper frames the transition as four competing “battles” within the energy system, of which electricity-based technologies are positioned to win three. These battles include efficiency, flexibility, and cost at the point of use. In transport, electric drivetrains convert roughly 70 to 80 percent of final energy into motion, compared with around 20 to 25 percent for internal combustion engines. In heating, heat pumps routinely achieve coefficients of performance above 3, meaning they deliver three units of heat for every unit of electricity consumed. These efficiency gains fundamentally change system economics, even before accounting for emissions.
This reframing challenges a persistent narrative that electrification requires an unmanageable expansion of energy supply. When measured in useful energy terms, total demand growth moderates significantly as inefficient fossil pathways are displaced. The implication is that grid expansion and renewable deployment, while substantial, may be more tractable than suggested by primary energy statistics that still dominate policy debates.
However, the report does not understate the challenges. Electricity systems must absorb more demand while becoming more flexible, resilient, and digitally managed. Peak load management, storage deployment, and network reinforcement emerge as binding constraints, particularly as heating and transport electrify simultaneously. The shift also redistributes value across the energy chain, favoring technologies and business models that optimize demand response, efficiency, and end-use integration rather than fuel extraction.
From a policy standpoint, the analysis implies that carbon pricing and supply-side incentives alone are insufficient. Consumer-side measures, including appliance standards, building codes, and electrification incentives, have a disproportionate impact on system outcomes because they lock in efficiency gains for decades. Counting energy from the consumer perspective makes these effects visible and measurable, strengthening the case for demand-focused regulation.
The report also has implications for hydrogen and other energy carriers often positioned as alternatives to direct electrification. When evaluated through a useful energy lens, hydrogen pathways that rely on electricity to produce, compress, and reconvert fuel face steep efficiency penalties. This does not eliminate hydrogen’s role, particularly in hard-to-electrify industrial processes, but it narrows the range of applications where it can compete on system cost and energy efficiency.
