Global electricity demand 2026: renewables overtake coal, but emissions still rise

Global electricity demand is forecast to grow by 3.6% in 2026, enough to add roughly the annual electricity use of Germany to the world's power systems. Renewables are expected to overtake coal as the largest source of generation, but power-sector carbon dioxide emissions are still forecast to rise by 1%.

The International Energy Agency (IEA) published those estimates in its Electricity Mid-Year Update 2026 on 23 July. They describe a power system expanding quickly enough that record renewable generation does not immediately displace every extra unit of fossil-fuelled electricity.

The 2026 electricity forecast in six figures

Electricity use is accelerating again

Electricity demand grew by 3% in 2025, then weakened early in 2026 as high energy prices and trade disruption slowed industrial activity in some markets. The IEA nevertheless expects growth to strengthen over the full year and continue into 2027.

China remains the largest source of additional demand, with electricity use forecast to rise by 5.5% in 2026. India is expected to grow by about 7%, while the United States approaches 2% and the European Union about 2%. The causes differ by market, but electrified transport, cooling, heating and computing increasingly sit alongside ordinary economic growth.

The United States illustrates the change particularly clearly. Data centres are adding a large, concentrated source of demand at the same time as manufacturing investment and electrification increase pressure on grids. In China and India, industrial growth and rising household electricity use remain more important, while high temperatures make cooling demand increasingly volatile.

These forecasts concern electricity consumption, not total energy use. Cars, heating systems and industrial processes moving from direct fossil fuels to electricity can increase power demand while reducing emissions elsewhere, provided the electricity supplying them becomes cleaner. The IEA's Global EV Outlook 2026 shows the transport side of that shift, while the COP31 electrification target places it within a wider 2035 policy goal.

Renewables overtake coal without cutting emissions yet

The largest change in the generation mix is also the source of the apparent contradiction. Renewable output is forecast to rise by 8% in 2026, allowing renewables to overtake coal as the world's largest source of electricity. Yet the IEA expects power-sector carbon dioxide emissions to increase by 1% during the same year.

Renewable generation can gain market share while emissions rise if total demand grows faster than clean output and fossil generation expands at the margin. The report also expects some markets to burn more coal because gas prices remain high. Global gas-fired generation is broadly flat in the 2026 forecast, rather than rising alongside demand.

That carbon constraint extends beyond the power sector. The Earth Overshoot Day 2026 analysis shows why carbon dioxide from fossil fuels remains the largest component of humanity's measured ecological overshoot, even though the annual indicator also covers food, timber, built land and other biological demand.

The coal comparison is therefore a ranking milestone, not the end of coal-fired power. Renewables become the largest individual source in the global mix, while coal still supplies a substantial absolute volume of electricity and can move higher in particular countries or months.

The IEA expects emissions to plateau in 2027 as renewable and nuclear output cover more of the additional demand. That forecast depends on projects being completed, grids accepting the power and fuel-market conditions not producing another large switch towards coal.

Solar adds the largest block of new generation

Solar photovoltaic generation is expected to add about 600 terawatt-hours in 2026. On the IEA's forecast, that is enough for solar to overtake wind as the second-largest renewable source of electricity after hydropower.

The scale of the increase reflects the capacity additions already recorded. The International Renewable Energy Agency reported that 692 gigawatts of renewable capacity was added in 2025, mostly solar and wind. Capacity is not the same as generation, but the IEA forecast shows that the buildout is now appearing in annual electricity output as well as installation totals. Our global renewable capacity review covers the geographic concentration and grid bottlenecks behind that record year, while the US solar and battery capacity check separates projects planned for 2026 from capacity operating by midyear.

Hydropower remains the largest renewable source globally, although its output can vary sharply with rainfall. Wind continues to grow, but solar's shorter construction times and rapid deployment are producing a larger annual increment. The trade-off is a stronger need for storage, flexible demand, transmission and generation that can cover hours when solar output falls.

Negative prices are exposing a flexibility shortage

More renewable electricity is changing when power is scarce, not only how much is generated over a year. During the first half of 2026, wholesale prices were negative for about 20% of hours in South Australia and California. Spain's share rose from 10% to 17%, while Sweden and Finland moved in the opposite direction, from about 6% to 2%.

A negative wholesale price usually means more electricity is available at that moment than the system can use, store or export. It does not mean household electricity is free. Network charges, taxes, supplier contracts and prices in other hours still shape the final bill.

At the other extreme, European heatwaves in June produced price spreads of as much as $600 per megawatt-hour between some neighbouring markets. Cooling demand rose while hydropower availability, transmission limits and local generation conditions differed. The same system can therefore experience surplus renewable power in one period and severe scarcity in another.

Those swings make storage, interconnection and demand flexibility economically important. Investment is already moving in that direction: the IEA's World Energy Investment 2026 report shows electricity infrastructure taking a growing share of global energy capital.

Wholesale prices remain exposed to gas and weather

The IEA says average spot wholesale electricity prices in the European Union and Japan were more than 30% higher year on year in the second quarter of 2026. Prices were broadly unchanged in the United States, less than 10% higher in India and about 45% lower in Australia.

Those differences reflect local fuel prices, weather, generation availability and network conditions. A growing renewable share can reduce average fuel costs, but it does not remove exposure to gas-fired marginal generation or periods when demand and supply move apart quickly.

Annual renewable shares therefore answer only part of the affordability question. The shape of demand, the location of generation and the ability to move or store power increasingly decide how the transition appears in wholesale prices.

What the forecast does and does not establish

The 2026 and 2027 figures are forecasts, not completed annual results. They combine official statistics available during the year with the IEA's assumptions about economic growth, weather, fuel prices, generation projects and electricity demand.

Several conclusions are already well supported. Electricity is taking a larger role in the energy system, renewable generation is growing quickly and solar is adding power at exceptional scale. The final emissions and price outcomes remain more sensitive to demand, weather and fossil-fuel switching.

Three developments will show whether the forecast holds: renewable generation must rise fast enough to cover more than the increase in demand; grid and storage investment must reduce both curtailment and scarcity; and coal generation must begin a sustained absolute decline rather than merely losing first place in the global ranking.

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Official sources

• International Energy Agency: Electricity Mid-Year Update 2026
• International Energy Agency: executive summary
• International Energy Agency: global electricity demand growth press release
• Feature image: Renewable Energy on the Grid by Kenueone, released under Creative Commons Zero