Global electricity demand is surging at the fastest pace in 15 years, driven by the rise of artificial intelligence infrastructure, advanced manufacturing, and the broader electrification of economies. The International Energy Agency (IEA) forecasts this trend will continue through at least the end of the decade, marking what it terms “The Age of Electricity.”
Global power demand is projected to grow by more than 3.5% annually on average through 2030, according to the IEA’s new Electricity 2026 report. This represents a significant acceleration, with global electricity demand increasing by 3% in 2025, following a 4.4% rise in 2024.
The anticipated growth between 2026 and 2030 is pegged at 3.6% per year, fueled by increased consumption from industry, the adoption of electric vehicles (EVs), greater use of air conditioning, and the expansion of data centers. While emerging economies – particularly China, India, and Southeast Asia – are expected to account for 80% of the increase in power demand by 2030, advanced economies are also experiencing a resurgence in electricity consumption after 15 years of stagnation.
This renewed growth in advanced economies is largely attributed to the demands of artificial intelligence, data centers, and advanced manufacturing processes. In the United States, electricity demand rose by 2.1% in 2025 and is forecast to grow by nearly 2% annually through 2030, with the rapid expansion of data centers driving half of that increase. The European Union is expected to see demand increase by around 2% per year through 2030, and similar growth is anticipated in other advanced economies like Australia, Canada, Japan, and South Korea.
Grid Investment Lags Rising Demand
Despite the anticipated boom in power generation from renewables, nuclear, and natural gas, a critical bottleneck is emerging: the capacity of existing electricity grids to accommodate this new capacity. Developers of new projects, especially those focused on renewable energy and natural gas, are facing increasing constraints in connecting to the grid.
The IEA warns that without significant and rapid expansion of grid infrastructure, coupled with increased system flexibility, the full potential of “The Age of Electricity” may not be realized. Currently, global investments in grids stand at approximately $400 billion per year. To meet the projected growth in power demand through 2030, the IEA estimates that annual grid investment needs to increase by roughly 50%, reaching $600 billion.
Beyond financial investment, the IEA emphasizes the need for a substantial scaling up of grid-related supply chains to support this expansion. Currently, over 2,500 gigawatts (GW) worth of projects – encompassing renewables, storage, and large-load projects like data centers – are stalled in connection queues worldwide.
The IEA believes that approximately 1,600 GW of these queued projects could be integrated in the near term through the implementation of grid-enhancing technologies and regulatory reforms that promote more flexible grid connections and usage. However, achieving this requires a significant increase in investment beyond current levels.
Investment Trends and Challenges
Grid investment reached a record high of over $470 billion in 2025, a 16% increase from 2024, according to a December analysis from BloombergNEF. The United States accounted for a quarter of global grid spending, with $115 billion in investment, making it the largest contributor. China and the EU/UK followed, each representing around 20% of the global total.
However, rising equipment costs and high inflation are beginning to impact overall spending figures. BloombergNEF notes that even with increased investment, significant barriers remain to meeting the needs of new generation and power demand on time, leading to likely delays in connecting new projects.
Peter Wall, Head of Grids Research at BloombergNEF, stated, “We’ve seen that even with increased investment, there are significant barriers to meeting the needs of new generation and power demand on time.” He added that investors need to consider the essential role of timely grid expansion, not only for connecting new demand but also for ensuring a secure and reliable supply to meet that demand after a decade of stagnation.
Supply chain constraints and labor shortages are further complicating efforts to increase grid investment. In the United States, aging grid infrastructure in key regional markets is struggling to cope with the increasing demands, particularly from data centers.
Potential for Power Crunch
Samantha Dart, co-head of global commodities research at Goldman Sachs, warned at a recent conference that the U.S. Could face a power crunch by 2030 if grid constraints are not addressed. “We aren’t adding enough capacity,” she said in January at the Goldman Sachs Energy, CleanTech and Utilities Conference in Miami.
Dart cautioned that nearly all power grids in the U.S. May lack critical spare capacity by the end of the decade. She also suggested that if these grid issues remain unresolved, China could potentially surpass the U.S. In the race to develop and deploy artificial intelligence technologies.
