Renewable energy sources are poised to surpass coal in global electricity production for the first time. According to a mid-year report published by the International Energy Agency (IEA), this shift is expected to occur in 2025 or at the latest in 2026. The report states that renewable sources, particularly solar and wind, are rising to the forefront in electricity generation, while nuclear energy is poised to break production records.
Renewable energy will officially surpass coal
Global electricity demand is projected to increase by more than 3 percent on average annually until 2026. This increase is driven primarily by emerging economies in Asia, industrial production, electrification of transportation systems, and data center investments.
Following a 4.4 percent increase in 2024, growth is expected to reach 3.3 percent in 2025 and 3.7 percent in 2026. These figures indicate a trend above the 2.6 percent average growth seen in the 2015–2023 period. The primary driver of renewables surpassing coal is the support of solar and wind energy through new capacity investments in many regions. During the same period, the growth in nuclear energy production is also notable.
Older reactors commissioned in Japan, high production levels in the US and France, and new facilities in Asia are driving global nuclear production upwards. Natural gas, meanwhile, is increasingly replacing coal and oil as a cleaner fossil fuel alternative.
With this transformation, global carbon emissions from electricity generation are expected to remain stable in 2025 and decline slightly in 2026. As the share of carbon-free generation sources in total electricity supply increases, emissions growth is also being curbed.
Approximately 60 percent of global demand growth comes from Asia. Electricity consumption in China is expected to increase by 5.7 percent in 2026, while in India, this rate is expected to rise to 6.6 percent. Meanwhile, in the US, electricity demand continues to grow at over 2 percent annually due to increasing data center investments. Following the 1 percent increase projected for 2025 in the European Union, demand is expected to accelerate in 2026.
Price increases in electricity markets are another factor impacting the energy transition. In the first half of 2025, wholesale electricity prices in the European Union and the United States rose by 30 to 40 percent compared to the same period last year. Tightening natural gas supply is cited as the primary reason for this increase. While prices remain below 2023 levels, they remain significantly above 2019 levels.
The frequent negative wholesale prices encountered in markets highlight the urgency of investments in grid flexibility, storage infrastructure, and flexible consumption solutions in the energy system. At the same time, regional energy price disparities pose a significant challenge to global competitiveness.
Electricity prices in energy-intensive sectors in Europe are approximately twice those in the United States. Compared to China, the difference is even greater. This creates unbalanced competition among regions, particularly in terms of industrial production.
