Increase in Electricity Demand from the World's Two Largest Polluters.
The demand for electricity in China and the United States is increasing, driven by data centers and the manufacturing industry.
China and the United States, the world’s top greenhouse gas emitters, could significantly increase their electricity consumption in the coming years, according to the latest projection from the International Energy Agency (IEA). A considerable rise in global electricity demand is expected, largely driven by the expansion of new data centers and the manufacturing of electric vehicles, batteries, solar panels, and semiconductors in both countries.
This growth reflects a broader transformation in the way people consume information and what drives their lives. An increasing number of vehicles and household appliances are powered by electricity. Additionally, new artificial intelligence tools have spurred a boom in data centers, which require a large amount of energy. This makes it crucial to develop new energy sources that can ensure adequate electricity supply for homes and businesses without increasing pollution.
Keisuke Sadamori, director of energy markets and security at the IEA, noted that the growth in global electricity demand underscores significant changes in the world’s energy systems and heralds the arrival of a new Electricity Era. However, it also presents challenges for governments in ensuring a secure, affordable, and sustainable electricity supply.
Globally, the anticipated increase in demand will be equivalent to Japan's total annual electricity consumption each year between now and 2027. This increase mostly comes from developing or emerging countries, such as China, although advanced economies, such as the United States, are also starting to consume more electricity than in the past.
It is important to note that the increase in electricity demand does not always correlate with economic growth. Since 2020, China's electricity consumption has grown at a faster rate than its economy. The production of solar panels, electric vehicles, and batteries has been one of the main reasons for this increase, accounting for a third of it in recent years. The Chinese automaker BYD competes with Tesla in selling the most electric vehicles in the world, and despite trade sanctions due to allegations of labor abuses and human rights violations in Xinjiang province, solar supply chains remain centered in China. Recently, the country also announced new policies to boost battery production.
On the other hand, artificial intelligence also plays a crucial role in this transformation. The China-based startup DeepSeek revealed significant advances in its AI models, including improvements in energy efficiency, which raises uncertainty about future energy use by AI. However, the IEA predicts that electricity use in data centers in China could double by 2027. Likewise, the growth of 5G networks in the country is also contributing to greater electricity consumption.
In advanced economies, including the United States, electricity consumption has remained stable or decreased in recent years despite economic growth, thanks to the development of more efficient technologies. However, the IEA estimates that demand will start to rise due to the proliferation of data centers, electric vehicles, electric heat pumps, and air conditioners that require more electricity.
After China, the United States ranks second in electricity use and in generating greenhouse gas emissions. Although its electricity demand fell by 1.8% in 2023, it is expected to grow by about 2% annually until 2027, which, although it seems like a low percentage, translates to the equivalent of California’s total electricity demand over three years. Data centers are driving this trend, with plans to develop new gas infrastructure and new nuclear reactors to meet the growing demand.
Electrification —the process of making more buildings and modes of transportation powered by electricity— is not necessarily negative as long as it comes from cleaner energy sources. However, both China and the United States are heavily reliant on fossil fuels, which account for about 60% of their electricity mix.
On the other hand, it is not essential for pollution to increase with electricity demand. With solar and onshore wind power being the cheapest sources of electricity in most parts of the world, the growth of renewables is rapid. Renewables are expected to surpass coal and generate more than a third of global electricity this year, potentially satisfying up to 95% of new electricity demand by 2027, according to the IEA. This forecast suggests that carbon dioxide emissions generated by electricity production could stabilize globally in the coming years.
