Three Things to Know About the Future of Electricity
How AI and Renewables Are Changing the Energy Landscape
Credits: Original article by Casey Crownhart, published in MIT Technology Review. This is a translated and adapted version of the text.
One of the central narratives throughout 2025 has been electricity: where and how demand is growing, how much it costs, and how it all intersects with Artificial Intelligence (AI). The recent annual World Energy Outlook report from the International Energy Agency (IEA) provides crucial insights and surprising numbers about the global grid and the state of climate change. Here are three key takeaways.
1. The World Is Entering the Age of Electricity
Global energy demand is rising due to population growth and expanding economies. However, electricity is the main protagonist, with a projected 40% increase in global demand over the next ten years.
While China accounted for most of the growth in the last decade, the future will be increasingly driven by emerging economies outside of China. Furthermore, even advanced economies, such as the United States and Europe, which have seen stable demand, will see a significant rise, largely due to the rise of AI and data centers.
One of the biggest consumption factors is **air conditioning**. Income-driven growth in AC use will add about 330 gigawatts (GW) to global peak demand by 2035, and rising temperatures will add another 170 GW during the same period, totaling an increase of over 10% compared to 2024 levels.
2. AI Drives Demand, Especially Locally
In 2025, investment in data centers is projected to surpass $580 billion, a figure higher than the $540 billion spent on the global oil supply. This puts the energy needs of AI in the spotlight, but with a distinct regional impact.
Globally, data centers still account for less than 10% of the total projected electricity demand increase until 2035, being surpassed by sectors such as industry and household appliances. However, in specific regions like the United States, data centers will account for half of the total demand growth between now and 2030. They pose a unique challenge because they tend to cluster, concentrating demand in specific communities and power grids near major cities.
3. Coal Is Close to Being Overtaken, But the Transition Must Accelerate
The source powering the grid is the key climate factor. Historically dominated by fossil fuels, the global energy mix is changing, albeit slowly. For the first time, solar and wind power were the main sources of electricity in the first half of this year, surpassing coal.
Global coal use may peak and begin to decline by the end of this decade. Nuclear power can also play a growing role, with the global fleet projected to increase by one-third in the next ten years. Notably, 80% of all electricity demand growth over the next decade will occur in regions with high solar irradiation.
Despite these advances, the pace is not sufficient. The world’s grids still primarily run on fossil fuels, and global greenhouse gas emissions are expected to hit a new record this year. To limit warming and avoid the worst effects of climate change, the energy system, including electricity, needs to be remade much more quickly.
