Global power generation from renewables is expected to grow by more than 8% in 2026, pushing its share in the electricity generation mix to 37% by 2027, up from 33% in 2025, according to the International Energy Agency (IEA).

In its latest Electricity Mid-Year Update, the IEA stated that electricity generation from renewables is set to overtake coal-fired output in 2026. As the deployment of renewables rises, factors like grid modernization, stronger price signals, and efficient use of existing infrastructure will play a strong role in supporting the integration of variable renewable energy such as wind and solar into systems.

The report stated that solar remained the largest contributor to global electricity supply growth. Solar output is expected to increase by around 600 TWh in 2026, and similar growth is forecast for 2027. As a result, solar PV is set to overtake wind power in 2026, becoming the world’s second-largest renewable source of electricity generation after hydropower.

Source: IEA

Solar and Wind Outlook

Solar generation is forecast to grow by 23% in 2026, remaining the largest contributor to global electricity supply growth.

While China continues to account for around half of the global increase in solar PV generation, Asian economies like India are likely to play a growing role. The IEA expects India and other Asian economies to account for around 17% of the global increase in solar generation in 2026, up from almost 10% in 2025.

As the combined solar and wind output rose by over 25%, renewables generation in India continued to expand in the first half of 2026. According to the report, solar generation rose by more than 30% and wind by slightly less than 10%.

Driven by strong gains in solar output, the U.S. saw renewables generation increase by 10% year-on-year during the first half of 2026. Higher growth in the hydropower sector also contributed to the higher renewables output. The country’s wind generation grew at around 5%.

In the European Union, both fossil-based and renewable generation increased during the period, driven by strong electricity demand. After a “broadly flat” 2025, clean energy generation in the European Union rose by over 5% in the first half of 2026. As low wind speeds and rising curtailment spark concerns about a slowdown in China in 2026, the IEA expects the European Union to see a sharp 9% growth this year.

Strong renewable output and rapidly expanding battery storage continued to shape the power market in Australia. In Q1 of 2026, installation of new battery capacity led to a tripling of daytime-to-evening energy shifting, which helped mitigate price surges by reducing the use of gas and coal generation used during these hours.

Source: IEA

The report forecast that wind generation in Australia would increase by over 6% in 2026.

Global Power Demand Continues to Surge

The IEA noted that global power demand is set to rise faster over the next two years than in 2025, even as the conflict in the Middle East continues to push electricity generation costs up. Power demand is expected to increase by 3.6% in 2026 and by 3.8% in 2027, up from 3% in 2025. With increased demand, global electricity consumption is set to reach 30,700 terawatt-hours (TWh) in 2027, up from 28,600 TWh in 2025.

The agency stated that structural factors such as industrial growth, the increasing use of electric vehicles, air conditioners, and heat pumps, and the expansion of data centers will continue to support growth in power consumption.

However, ongoing military hostilities in the Middle East and broader geopolitical tensions could weigh on the global economy and impact electricity demand, the report warned.

IEA said that the strongest rise in power consumption is likely to be seen in bigger economies. In China, higher manufacturing activity and increasing EV charging are likely to push power demand growth to 5.5% in 2026, from 5.2% in 2025.

Notably, lithium-ion battery production in China increased by 39.3% year-on-year during the first half of 2026. After a sluggish start in 2026, new energy vehicle output also rebounded to higher growth rates during the period.

The surge in demand for electric vehicle charging, together with the rapid expansion of charging infrastructure, continued to support rising electricity usage in the country in the first half of 2026.

Electricity demand growth in China is poised to remain robust through the rest of the year, supported by continued expansion in high-tech manufacturing, electric mobility, data centers, and rising air conditioning.

In India, electricity demand growth is forecast to rebound to 7% in 2026 from 1.6% in 2025, when an early monsoon dampened consumption. During the first half of 2026, power demand grew by 6%, supported by stronger industrial and services activity and by the heatwaves that swept India between April and June. The country also met its peak demand fully due to higher thermal and renewable capacity. At 60 GW, solar covered 22% of the daytime peak.

After two consecutive years of record highs, electricity consumption in the U.S. is set to rise further in 2026. Data centers, electrification, and increased use of AC due to warmer summer temperatures are among the factors supporting this growth. The IEA expects power demand in the U.S. to rise by 1.8% in 2026 and by 3% in 2027.

In the European Union, electricity demand growth is expected to strengthen to 2%, supported by electrification, colder winter weather in the first quarter, and increased cooling needs during heatwaves.

In contrast, supply disruptions and higher energy prices have led to reduced power consumption in price-sensitive economies such as Pakistan and Bangladesh.

Power Prices Rise

The IEA also noted that the Strait of Hormuz crisis drove up LNG prices, which translated into higher costs for gas-fired electricity generation and pushed up wholesale power prices in many regions from March onwards.

In the second quarter of 2026, average spot wholesale electricity prices in Japan and the European Union increased by over 30% year-over-year. In India, average electricity prices rose by less than 10% during the period due to LNG’s low contribution to the country’s power generation mix.

The LNG price shock didn’t have much impact in the U.S. as average wholesale electricity prices in the second quarter remained largely unchanged.

Strong generation from renewables and rapidly expanding battery storage capacity helped Australia reduce its dependence on gas-fired plants during peak demand periods. As a result, wholesale electricity prices in the country were about 45% lower.

Source: IEA

In a 2025 report, the IEA had stated that global electricity consumption is projected to grow at an average annual rate of 3.6% between 2026 and 2030. The report, Electricity 2026, stated that rising electricity consumption will reshape global energy markets, with renewables and nuclear power together expected to generate 50% of global electricity by the end of the decade.

The IEA has estimated that the combined global market value of clean energy technologies grew by around 20% per year on average over the past decade, reaching nearly $1.2 trillion in 2025.