IEA Annual Report: Data centers contributed "half" of last year's increase in U.S. electricity demand, while battery storage was the world's fastest-growing power technology.

IEA Annual Report: Data centers contributed "half" of last year's increase in U.S. electricity demand, while battery storage was the world's fastest-growing power technology.

The latest report from the International Energy Agency (IEA) shows that data centers are becoming a key force in reshaping the energy landscape of the United States and the world.

IEA's annual “Global Energy Review” released on Monday notes that U.S. electricity demand will grow by 2% in 2025, with data centers accounting for about half of the increase in power consumption across the country. Meanwhile, global electricity demand growth reaches 3%, far surpassing the overall energy demand growth of 1.3%. IEA Executive Director Fatih Birol characterizes this trend as a clear signal of “the expansion of economic electrification.”

On the supply side, for the first time, photovoltaics have become the largest single contributor to the global increase in energy demand, accounting for over 25% of incremental share, surpassing natural gas at 17%. Battery storage will be the fastest-growing power technology in 2025, with newly added installed capacity of about 110 gigawatts, breaking the annual installation record previously held by natural gas.

Data Centers Lead Structural Change in U.S. Power Demand

The IEA report indicates U.S. electricity demand growth is 2% in 2025, lower than 2.8% in 2024, but still more than three times the ten-year average growth rate.

Looking at demand structure, the building sector contributes 80% of the incremental U.S. electricity demand, with surging data center loads serving as the core driver. Data center electricity consumption alone accounts for about half of national demand growth. The IEA also notes that a colder winter in 2025 — heating degree days increased by nearly 10% year-on-year — provides additional support for electricity demand.

IEA labels the U.S. energy demand growth in 2025 as the second highest level since 2000 (excluding post-recession rebound years), with drivers including strong electricity use by data centers, robust industrial growth, and cold weather.

Global Electricity Demand Growth Continues to Outpace Overall Energy Demand

In 2025, global electricity demand will grow by 3%, higher than the average annual growth rate of 2.8% between 2014 and 2024, though lower than the 4.4% seen in 2024. The IEA attributes the slower pace mainly to single-off factors like reduced cooling demand in India and Southeast Asia, rather than a structural trend reversal.

In contrast, overall global energy demand growth is only 1.3%, slightly below the ten-year average of 1.4%, dragged down by slowing global economic growth, weak growth in energy-intensive industries, and accelerated improvements in energy efficiency.

Fatih Birol stated in the report: “Electricity demand growth is far outpacing overall energy demand growth — this trend is unmistakable: economic electrification is continuously expanding.”

Record-Breaking Solar Power, Battery Storage Surpasses Natural Gas

On the supply side, newly added global solar PV power generation in 2025 will reach 600 Terawatt-hours, the largest structural annual growth ever recorded for any single power technology (excluding post-crisis recovery periods), and will contribute about 70% of the global electricity supply increment.

The combined increase from renewables and nuclear already exceeds the total increase in global electricity supply. Total renewable energy generation now almost matches global coal-fired power. In the EU, the combined share of solar and wind power generation will reach 30% in 2025, surpassing fossil fuels for the first time.

For battery storage, newly installed capacity in 2025 will be about 110 gigawatts, a year-on-year increase of about 40%, surpassing the highest annual new natural gas installations in history. Additionally, more than 12 gigawatts of new nuclear power will be commissioned globally in 2025, with nuclear projects regaining momentum in several regions.

Global annual renewable energy additions will hit a record high of 800 gigawatts, with solar power accounting for 75%.

Fossil Energy Demand Growth Slows Across the Board, Carbon Emissions Trend Downward

Global oil demand will increase by 650,000 barrels per day in 2025, a growth of 0.7%, less than the 750,000 barrels per day increase in 2024 and well below the 1.4 million barrels per day average annual increment between 2010 and 2019. The IEA notes that continued adoption of electric vehicles is suppressing oil demand for road transportation — electric vehicle sales will grow by over 20% in 2025, surpassing 20 million units and accounting for about a quarter of global new car sales.

Natural gas demand growth will drop sharply from 2.8% in 2024 to about 1%, mainly due to relatively high prices early in the year. Coal demand will be only slightly higher than in 2024, with a growth rate of about 0.4%. Coal power usage in China is falling due to rapid renewable expansion, while India’s coal power demand has weakened because of an early and long monsoon season.

Growth in global energy-related carbon dioxide emissions will slow further, with a rise of about 0.4% in 2025. IEA estimates that since 2019, the large-scale deployment of clean energy technologies will cumulatively reduce fossil fuel demand by more than 35 exajoules in 2025, which is about 7% of global annual fossil fuel consumption, and will cut carbon dioxide emissions by about 3 billion tons annually.

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