Renewable energy development must accelerate and electricity grids need urgent reinforcement to meet growing energy demand and climate challenges, the International Energy Agency (IEA) said in its World Energy Outlook 2025 released on Tuesday.
The report, issued amid ongoing geopolitical and market volatility, projects renewables as the only major energy source to expand across all scenarios, with solar photovoltaics leading the global transition.
“When we look at the history of the energy world in recent decades, there is no other time when energy security tensions have applied to so many fuels and technologies at once – a situation that calls for the same spirit and focus that governments showed when they created the IEA after the 1973 oil shock,” said IEA Executive Director Fatih Birol.
Global electricity demand is rising faster than total energy consumption, driven by electrification, urbanisation, and data growth. Spending on electricity generation and end-use electrification now represents about half of total global energy investment. However, investment in grid infrastructure has lagged behind generation growth, creating bottlenecks for future renewable expansion.
The report notes that by 2035, 80% of global energy consumption growth will occur in regions with high-quality solar irradiance, reinforcing solar PV’s central role. “Last year, we said the world was moving quickly into the Age of Electricity – and it’s clear today that it has already arrived,” Dr Birol added. “Global investment in data centres is expected to reach $580 billion in 2025… this surpasses the $540 billion being spent on global oil supply.”
Nuclear energy is also projected to expand, with global capacity expected to increase by at least a third by 2035, supported by both large-scale and small modular reactors.
The outlook highlights emerging risks in critical mineral supply chains, where a single country dominates refining for 19 of 20 energy-related strategic minerals, including nickel and cobalt, with average market shares around 70%.
While oil and gas supplies remain sufficient in the near term, the IEA warned markets remain vulnerable to geopolitical disruptions and uncertain demand, despite an expected 50% increase in LNG supply by 2030, including around 150 bcm from the United States.
The report also emphasises gaps in energy access and climate targets, noting that roughly 730 million people still lack electricity and nearly 2 billion rely on polluting cooking methods. A new scenario outlines pathways to universal electricity access by 2035 and clean cooking by 2040.
The IEA stressed resilience remains critical: disruptions to energy infrastructure in 2023 affected more than 200 million households, with transmission and distribution grid damage accounting for around 85% of incidents.
