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Demand for Energy Services Will Continue to Rise

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Source: Economic DailyAuthor: Wang Baokun
Recently, the International Energy Agency (IEA) released the World Energy Outlook 2025 report, which emphasizes that over the next few decades, global demand for energy services—especially electricity—will continue to grow. Demand for energy in transportation, heating, cooling, lighting, and other household and industrial uses will rise rapidly. At the same time, energy supply required for data and artificial intelligence (AI)-related services will also increase significantly.
Electricity is the lifeblood of modern industry and the digital economy. Currently, electricity accounts for only 20% of global end-use energy consumption, but it supports more than 40% of the global economic output and serves as the core energy guarantee for most households. In the foreseeable future, the growth rate of global electricity demand will be much higher than that of total energy consumption. This is already evident in current global energy investments: investments in electricity supply and end-use electrification account for 50% of total global energy investments.
The IEA’s analyses over the years have consistently highlighted the increasingly important role of electricity in the global economy. Fatih Birol, Executive Director of the IEA, pointed out that unlike the trend over the past decade, the growth in electricity consumption is no longer limited to emerging and developing economies. The surge in electricity demand driven by data centers and AI has also significantly boosted electricity consumption in developed economies worldwide. Global investment in data centers is expected to reach $580 billion in 2025, exceeding the $540 billion investment in global oil supply—reflecting a profound transformation in the global economic pattern.
The report notes that the core of energy security in the electric age lies in the progress speed of power grid construction, energy storage facilities, and the allocation of other flexible resources for power systems. However, most countries still lag behind in the development of these areas. Since 2015, global investment in power generation has surged by nearly 70%, but the annual growth rate of investment in power grids is less than half of that.
The report shows that renewable energy, led by photovoltaic (PV) power, is growing faster than other major energy sources. By 2035, 80% of the global growth in energy consumption will occur in regions with high-quality solar irradiation. At the same time, the global nuclear power industry is accelerating its recovery: after more than 20 years of stagnation, it is predicted that global nuclear power installed capacity will increase by at least one-third by 2035. Meanwhile, investments in both traditional large-scale nuclear power plants and new designs such as small modular reactors (SMRs) will maintain dual-line growth.
The report predicts that in the short term, global oil and gas supply will be relatively abundant, and oil prices will stabilize in the range of $60 to $65 per barrel. As new liquefied natural gas (LNG) export projects are put into operation one after another, the contradiction between supply and demand in the natural gas market will also show a moderate trend. However, the recent balance of the international oil and gas market still faces tests from geopolitical risks. If the pace of global energy transition policies slows down or lower oil and gas prices stimulate demand growth, the existing buffer space may narrow rapidly.
The report points out that the final investment decisions for new global LNG projects will increase in 2025. It is expected that by 2030, new LNG export facilities with an annual capacity of approximately 300 billion cubic meters will be put into operation, and global LNG supply will increase by 50%. Although natural gas demand is expected to grow, such a significant increase in LNG production capacity may lead to oversupply in the market.
Notably, the report predicts that oil and natural gas will continue to play an important role in the evolution of energy in the future. Under current policy conditions, the demand for oil and natural gas will not peak until 2050, and oil will remain the most important fuel. As the growth rate of demand for oil and natural gas in developed economies slows down, emerging economies represented by India and Southeast Asia, together with developing countries in the Middle East, Africa, and Latin America, will contribute most of the global growth in oil and natural gas demand in the coming years and may gradually reshape the pattern of the international energy market.
The report states that amid the transformation of the international energy market and the turbulence of the international political landscape, in addition to traditional energy security risks such as oil and gas supply, the vulnerability in the field of other critical mineral resources is particularly prominent. In response, Birol said that looking back at the history of energy development in recent decades, there has never been a period like the present, where energy security pressures from so many fuels and technologies are faced simultaneously.


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