IEA: Renewables and artificial intelligence are rapidly changing the world’s energy future
The International Energy Agency (IEA) says renewables and artificial intelligence are reshaping the world’s energy future, and that the transformation is happening faster than anyone expected. The IEA warns in its new “World Energy Outlook 2025” that energy security risks now extend far beyond oil and gas. Critical minerals essential to clean technology, defense and artificial intelligence have become new fault lines in global supply chains. The IEA also states that energy has become central to geopolitical power struggles, making it one of the defining economic and security challenges of our time.
A more complex, electrified future
The IEA’s annual “World Energy Outlook” explores three possible future scenarios, stressing that none of them are predictions. Instead, they are road maps that show what could happen depending on the choices governments and industry make about policy, technology and investment.
One theme stands out in each scenario: demand for electricity is growing faster than any other form of energy. Electricity currently accounts for only about 20% of global energy consumption, yet powers more than 40% of the global economy. Fatih Birol, executive director of the IEA, said the trend was accelerating: “Last year we said the world was moving rapidly into the age of electricity – and today it is clear that it has already arrived.”
This growth is driven by data centers, artificial intelligence and electrification in transport, heating and manufacturing. Global investment in data centers alone is expected to reach $580 billion in 2025—even more than the $540 billion the world spends on oil supplies.
Shifting global energy dynamics
Emerging economies led by India and Southeast Asia are now shaping energy markets once dominated by China. These regions are experiencing a rapid increase in demand for energy, mobility and industrial energy use. By 2035, 80% of the growth in global energy consumption is expected to come from countries with high solar potential.
At the same time, the IEA warns that grid expansion and storage are not keeping pace with this growth. While investment in power generation has jumped nearly 70% since 2015, spending on transmission and distribution has grown at less than half the rate. The agency is calling for urgent grid upgrades and stronger government coordination to avoid future electricity bottlenecks.
Renewables and nuclear power on the rise
Solar leads in all IEA scenarios, with renewables growing faster than any other energy source. Nuclear power is also making a comeback: after two decades of stagnation, global nuclear capacity is projected to increase by at least a third by 2035, thanks to both large-scale projects and the construction of small modular reactors.
Dave Jones, principal analyst at global energy think tank Ember, said: “The world is moving in the right direction and continued acceleration can lead to a faster transformation of the energy system. Renewables and electrification will dominate the future – and fossil-importing countries will gain the most by embracing them.”
Energy access and climate urgency
The IEA highlights two critical areas where the world is falling behind: universal access to energy and climate goals. Roughly 730 million people still live without electricity, and nearly 2 billion rely on polluting cooking methods. Even in the agency’s most ambitious paths, global temperatures will exceed 1.5°C of warming before potentially falling back below that level later in the century.
Meanwhile, the effects of climate change are already disrupting energy systems. In 2023 alone, more than 200 million households worldwide were affected by power infrastructure failures, with transmission lines accounting for about 85% of incidents. The IEA says governments need to prioritize resilience not only against extreme weather, but also against cyber attacks and supply chain shocks.
Birol summed it up: “When we look at the history of the energy world in recent decades, there is no other time when energy security tensions have been applied to so many fuels and technologies at once. As energy security is at the forefront of many governments’ minds, their responses must take into account the synergies and trade-offs that may arise with other policy objectives – affordability, access, competitiveness and climate change.”
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