In the past three years, electricity generation projections have evolved in response to shifts in electrification of end-use sectors, industrial development, and growth in new industries such as AI. While global generation projections increased (Figure 8), the distribution of those increases varies across regions. Figure 23 compares power generation projections from IEA and IEEJ in 2022 and 2025 for China, India, the European Union, North America, and the Rest of the World.
Since the 2022 outlooks were published, policies and economics have diverged across regions. In the United States, federal policy to support deployment of renewables and the electrification of transportation and buildings has been significantly reduced. Volatile trade policy may also lead to shifting trade flows and associated industrial activity over time. Policies in China and the European Union continue to advance electrification, and China has experienced significant electric vehicle price reductions in the past two years, accelerating adoption.42 Across regions, the computational needs associated with AI remain a significant source of uncertainty for electricity demand growth.
IEA STEPS captures the acceleration of generation growth across regions, revising its 2050 projections upward by over 5,000 TWH for China (37.3 percent increase), 1,000 TWH for the European Union (30.5 percent increase), and 1,000 TWH for the Rest of the World (7 percent increase), relative to its 2022 projections. The IEEJ’s Reference scenario also increased its 2050 projections for China by about 2,500 TWH (22.5 percent increase), though it foresees only a minor increase for the European Union. The IEEJ makes upward adjustments to generation for North America and India, with 2050 levels roughly 12 percent higher in 2025 relative to its 2022 projections.
The only two downward revisions are for North America under IEA STEPS (0.7 percent) and the Rest of the World under IEEJ Reference (1.2 percent), though these decreases are the smallest magnitudes of any changes. Compared with 2022 projections, IEA’s 2025 STEPS projections for North American show less electricity going to transportation (15.6 percent decrease), industry (5 percent decrease), and other uses (1 percent decrease), while consumption in buildings is 10.9 percent higher. These differences from IEA STEPS correspond to a net increase in anticipated electricity demand (1 percent) from end users in North America, in contrast to the anticipated reduction in North American electricity generation in the same scenario. We were unable to trace the driver of this gap in the model documentation. These changes align with data center demand rising while transport and industrial electrification slows down in the United States, the largest subregion of North America.