After years of stagnation in key developed markets, power demand is rising again at a pace not seen in decades as data centers, electrification, and industrialization drive a surge in electricity consumption.
The Age of Electricity, as the International Energy Agency (IEA) put it in its 2026 Electricity report, is gathering pace, changing long-term assumptions and forecasts about power markets in all regions, and posing new challenges for policymakers, power generators, and grid operators.
One common feature in the Age of Electricity is that power demand is rising everywhere in the world, driven by higher electrification rates and the AI and data center boom. But different countries and regions have taken different pathways to meet higher electricity demand, reshaping their regional power markets in different ways, analysts at Wood Mackenzie say.
Booming Power Demand
In the United States, electricity consumption set a new record high last year and is on track for new all-time highs this year and next, as the AI boom has ended America’s decade of stagnant power use.
This growth was mostly due to the data centers, as “data center load is emerging as the dominant driver of long-term U.S. electricity growth,” as the U.S. Energy Information Administration (EIA) said in its annual outlook earlier this year.Related: U.S. Threatens Diesel Export Ban Unless Europe Releases Stockpiles
Despite a pause in connecting new data center projects in Texas to the grid, the West South Central region will still account for the largest regional share of growth in total electricity sales, totaling nearly 20% of nationwide growth in 2026 and almost 40% in 2027, according to the EIA’s forecast in the Short-Term Energy Outlook (STEO) for September.
WoodMac’s analysts forecast 3.2% annual electricity sales growth in the U.S. through 2035, two-thirds of which will come from data centers. With the backing of the Trump Administration, gas remains a popular choice and will meet 52% of the increased power generation through 2035.
However, gas investment costs have hit a record high, and bottlenecks in gas turbine deliveries are complicating decisions to rely too much on gas-powered generation.
“The need for electrons must be balanced against the risk of stranded assets,” Wood Mackenzie’s power and renewables market analysts say.
“The tension between speed to power and affordability are spurring reforms across regional US power markets,” they added, but noted that state policy responses remain fragmented and there is no silver bullet to solving the challenge.
Power demand in Europe is also rising, due to the same global factors plus another major driver—the European Union’s decarbonization policies and drive to boost the share of renewables as a way to protect against geopolitical challenges to energy security, such as the lack of LNG supply from Qatar because of the Iran war and the disrupted traffic through the Strait of Hormuz.
By Tsvetana Paraskova
