Global power markets in 2026 are confronting unprecedented complexity as countries worldwide grapple with surging electricity demand and heightened energy security concerns, according to analysis from Wood Mackenzie. While most nations face broadly similar challenges and opportunities, they are pursuing distinctly different approaches tailored to their specific circumstances. Electricity demand continues to expand driven by industrialisation, electrification and rapid data centre buildout.
However, infrastructure in many markets is struggling to keep pace with this growth. Simultaneously, the Middle East conflict has intensified energy security concerns, threatening to structurally reshape market dynamics globally. In North America, record demand growth is spurring unprecedented investment across the power sector.
The US forecasts 3.2% annual sales growth through 2035, with approximately two-thirds of this expansion coming from data centres. Canada is experiencing somewhat lower growth at 2.2% for the same period, though this represents a notable increase from the 1.5% predicted in previous outlooks. The current US administration's support for natural gas means the fuel is expected to contribute 52% of incremental generation through 2035, despite rising emissions across major US markets.
However, grid constraints and policy fragmentation remain limiting factors, with tensions between speed to power delivery and affordability driving ongoing reforms across regional markets. Europe's power demand is set to expand by 66% by 2050 as electrification accelerates across the continent. Data centre buildout is the primary near-term demand driver, with EV adoption expected to increase electricity demand 15-fold by 2050, while heat pump deployment will expand fivefold though falling short of national targets in most markets.
Meeting this demand will require over 1,400 GW of net new PV and wind capacity by mid-century. Battery storage is projected to surge tenfold to 470 GW by 2050 as variable renewables penetration rises from 28% to 68% of the power mix. However, Europe's ambitions will largely fall short of official targets.
Wood Mackenzie projects the renewables share of generation at just below 64% by 2030, compared to the REPowerEU goal of 69%. Zero-carbon power's share of the mix is set to reach 93% by 2050, with coal fully exiting the EU27 power mix at the start of the 2040s. Latin America's Southern Cone region faces constrained demand growth and diverging national energy trajectories.
Weak investment and limited macroeconomic policy space signal modest GDP growth and lower projections for data centre buildout across Argentina, Bolivia, Brazil and Chile, resulting in electricity demand growth below the global average. Renewables are advancing across the region, underpinned by low capital costs and policy support, with solar and wind driving the majority of new capacity through 2060. Battery storage is emerging as the region's fastest-growing technology.
Renewables are projected to exceed 55% of installed capacity in Bolivia by 2060, while in Brazil, water availability for hydro generation remains the primary driver of price uncertainty. Asia Pacific will see the highest electricity demand growth of any global region in the coming decades. Driven by ongoing industrialisation, economic expansion and urbanisation in developing economies, particularly in China, India and Southeast Asia, APAC will account for nearly three-quarters of overall global demand growth to 2035.
China's total power demand exceeded 10,000 terawatt hours in 2025, making it the first country to reach this milestone. Wind and solar already represent 47% of China's power capacity, projected to rise to 84% by 2060 and deliver 73% of generation. As renewables penetration deepens, energy storage will expand at an annual rate of 8.5% to provide flexibility.
Australia's power system is set to triple its capacity by 2060, driven by structural demand growth from electrification, industrial decarbonisation and data centres. Solar is now the country's largest capacity source, though renewable deployment is expected to lag the ambitious target of 82% renewable generation by 2030 due to grid connection, transmission and project delivery constraints. Across all regions, the analysis draws on proprietary data from Wood Mackenzie's Lens Power & Renewables solutions, compiled by analysts from regional research teams including Brian Gaylord (Principal Analyst, Integrated Research Team - Power & Renewables), Marina Azevedo (Senior Power Analyst), Siddhant Warrier (Research Analyst, North American Power), Xiaoyang Li (Director - Lead of China Power and Renewables Research), Shiyu Li (Research Associate - Australia Power and Renewables Research) and Yanqi Cao (Principal Analyst - Lead of Southeast Asia Power and Renewables Research).
Source: woodmac.com