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Asia Pacific will account for 85 per cent of global power demand growth in 2026, adding an estimated 790 terawatt hours (TWh) of electricity consumption, as data centres, policy shifts and supply-chain constraints reshape the region’s power and renewables landscape, according to a new report by Wood Mackenzie.
The consultancy’s Five Trends to Look for in Asia Pacific Power & Renewables report says that while 2025 was marked by record-breaking wind and solar installations, 2026 will be defined by market maturation, regulatory recalibration and emerging bottlenecks in conventional generation, particularly gas turbines.
“Data centres are no longer just a niche load; they are the primary driver of transformational demand across Asia Pacific,” said Yanqi Cao, Senior Analyst, Asia Pacific Power Research at Wood Mackenzie. “In markets like Japan, which have seen energy demand decline for a decade, data centres are single-handedly reversing the trend.”
The accelerating global race for artificial intelligence and cloud infrastructure is fundamentally altering electricity demand patterns. While the United States and Europe are expected to account for 9 per cent and 5 per cent of global power demand growth in 2026 respectively, Asia Pacific remains the dominant growth engine.
Wood Mackenzie estimates global electricity demand will rise by 920 TWh in 2026, with Asia Pacific contributing the bulk of the increase. China, the world’s largest power market, continues to expand at a scale twice that of the US, Europe and the rest of Asia Pacific combined. Outside China, India is expected to drive about 50 per cent of regional demand growth, followed by Southeast Asia at 25 per cent.
After years of rapid expansion, the region’s two largest renewable markets are entering what Wood Mackenzie describes as a “policy plateau.”
In China, solar and wind installations are expected to fall to 318 GW in 2026, potentially marking the first decline in a decade. New merchant pricing mechanisms under Policy No. 136 are exposing developers to greater spot-market risk, tempering near-term investment appetite.
In India, despite a record year for capacity additions in 2025, tendering activity has slowed as authorities address transmission congestion and execution risks. The report says 2026 will focus on “quality over quantity,” with new tenders increasingly mandating energy storage and grid flexibility.
Corporate power procurement is emerging as a structural shift across Asia Pacific. Corporate power purchase agreements (CPPAs), once marginal, are becoming the dominant model as costs fall and regulatory frameworks evolve.
Wood Mackenzie notes that wind-and-battery hybrid systems in China now cost roughly one-third of utility tariffs, while similar arrangements in Japan and Taiwan are about 30 per cent cheaper than grid power. In 2026, China will roll out full-scale Green Power Direct Connection, while Thailand and Vietnam advance direct PPA frameworks, allowing large consumers to bypass utilities.
A growing supply-chain constraint in conventional generation is emerging as a major risk. Global lead times for heavy-duty gas turbines have stretched to five to eight years, threatening project schedules beyond the late 2020s.
While most 2026 projects are already secured, Wood Mackenzie warns that failure to place orders this year could derail 2030 decarbonisation targets, particularly in Southeast Asia, where gas is seen as a critical bridge fuel away from coal. The risk is especially acute in markets such as Vietnam.
For land-constrained markets, including Singapore, Japan, and South Korea, 2026 will test the economic viability of low-carbon fuels. Despite heavy policy support, including Japan’s $20 billion hydrogen contracts-for-difference programme, green hydrogen and ammonia co-firing are expected to remain significantly more expensive than LNG through 2026.
Utilities such as JERA and Keppel are commissioning hydrogen-ready plants this year, but Wood Mackenzie cautions that long-term fuel supply costs remain a major uncertainty that markets are struggling to price.
The report places 2026 in contrast with 2025, when Asia Pacific added around 600 TWh of new electricity demand, built nearly 500 GW of wind and solar, and saw China consume more than 10 petawatt hours of electricity for the first time.
However, rising trade barriers, including tariffs, and mounting supply-chain constraints are now introducing new risks for economic growth and energy transition plans.
“2026 is not about how fast markets can grow,” Cao said. “It’s about whether policy, infrastructure and supply chains can keep pace with demand that is no longer optional, but structural.”