Electricity must reach 35% of global energy use by 2035 as grid investment doubles to $1 trilllion a year, IRENA says

Electricity must account for 35 per cent of global final energy consumption by 2035 and more than 50 per cent by 2050 if the world is to stay on a 1.5 degrees Celsius (°C)-compatible pathway, according to the International Renewable Energy Agency (IRENA).

In its latest report, Transitioning Away From Fossil Fuels: A Roadmap Powered by Renewables, Electrification and Grid Enhancement, IRENA warned that the world remains off track on climate goals despite rapid growth in renewable energy deployment.

Global renewable power capacity must rise to 18.4 terawatts by 2035 and 38.2 terawatts by 2050, the agency said. Annual grid investment must increase from about $0.5 trillion in 2025 to around $1 trillion a year between 2026 and 2035.

Francesco La Camera, director general of IRENA, said the global energy transition had entered “a decisive new phase” amid rising geopolitical tensions, market volatility and surging electricity demand from industrialisation, urbanisation and digitalisation.

Electrification, supported by renewable energy, modern grids and energy efficiency, could significantly cut fossil fuel demand across transport, buildings and industry, La Camera said. “The transition ahead is not simply about adding more clean energy capacity. It is also about redesigning energy systems to be more resilient, efficient, secure and inclusive,” he said.

Why the world is off track

The report was released in collaboration with the Brazilian Presidency of the 30th Conference of the Parties (COP30) to the United Nations Framework Convention on Climate Change, ahead of the Copenhagen Climate Ministerial. It  identified weak energy efficiency gains, inadequate grid infrastructure and uneven renewable deployment as major barriers to the transition.

Although 133 countries committed at COP28 in the United Arab Emirates (UAE) to triple renewable energy capacity and double energy efficiency improvements by 2030, current progress remains insufficient, IRENA said. Renewable additions reached 692 GW in 2025, including around 510 GW of solar photovoltaic capacity and 159 GW of wind power.

But deployment remains heavily concentrated, with China, the United States and the European Union accounting for more than 79.5 per cent of installed renewable capacity globally, according to IRENA. Energy efficiency improvements also remain below target.

Global energy intensity improved by only around 1 per cent during 2023 and 2024, far below the 4 per cent annual target, the report said. IRENA said at least 5 per cent annual improvement would now be required through 2030.

Grid bottlenecks and storage needs

Grid infrastructure has emerged as a major bottleneck in the energy transition, the agency said. Around 2,500 GW of wind, solar and storage projects are currently waiting in global grid connection queues, according to the report.

Without rapid expansion of transmission and distribution systems, electrification could increase congestion, curtailment and reliability risks, IRENA warned.

Grid infrastructure typically takes far longer to plan and build than renewable generation projects, creating a structural mismatch in deployment timelines, the report said. The transition away from fossil fuels would require integrated policy frameworks combining renewable deployment, electrification, energy efficiency, storage and sustainable fuels.

The agency called for faster renewable power deployment, large-scale expansion and modernisation of electricity grids, growth in storage and system flexibility, digitalisation and demand-side management. It also called for the phase-down of fossil fuel subsidies, stronger electrification incentives for transport, buildings and industry, concessional finance and de-risking mechanisms for developing economies, and investment in workforce training and technology transfer.

Installed global storage capacity must increase from 416 GW in 2025 to 2,530 GW by 2035 and 6,859 GW by 2050, according to the report. Battery costs have fallen from $2,571 per kilowatt hour in 2010 to $192 per kilowatt hour in 2024, a 93 per cent decline, IRENA said.

Global battery storage additions reached 74 GW in 2024, while investment rose 33 per cent year on year to a record $54 billion, the report said.

Buildings, industry and transport

Under IRENA’s revised 1.5°C scenario, electrification is expected to expand fastest in buildings. Electricity would account for 55 per cent of final energy use in buildings by 2035 and more than 75 per cent by 2050, according to the report.

Industry electrification would rise to around 35 per cent by 2035 and above 40 per cent by 2050, driven partly by green hydrogen for hard-to-abate sectors such as steel and cement, IRENA said. Transport electrification is projected to rise from just 1 per cent today to 15 per cent in 2035 and more than 45 per cent by 2050 through wider adoption of electric vehicles and buses, the report said.

However, some sectors, including aviation, shipping and heavy industry, will continue to need sustainable fuels and clean hydrogen where direct electrification remains difficult, IRENA said.

The report linked its recommendations to international climate initiatives including the COP28 UAE Consensus, the COP29 Global Energy Storage and Grids Pledge and the Belém Commitment for Sustainable Fuels launched by Brazil ahead of COP30.

The COP29 storage and grids pledge set targets to expand or refurbish more than 80 million kilometres of transmission lines by 2040 and raise global storage capacity to 1,500GW by 2030, the report said.

A coordinated global approach will be critical to ensure electrification policies, renewable deployment and infrastructure investments remain aligned with climate, energy security and economic development goals, IRENA said.