Global energy demand is rising fast enough to turn the energy transition into a broader “energy expansion”, according to a new McKinsey analysis which identifies grid infrastructure as an increasingly important constraint on decarbonisation.
The consultancy’s Global Energy Perspective 2026, published on 30 September, says global energy demand grew by 2.7% in 2025, with oil, gas, coal and renewables all increasing simultaneously. The report examines a wider range of possible outcomes than previous editions, reflecting uncertainty over geopolitics, artificial intelligence, technology costs and economic growth.1
McKinsey argues that transmission networks, storage, firm generating capacity, permitting and grid interconnections will increasingly determine how quickly low-cost renewable generation can be translated into usable and reliable electricity.
Infrastructure readiness is already the most common binding constraint across the scenarios examined, according to the report. Where it fails to keep pace, electrification can stall even as renewable generation becomes cheaper.
Rapid growth in electricity consumption by data centres is one source of pressure. McKinsey describes data centres as the fastest-growing load segment in OECD power markets and, under its “Continued Momentum” scenario, projects their electricity demand will grow at a compound annual rate of 24% to 2030.
The longer-term trajectory is considerably less certain, however, with improvements in computing efficiency among the factors that could reduce future electricity requirements.
The analysis also highlights vulnerabilities created by increasingly electrified and digitised energy systems. McKinsey says energy security is becoming dependent not simply on access to fuels but on equipment, batteries, critical minerals, semiconductors, ports, grids and digital infrastructure.
Geopolitical fragmentation could meanwhile increase the cost of deploying some low-carbon technologies. Under the report’s “Fragmented Energy Order” scenario, rebuilding concentrated supply chains outside China could raise solar capital expenditure by 20–25% and battery-storage capex by 40–50% in the EU and US.
“The energy transition has become an energy expansion, with total energy demand up 2.7% and every major energy source growing simultaneously,” said Humayun Tai, senior partner and global leader of McKinsey’s Energy & Materials Practice.
The 2026 report uses four scenarios rather than attempting to identify a single most likely trajectory for the global energy system. These range from continued growth in fossil-fuel consumption to accelerated decarbonisation, and consider both greater international integration and increasing fragmentation.
The resulting differences can be substantial. Under McKinsey’s “Hydrocarbon Resilience” scenario, for example, global oil demand could approach 130 million barrels per day by 2035, with demand increasing by more than 2.5 million barrels per day annually over the next decade. This represents a high-growth scenario rather than a central forecast.
McKinsey says affordability and energy security are increasingly shaping investment decisions alongside decarbonisation. The consultancy argues that the widening range of possible outcomes makes scenario planning more important for businesses deciding where and when to allocate capital.
Diego Hernandez Diaz, a partner at McKinsey, said AI, geopolitical fragmentation and technology-cost breakthroughs were already visible but could develop “in very different ways over the next decade”.
The report consequently encourages companies to identify where their strategies become vulnerable under different energy-system scenarios and to monitor market signals that might warrant changes in investment.
Notes
[1] McKinsey & Company, Global Energy Perspective 2026, 30 September 2026.
