INDUSTRY REPORT rising consumption from industry, electric vehicles, air conditioning and data centres. Worldwide electricity demand grew by 3 % year-on-year in 2025. This followed growth of 4.4 % in 2024, when intense heat waves and strong industrial activity in many regions boosted electricity use. Looking ahead, annual demand growth over the next five years is set to be 50 % higher on average, compared to the average across the previous decade,” highlighted the IEA.
“ Rising global electricity consumption driven by urbanisation, industrialisation and digital transformation is accelerating investments in new power generation capacity. Countries are expanding their generation mix through the integration of renewable energy sources such as solar, wind and hydropower, alongside conventional sources such as coal, natural gas and nuclear energy. Ageing power infrastructure in several regions is further driving modernisation efforts, including the deployment of smart grids, distributed energy resources and advanced energy storage systems to enhance grid stability and ensure uninterrupted power supply across developed and emerging economies,” added Grand View Research.
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Energy price volatility
Energy often represents a major operating expense for SMEs and larger firms. Price increases and market volatility can hit manufacturers hard, especially SMEs.
“ In 2022, when Russia’ s fullscale invasion of Ukraine led to sharply higher fuel costs, 8 % of SMEs in the European Union reported that declines in productivity and revenue threatened their survival. In the same survey, many SMEs reported absorbing rising energy costs by accepting lower profits( 58 %) or raising consumer prices( 52 %). These pressures can ripple through employment, supply chains, local economies and household purchasing power worldwide,” outlined the IEA.
The impacts of energy price volatility continue to be felt today, with manufacturers once again facing rising costs amid the current energy crisis. This is particularly challenging for businesses that already operate on thin profit margins.
“ Surveys conducted following disruptions to oil and gas flows through
Image: Shutterstock. com.
Global electricity demand is forecast to increase at a brisk average annual rate of 3.6 % over the 2026-2030 forecast period the Strait of Hormuz show that these renewed price pressures are affecting SMEs across multiple regions. One survey found that almost half of business leaders in the United States say that current energy costs are affecting their operations, with 13 % describing the impact as significant. Meanwhile, more than 80 % of SMEs surveyed in Malaysia said that they faced double-digit cost increases and stalling demand, while over 20 % of SMEs surveyed in Thailand reported being at risk of permanent closure within three months,” continued the IEA.
As energy technology deployment
accelerates against the backdrop of a rapidly changing geopolitical environment, governments are presented with an evolving array of security concerns and tradeoffs. Energy, trade and industrial policies are increasingly intertwined, with governments seeking to balance the affordability and speed of deployment against concerns around geographic concentration of manufacturing and economic security.
“ Cross‐border trade has supported the rapid scaling of these energy technologies, even as trade policies affecting them have become more restrictive. Tariffs, duties, anti-dumping measures, local-content provisions and subsidy regimes have proliferated, tightening trade conditions and reshaping trade patterns,” added the IEA.
These changes have coincided with stronger policy efforts aimed at supporting domestic manufacturing, particularly in downstream segments close to the final consumer, such as solar PV module assembly and battery cell manufacturing, where scale‐up can often be achieved more quickly.
Energy efficiency
“ While SMEs are particularly exposed to high and volatile energy prices, relatively few adopt energy efficiency measures that can reduce this exposure. For example, only 15 % of smaller companies surveyed by us in 2025 had implemented an energy audit compared to 40 % of large companies, with only a quarter of SMEs investing in digital technologies compared to over 50 % of larger companies,” highlighted the IEA.
“ When SMEs do invest in efficiency, the returns can be substantial.
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