The El Niño energy impact is expected to become increasingly significant as a strong event develops through 2026 and potentially extends into 2027. Rising temperatures, prolonged droughts, shifting rainfall patterns and more frequent extreme weather events are set to affect renewable electricity generation, increase cooling demand and place additional pressure on global energy systems.
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The El Niño energy impact is becoming an increasingly important factor for the global energy sector as the climate pattern drives major shifts in weather conditions across different regions of the world.
El Niño can trigger heatwaves and droughts in some areas, while bringing heavier rainfall or cooler weather to others, alongside a rise in global temperatures. According to the World Meteorological Organization, the 2026 El Niño event is expected to be particularly intense, potentially extending into 2027 and increasing the likelihood of extreme weather events.
For the energy sector, these changes directly influence gas demand as well as solar, wind and hydropower generation. Variations in cloud cover, wind speeds, precipitation and snowmelt all have a direct effect on renewable electricity production.
The 2023-2024 El Niño event reduced wind power generation across the central United States and lowered solar electricity production in California. It also curtailed hydropower output in China and India, while that winter became the warmest ever recorded across the contiguous United States.
How El Niño affects international energy trade
El Niño also has important implications for global energy trade. The Panama Canal relies on freshwater reservoirs, particularly the artificial Lake Gatun, to manage vessel transit. Severe drought conditions across the region during 2023-2024, partly driven by El Niño, forced the Panama Canal Authority (ACP) to introduce restrictions on the size of vessels allowed to pass through the waterway.
As a consequence, many LNG carriers bound for Asia were forced to reroute around the Cape of Good Hope or travel eastwards through the Suez Canal, extending delivery times by two to three weeks. Current restrictions are less severe than those imposed during 2023-2024. The maximum authorised draft is currently around 14.9 metres, although this will be reduced to 14.5 metres on 15 August.
El Niño energy impact on solar power generation
According to Wood Mackenzie, solar power conditions are expected to remain favourable during autumn across the United States east of the Rocky Mountains, the Iberian Peninsula and the Middle East, during winter in Western Australia, and during spring across north-eastern South America and India. Overall, however, El Niño is expected to have a predominantly negative impact on solar generation worldwide.
Scientists have demonstrated that El Niño events reduce surface solar irradiance, creating prolonged generation deficits in regions where solar deployment has expanded rapidly, including California, the southern Atacama Desert, the Chaco Basin, the Middle East and eastern China.
The effects become particularly severe during the rare Super El Niño events. Only three such events have occurred since the early 1980s. According to scientific research, these exceptionally intense episodes significantly reduce photovoltaic generation, increase reliance on fossil fuel backup generation and lead to additional carbon dioxide emissions amounting to tens of millions of tonnes.
El Niño drives higher cooling demand
As highlighted by the International Energy Agency (IEA), cooling degree days are increasing worldwide, with many regions experiencing faster growth than during the previous 2023-2024 El Niño event. This indicator measures accumulated daily temperatures above a defined threshold and provides an estimate of the energy required to cool buildings.
By 2024, cooling degree days in China and Europe were approximately 25% higher than in 2020. In Japan and South Korea, they were almost 50% higher. According to the IEA, heatwaves influence cooling demand in two distinct ways. First, they increase the use of air conditioning, as households and businesses rely more heavily on cooling during periods of extreme heat. Second, they accelerate sales of new air conditioning units, permanently expanding installed cooling capacity and creating a long-term structural increase in electricity demand.
Based on current projections, global cooling demand is expected to increase by 1,600 terawatt-hours by 2035, equivalent to the combined annual electricity consumption of Japan and South Korea. Assuming a strong El Niño event develops during 2026-2027, the IEA has revised its projections upwards, estimating that cooling demand will require an additional 700 terawatt-hours of electricity by 2035. More than 60% of this extra demand would result from the installation of new air conditioning systems, while the remainder would come from increased use of existing units.
