Global electricity demand is rising at its fastest rate in years, propelled by robust economic growth, intense heat waves, and the increasing use of electric technologies such as EVs and heat pumps. The International Energy Agency (IEA) predicts this surge will continue through 2024 and 2025, driven by significant contributions from renewable energy sources, particularly solar PV. This trend underscores the critical role of clean energy in meeting future power needs and mitigating climate change.
KEY FINDINGS
Rapid Growth in Electricity Demand
According to the IEA’s Electricity Mid-Year Update, global electricity demand is forecast to grow by around 4% in 2024, up from 2.5% in 2023. This marks the highest annual growth rate since 2007, excluding the exceptional rebounds post-global financial crisis and Covid-19 pandemic. The robust growth is set to continue into 2025, with another 4% increase expected.
Renewable Energy’s Ascendancy
Renewable energy sources are expanding rapidly, with their share of global electricity supply projected to rise from 30% in 2023 to 35% in 2025. For the first time, the amount of electricity generated by renewable in 2025 is expected to surpass that generated by coal. Solar PV alone is anticipated to meet roughly half of the growth in global electricity demand over 2024 and 2025, with solar and wind combined accounting for up to three-quarters of the increase.
Coal’s Persistent Role
Despite the sharp rise in renewable energy, coal’s role in global power generation is unlikely to decline significantly in 2024 due to strong demand growth, especially in China and India. Consequently, CO2 emissions from the global power sector are plateauing, with a slight increase projected in 2024 followed by a decline in 2025. However, improved hydropower production in China could curb coal-fired power generation and reduce emissions slightly in 2024.
REGIONAL DEMAND HIGHLIGHTS
India and China
India’s electricity demand is expected to surge by 8% in 2024, driven by strong economic activity and severe heat waves. China is also set for significant demand growth of over 6%, fuelled by robust activity in the services sector and industrial sectors, including clean energy technology manufacturing.
United States
In the U.S., electricity demand is forecast to rebound by 3% in 2024 following a decline in 2023 due to mild weather. This rebound is attributed to steady economic growth, increased cooling demand, and the expanding data centre sector.
European Union
The EU is expected to see a more modest recovery in electricity demand, with growth forecast at 1.7% following two consecutive years of contraction amid the energy crisis impacts.
CHALLENGES AND OPPORTUNITIES
Heat waves and Cooling Demand
Heat waves have significantly increased electricity demand, straining power systems in multiple regions. The growing use of air-conditioning will continue to be a major driver of electricity consumption.
AI and Data Centres
The rise of artificial intelligence (AI) is drawing attention to the electricity demand of data centres. The IEA emphasizes the need for reliable data and better stocktaking measures to understand the electricity consumption trends in this sector. The agency has launched a new initiative, Energy for AI & AI for Energy, to explore the links between the energy sector and digitalization.
Keisuke Sadamori, IEA Director of Energy Markets and Security, highlights the importance of clean energy’s growing share in the electricity mix, stressing the need for faster expansion to meet international energy and climate goals. Reinforcing and expanding power grids, along with implementing higher energy efficiency standards, are crucial to ensuring a secure and reliable electricity supply.
As the world navigates the challenges of increasing electricity demand and climate change, the transition to renewable energy sources like solar PV will be vital. The IEA’s report provides a roadmap for understanding and addressing these complex dynamics, paving the way for a sustainable energy future.