Renewables are set to dominate the growth of the world’s electricity supply over the next three years as together with nuclear power they meet the vast majority of the increase in global demand through to 2025, according to a new IEAreport.
The IEA’s Electricity Market Report 2023 noted that the power demand after slowing slightly to two per cent in 2022 amid the turmoil of global energy crisis and exceptional weather conditions in some regions, the growth in world electricity demand is expected to accelerate to an average of three per cent over the next three years.
The report mentioned that emerging and developing economies in Asia are the driving forces behind this faster pace, which is a step up from average growth of 2.4% during the years before the pandemic.
Noting that Renewables and nuclear energy will dominate the growth of global electricity supply, the IEA report stated that China accounts for more than 45% of the growth in renewable generation in the period 2023-2025, followed by the EU with 15%. It also mentioned that the increase in nuclear output results from an expected recovery in French nuclear generation as more plants complete their scheduled maintenance, and from new plants starting operations, largely in Asia.
RISE IN DEMAND
The IEA said that electricity demand in India and the United States rose, while Covid restrictions affected China’s growth. China’s zero-Covid policy weighed heavily on its economic activity in 2022, and a degree of uncertainty remains over the pace of its electricity demand growth. The report estimated it to be 2.6% in 2022, substantially below its pre-pandemic average of over 5% in the 2015-2019 period.
With respect to India, the report said that the demand rose by a strong 8.4% in 2022, due to a combination of its robust post pandemic economic recovery and exceptionally high summer temperatures. The United States recorded a significant 2.6% demand increase in 2022, driven by economic activity and higher residential use to meet both heating and cooling needs amid hotter summer weather and a colder-than-normal winter.
“The world’s growing demand for electricity is set to accelerate, adding more than double Japan’s current electricity consumption over the next three years,” said IEA Executive Director Fatih Birol. “The good news is that renewables and nuclear power are growing quickly enough to meet almost all this additional appetite, suggesting we are close to a tipping point for power sector emissions. Governments now need to enable low-emissions sources to grow even faster and drive down emissions so that the world can ensure secure electricity supplies while reaching climate goals.”
DECLNE IN EU
The report said that European Unionrecorded a sharp 3.5 per cent decline year-on-year in 2022 with respect to electricity consumption. High energy prices led to significant demand destruction among industrial consumers and exceptionally mild winter added further downward pressure on electricity consumption. The report stated that this was EU’s second largest percentage decrease in electricity demand since the global financial crisis in 2009 – with the largest being the exceptional contraction due to the Covid-19 shock in 2020.
NATURAL GAS AND COAL
Global electricity generation from both natural gas and coal is expected to remain broadly flat between 2022 and 2025. While gas-fired generation in the European Union is forecast to decline, significant growth in the Middle East will partly offset this decrease, the report noted. It also stated that drops in coal-fired generation in Europe and the Americas will be matched by a rise in Asia Pacific.
China’s share of global electricity consumption is forecast to rise to one-third by 2025, compared with one-quarter in 2015. Over the next three years, more than 70% of the growth in global electricity demand is set to come from China, India and South-east Asia combined.
The new IEA report notes that electricity demand and supply worldwide are becoming increasingly weather dependent, with extreme conditions a recurring theme in 2022. In addition to the drought in Europe, there were heat waves in India, resulting in the country’s highest ever peak in power demand. Similarly, central and eastern regions of China were hit by heat waves and drought, which caused demand for air conditioning to surge amid reduced hydropower generation in Sichuan province. The United States also saw severe winter storms in December, triggering massive power outages.