Global growth in electricity demand will ease this year, as EU and USA use less electricity amid the energy crisis and an economic slowdown, according to the International Energy Agency’s latest Electricity Market Report.
The IEA’s July update to its Electricity Market Report suggests that electricity demand is falling in the United States, the EU and Japan despite the wider energy transition driving greater electrification.
In the USA electricity demand is set to be almost 2% less in 2023 than 2022, and in Japan it will fall 3%. The EU, having seen a drop in electricity use in 2022 already, will use 3% less again this year. That will put EU electricity consumption down to levels last seen in 2002.
Global electricity demand will not fall, however, due to rising demand across the rest of the world. That growth will now be slightly less than 2% this year, down from 2.3% last year. Projections for an economic upturn next year suggest that electricity demand will grow globally by 3.3%.
The IEA report sets out reasons to expect electricity growth to resume over the long term. These include the growing economic development of countries across Africa and Asia, rising use of indoor cooling to mitigate rising global temperatures, and gradual electrification of sectors like transport as the world seeks to reduce carbon emissions.
The rise of India is also expected to drive up electricity demand. China’s demand is forecast to increase at an average annual rate of 5.2% over the next two years, which is slightly below its 2015-19 average. But in India, average annual growth is rising to 6.5%, well above its historic trend.
Carbon impact
The IEA report is relatively positive about the carbon prospects amid rising electricity demand because the increasingly strong deployment of renewables worldwide should meet all the additional growth in global electricity demand over the next two years. By 2024, renewables’ share of global electricity generation will exceed one-third and, depending on weather conditions, 2024 could well become the first year in which more electricity is generated worldwide from renewables than from coal.
At the same time, electricity generated from fossil fuels is expected to decline over the next two years. Electricity generated from oil is projected to fall significantly, while coal-fired generation will slightly decline in 2023 and 2024, after rising 1.7% in 2022.
Keisuke Sadamori, the IEA’s director for energy markets and security.“The world’s need for electricity is set to grow strongly in the years to come. The global increase in demand through 2024 is expected to amount to about three times the current electricity consumption of Germany. And we’re encouraged to see renewables accounting for a rising share of electricity generation, resulting in declines in the use of fossil fuels for power generation. Now is the time for policy makers and the private sector to build on this momentum to ensure emissions from the power sector go into sustained decline.”
In another sign the energy transition is taking hold, the IEA now sees electricity generated from fossil fuels falling in four out of the six years between 2019 and 2024. In the past, annual declines in fossil-fired generation were rare and occurred primarily after global energy and financial shocks, when global electricity demand was suppressed. But in recent years, electricity generated from fossil fuels has lagged or fallen even when electricity demand expanded.
That indicates the world is rapidly moving towards a tipping point in which global electricity generation from fossil fuels will increasingly be replaced by electricity from clean energy sources, the report finds.
To read the IEA report, click here.
