Global electricity demand set to rise strongly this year and next, reflecting its expanding role in energy systems around the world.

The latest report from the IEA predicts that the growth in global electricity demand for 2024 and 2025 will be among the highest in the past 20 years, with solar photovoltaic (PV) systems expected to account for about half of this increase. The rise in electricity demand is attributed to strong economic growth, extreme heatwaves, and the growing use of electric technologies such as electric vehicles (EVs) and heat pumps. At the same time, renewable energy sources are expected to continue their rapid growth, with solar PV anticipated to set new records.

The IEA’s Electricity Mid-Year Update forecasts a global electricity demand increase of around 4% in 2024, up from 2.5% in 2023. This would be the highest annual growth rate since 2007, excluding the exceptional rebounds seen after the global financial crisis and the Covid-19 pandemic. The report also predicts that this strong growth will continue into 2025, with another 4% increase expected.

Renewable energy sources are projected to expand quickly in the coming years, with their share of global electricity supply expected to rise from 30% in 2023 to 35% by 2025. For the first time, the amount of electricity generated by renewables is expected to surpass that produced by coal in 2025. Solar PV alone is expected to cover about half of the increase in global electricity demand over 2024 and 2025, while solar and wind together are expected to meet up to three-quarters of this growth.

Despite the rapid expansion of renewables, coal power generation is unlikely to decrease this year due to high demand, particularly in China and India. Consequently, carbon dioxide (CO2) emissions from the global power sector are expected to stabilize, with a slight rise in 2024 followed by a decrease in 2025. However, uncertainties remain, such as the potential for increased Chinese hydropower production to reduce coal-fired power and emissions.

Several major economies are experiencing significant rises in electricity demand. India’s demand is anticipated to increase by 8% this year due to strong economic growth and intense heatwaves. China is expected to see a rise of more than 6% in demand due to robust activity in services and industrial sectors, including the clean energy technology industry.

In the United States, after a decline in 2023 due to mild weather, electricity demand is projected to grow by 3% this year driven by steady economic growth, rising cooling needs, and a growing data center sector. In contrast, the European Union will experience a more modest 1.7% growth following two years of contraction due to the energy crisis.

The report notes that increased use of air conditioning is a significant factor driving electricity demand, especially during heatwaves.

Keisuke Sadamori, IEA Director of Energy Markets and Security, remarked that the anticipated growth in global electricity demand over the next two years is set to be among the fastest in the past two decades, reflecting the increasing role of electricity in economies and the impact of severe heatwaves. He emphasized the need for a faster increase in clean energy's share of the electricity mix and the importance of strengthening grids and implementing higher energy efficiency standards.

With the rise of artificial intelligence (AI), there is growing concern about the electricity demand of data centers, highlighting the need for improved data collection and analysis. The IEA has launched a new initiative, "Energy for AI & AI for Energy," to address these challenges, including a Global Conference on Energy and AI scheduled for December 5, 2024, in Paris.

Source: IEA