The IEA’s biannual Electricity Mid-Year Update provides the latest data for 2023 and new forecasts for 2024 and 2025 for global electricity demand, supply by fuel type, and carbon dioxide (CO2) emissions from the power sector. The update also analyses the latest developments in key markets including China, the United States, the European Union and India.
2024 and 2025
In 2024-25, global electricity consumption is expected to grow at the fastest pace in years, fueled by robust economic growth, intense heat waves and continued electrification worldwide. The projected growth of 4% for 2024 is the highest since 2007, except for the sharp rebounds in 2010 following the global financial crisis and in 2021 following the Covid-induced demand collapse. The growth is driven by strong demand for electricity in several regions and countries, notably in the People's Republic of China (hereinafter "China"), India and the United States.
The demand trend is expected to continue in 2025, with growth also of 4%. In both 2024 and 2025, the increase in global electricity consumption is expected to be significantly higher than the global GDP growth of 3.2%. In 2022 and 2023, electricity demand grew slower than GDP
Clean energy sources records
Clean energy sources set to set new records through 2025 Despite the sharp rise in electricity consumption, solar power alone is expected to provide about half of the growth in global electricity demand through 2025. Together with wind power generation, it will account for almost 75% of the increase.
Global electricity generation from solar PV and wind is expected to surpass that from hydropower by 2024. This follows a massive 33% year-on-year increase in global solar generation and continued 10% growth in wind power.
Total global renewable generation will overtake coal-fired electricity generation by 2025. The share of renewables in global electricity supply has increased to 30% in 2023 and is expected to increase further to 35% in 2025.
In the European Union, wind and solar photovoltaic generation will exceed fossil fuel generation in 2024. The combined share of wind and solar in total electricity supply is expected to increase from 26% in 2023 to 30% in 2024 and to 33% in 2025.
The main driver is the rapid growth of solar PV, led by lower prices of solar panels combined with strong policy support. The share of all renewables in total generation is expected to reach 50% in 2024.
Negative electricity prices
The increasing frequency of negative electricity prices leads to an urgent need to increase system flexibility By 2024, the frequency of negative wholesale prices will have increased significantly on many electricity markets.
In the first half of the year, the share of negatively priced hours in Southern California exceeded 20%, more than tripling from a year earlier. In some markets, such as South Australia, prices have been negative about 20% of the time since 2023.
Negative prices arise because generation is not flexible enough for technical, economic, contractual or regulatory reasons. They indicate that demand is not responding sufficiently to prices and that there is not enough storage available. The increasing frequency of negative prices sends an urgent signal that more flexibility of supply and demand is needed. Appropriate regulatory frameworks and market designs will be important to enable the introduction of flexibility solutions such as demand response and storage.
EU
Electricity demand in the European Union is expected to grow by 1.7% in 2024 as economic difficulties ease, but uncertainty remains over the pace of growth. Electricity consumption in the EU has shrunk in the previous two years, with the decline in output from energy-intensive industries a major driver.
From the fourth quarter of 2023, there are signs of a recovery in electricity demand in the EU. Growth picked up further in the first half of 2024 as energy prices stabilised and several industries that had previously curtailed their activities restarted. Although energy prices in Europe have fallen from previous highs, they are still high compared to pre-Covid levels.
This, combined with a fairly weak macroeconomic outlook, continues to weigh on some sectors and increases uncertainty about the pace of demand recovery.
US
Electricity demand in the United States is expected to rebound significantly in 2024, growing 3% year-over-year. This stronger growth rate is driven by an improved economic outlook and rising demand for air conditioning amid severe heat waves and a surge in data center expansions. Demand is expected to grow 1.9% in 2025.
China
China's electricity demand is expected to grow 6.5% in 2024, similar to the average between 2016 and 2019. It marks a modest slowdown from 7% in 2023 amid ongoing restructuring of the Chinese economy.
Electricity consumption in 2024 and 2025 is expected to be driven by the service sector and various industrial sectors, including rapid expansion of solar power, electric vehicle (EV) and battery manufacturing, and electricity-intensive processing of related materials. The continued expansion of 5G networks and data centers and strong adoption of EVs in the domestic market are also contributing factors.
Over the past three years, demand has remained roughly the same each year on average. This demand for electricity is roughly equal to that of Germany, and is expected to continue through 2025, with an expected growth of 6.2%.
India
India is the fastest growing major economy in the world. The country is expected to see an 8% increase in electricity consumption in 2024, in line with the rapid growth in 2023. This is due to strong GDP growth and increased demand for cooling as a result of long and intense heat waves. In the first half of 2024, the country experienced record heat waves, with peak load peaks reaching new highs and putting exceptional strain on electricity systems. Assuming a return to average weather conditions, India’s electricity demand growth is expected to moderately slow to 6.8% in 2025.
CO2 emissions
Power sector emissions are expected to level off, with a slight increase in 2024 followed by a decline in 2025. Coal-fired generation is expected to remain stable in 2024 due to strong growth in electricity demand, hampering a decline in global power sector CO2 emissions.
Despite the rapid growth of renewables, the sharp increase in electricity consumption, especially in China and India, is leading to the use of more coal-fired generation to meet demand. Global coal-fired generation is expected to grow by less than 1% in 2024, but this is highly dependent on trends in hydropower, especially in China.
China's hydropower output rebounded strongly in the first half of 2024 from a trough in 2023, and further improvement in hydropower trends in the second half of the year could rein in coal-fired power generation and reduce global emissions from the power sector.
Global natural gas-fired gas production is expected to grow by around 1% on average over the 2024-2025 period. Significant declines in Europe will be offset by increases in Asia, rising LNG imports, and in the Middle East due to the switch from oil-fired to gas-fired generation.
The United States is expected to see an increase in power sector carbon emissions in 2024, before declining in 2025. The United States is one of the few advanced economies to see its power sector carbon emissions increase in 2024, although they will still be nearly 30% lower than a decade earlier. In 2024, US coal-fired generation is expected to grow by about 2% and natural gas by 1.5%, leading to an increase in emissions. This is due to a rebound in US electricity demand growth after the decline in 2023 and limited room for further coal-to-gas switching given current fuel price dynamics. However, these trends will be highly dependent on further developments in natural gas market prices and weather conditions in the second half of 2024.
Heat waves
Many regions experienced intense heatwaves in the first half of 2024, increasing demand for electricity and putting strain on power grids. May 2024 was the hottest month since global records began and the 12th consecutive month of record high temperatures.
India, Mexico, Pakistan, the United States, Vietnam and many other countries have seen severe heat waves with rising peak loads due to increased cooling needs. As more households start buying air conditioners (ACs), the impact will increase significantly, especially in emerging economies where the share of households with ACs is currently much lower.
Making air conditioning systems more efficient will be crucial to mitigate the impact of increased cooling demand on energy systems. Expanding and strengthening electricity grids will also be very important to ensure reliability.
AI
The rise of artificial intelligence (AI) has brought data center electricity consumption into focus, making better inventory more important than ever. In many regions, historical estimates of data center electricity consumption are hampered by a lack of reliable data.
At the same time, future projections include many uncertainties related to the pace of deployment, the diverse and growing applications of AI, and opportunities for energy efficiency improvements.
Expanding and improving the sector's collection of electricity demand data will be critical to accurately identify past trends and better understand future trends.
The International Energy Agency (IEA) is studying links between the energy sector and digitalization. To provide more insight into the topic, the IEA is organizing the Global Conference on Energy and AI in December 2024, bringing together governments, industry, researchers and other stakeholders.
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