Power generation is currently the largest source of carbon dioxide (CO2) emissions in the world, but it is the energy sector that is leading the transition to net zero emissions through the rapid expansion of renewable energy sources such as solar and wind power. Annual analyzes of developments in the electricity market provide insight into the shifts.
These and more insights can be read in the recently published Electricity 2024 , the IEA's annual analysis of developments and policies in the electricity market.
Conclusions from the report:
- Low-emission sources are expected to account for almost half of global electricity generation by 2026, up from just under 40% in 2023.
- Renewables will account for more than a third of total electricity generation by early 2025, overtaking coal.
- Electricity accounted for 20% of final energy consumption in 2023, up from 18% in 2015, although electrification would need to accelerate significantly in coming years to meet the world's climate targets.
Increase in demand expected
With regard to the current and expected demand for electricity, the report states the following:
- Global electricity demand growth has declined slightly to 2.2% in 2023 due to declining electricity consumption in advanced economies. Demand is expected to accelerate to an average of 3.4% in 2024 through 2026.
- About 85% of the increase in global electricity demand until 2026 is expected to come mainly from China, India and countries in Southeast Asia.
- Electricity demand in the European Union fell for the second consecutive year in 2023 and is not expected to return to pre-global energy crisis levels until 2026 at the earliest.
In the Netherlands, the demand for electricity has not increased in recent decades. This is expected to change. The Netherlands Environmental Assessment Agency (PBL) expects that the demand for electricity in 2030 will be approximately 32 to 52% higher in 2022 .
Decrease in electricity prices in Europe
Regarding electricity prices, the IEA analysis states that they were generally lower in 2023 than in 2022. However, price developments varied widely from region to region, impacting their economic competitiveness.
Wholesale electricity prices in Europe fell by more than 50% on average in 2023 after reaching record highs in 2022 following Russia's invasion of Ukraine. Yet electricity prices in Europe were still more than double pre-Covid levels last year, while prices in the United States were around 15% higher than in 2019.
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