Low carbon generation set to meet electricity demand growth – IEA

The IEA’s Electricity 2024 report records electricity demand growth easing in 2023 but is projected to accelerate over the next three years through 2026.

The update finds that world demand for electricity grew by 2.2% in 2023, less than the 2.4% growth of 2022, attributing this to declines in advanced countries due to the lacklustre macroeconomic environment and high inflation.

However, the demand is expected to rise, growing by an average of 3.4% annually through 2026 through an improving economic outlook and particularly in advanced economies the ongoing electrification of the residential and transport sectors.

Significant extra demand also is expected from outside these economies, in particular in China, India and countries in Southeast Asia.

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Notable expansion of the data centre sector also is likely, with consumption from data centres, AI and the cryptocurrency sector potentially doubling by 2026.

In 2023 the share of electricity in final energy consumption is estimated to have reached 20%, up from 18% in 2015.

To meet the IEA’s net zero by 2050 pathway, the share must near 30% in 2030 and thus electrification needs to accelerate rapidly, the Electricity 2024 publication states.

Renewables and nuclear

The report projects that low-emission generation sources, including nuclear and renewables such as solar, wind and hydro, are set to rise at twice the annual growth rate over the past five years.

By 2026 these sources are set to account for almost half the world’s generation, up from 39% in 2023.

In particular, the share of renewables is forecast to rise from 30% in 2023 to 37% in 2026 and more than offset demand growth in advanced economies such as the US and European Union and potentially also in China.

Nuclear power generation also is expected to reach an all-time high, with growth averaging close to 3% per year.

With this global coal-fired generation is expected to fall by an average of 1.7% annually through 2026.

Global CO2 emissions also are expected to decline, averaging 4% between 2023 and 2026, which is more than double the 2% in the period from 2015 to 2019.

“The power sector currently produces more CO2 emissions than any other in the world economy, so it’s encouraging that the rapid growth of renewables and a steady expansion of nuclear power are together on course to match all the increase in global electricity demand over the next three years,” commented IEA Executive Director Fatih Birol.

“This is largely thanks to the huge momentum behind renewables, with ever cheaper solar leading the way, and support from the important comeback of nuclear power, whose generation is set to reach a historic high by 2025. While more progress is needed, and fast, these are very promising trends.”

Electricity demand highlights

Some other top points from the report are as follows:

● Africa remains an outlier in electricity demand trends, with per capita demand having been effectively stagnant for more than three decades. A more than doubling in investments is required to deliver the region’s energy development and climate targets.

● Electricity prices were generally lower in 2023 than the record highs in 2022, in tandem with declines in prices for commodities such as natural gas and coal, but price trends varied widely among regions, affecting their economic competitiveness.

● Growing weather impacts on power systems highlight the importance of investing in electricity security. For example, global hydropower generation declined in 2023 due to impacts such as droughts, below average rainfall and early snowmelts in numerous regions. Diversifying energy sources, building regional power interconnections and implementing strategies for resilient generation in the face of changing weather patterns will be increasingly important.

● Rising self-consumption in distributed systems and data collection is giving rise to demand forecasting and planning and data sharing challenges. Complete data sets on distributed generation and consumption can give valuable insights into the potential for local flexibility solutions and improved data exchange between DSOs and TSOs can contribute to a more comprehensive accounting of self-consumption.

● Global smart meter investments doubled in 2022 compared to 2015, with the number of smart meters exceeding 1 billion worldwide. However, smart meter penetration varies significantly among countries and regions, from around 80% of US households to 10% in Latin America. Smart meters not only enable better and more detailed data collection but can also enable considerable cost savings.