Global demand for electricity is rising at its fastest rate in several years driven by robust economic growth, intense heatwaves, and increasing uptake of technologies that run on electricity such as EVs and heat pumps, according to the latest report by the International Energy Agency (IEA). At the same time, renewables continue their rapid ascent, with solar PV on course to set new record highs.
In its latest Electricity Mid-Year Update, the IEA expects global electricity demand to grow by around 4 percent in 2024, up from 2.5 percent in 2023. This would represent the highest annual growth rate since 2007, excluding the exceptional rebounds the world witnessed following the global financial crisis and the COVID-19 pandemic.
The strong increase in global electricity consumption and demand will likely continue into 2025, with another growth of around 4 percent, said the report.
Renewable sources set to expand
The IEA expects renewable sources of electricity to expand rapidly this year and the next, with their share of global electricity supply forecast to rise from 30 percent in 2023 to 35 percent in 2025. The amount of electricity from renewables worldwide in 2025 is forecast to exceed the amount from coal for the first time.
In addition, the report expects solar PV alone to meet roughly half of the growth in global electricity demand between 2024 and 2025, with solar and wind combined meeting as much as three-quarters of the growth.
Despite the sharp increases in renewables, global power generation from coal will likely not decline this year due to the strong growth in demand, especially in China and India.
“It’s encouraging to see clean energy’s share of the electricity mix continuing to rise, but this needs to happen at a much faster rate to meet international energy and climate goals,” stated Keisuke Sadamori, IEA Director of Energy Markets and Security.
Demand in India and China to surge
Some of the world’s major economies are registering particularly strong increases in electricity consumption. The report expects electricity demand in India to surge by 8 percent this year due to strong economic activity and powerful heat waves.
China will also see significant demand growth of more than 6 percent as a result of robust activity in the services industries and various industrial sectors, including the manufacturing of clean energy technologies.
U.S. demand to rebound
After declining in 2023 due to mild weather, electricity demand in the United States will likely rebound this year by 3 percent amid steady economic growth, rising demand for cooling, and an expanding data center sector.
In contrast, the European Union will see a more modest recovery in electricity demand, with growth forecast at 1.7 percent, following two consecutive years of contraction amid the impacts of the energy crisis.
In many parts of the world, the increasing use of air-conditioning will remain a significant driver of electricity demand. Multiple regions faced intense heatwaves in the first half of 2024, which raised demand and put electricity systems under strain, stated the IEA.
“Growth in global electricity demand this year and the next is set to be among the fastest in the past two decades, highlighting the growing role of electricity in our economies as well as the impacts of severe heatwaves,” added Sadamori.
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Data centers, AI drive demand
With the rise of artificial intelligence (AI), the electricity demand of data centers is coming into focus. This underscores the need for more reliable data and better stocktaking measures. The IEA report highlights the wide range of uncertainties concerning the electricity demand of data centers, including the pace of deployment, the diverse and expanding uses of AI, and the potential for energy efficiency improvements.
It also notes that better collection of electricity consumption data of the data center sector will be essential to identify past developments correctly and better understand future trends.
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