Electricity demand growth set to ease this year amid economic slowdown, IEA says

EU's power consumption is on track to drop to its lowest level in 20 years

Global electricity demand is rising due the electrification of energy systems, greater indoor cooling needs and strong demand growth in emerging and developing economies. Reuters
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Growth of electricity demand worldwide is expected to ease in 2023 as advanced economies grapple with the effects of the energy crisis and an economic slowdown, the International Energy Agency has said.

Global electricity demand is set to increase by less than 2 per cent this year, down from a growth of 2.3 per cent in 2022, the Paris-based agency said in its Electricity Market Report on Wednesday.

However, growth is projected to rebound to 3.3 per cent in 2024 as the global economy recovers, the agency said.

“The world’s need for electricity is set to grow strongly in the years to come. The global increase in demand through 2024 is expected to amount to about three times the current electricity consumption of Germany,” said Keisuke Sadamori, the agency's director for energy markets and security.

“And we’re encouraged to see renewables accounting for a rising share of electricity generation, resulting in declines in the use of fossil fuels for power generation.”

Power consumption in the US is projected to decline by nearly 2 per cent this year while demand in Japan is forecast to fall by 3 per cent, the agency said.

Meanwhile, demand for electricity in the EU is set to drop by 3 per cent, similar to the decline recorded in 2022, it added.

“Following these two consecutive declines, which together amount to the [region’s] largest slump in demand on record, EU electricity consumption is poised to drop to levels last seen in 2002,” the agency said.

The EU’s energy-intensive industries have still not recovered from last year’s production slump, despite prices of energy commodities and electricity falling from previous highs, it added.

China’s demand is forecast to increase by 5.2 per cent annually over the next two years, while India is expected to record annual growth of 6.5 per cent through 2024, according to the agency.

Global electricity demand is rising due to the electrification of energy systems, increased indoor cooling needs, and strong demand growth in emerging and developing economies, it said.

Renewable energy will account for more than a third of global electricity generation by next year.

“Depending on weather conditions, 2024 could well become the first year in which more electricity is generated worldwide from renewables than from coal,” the report said.

Electricity generated from crude oil is projected to fall significantly, while coal-fired generation will slightly decline in 2023 and 2024, after rising 1.7 per cent last year.

“The world is rapidly moving towards a tipping point in which global electricity generation from fossil fuels will increasingly be replaced by electricity from clean energy sources,” according to the report.

Global additions of renewable power capacity are expected to increase by a third this year as growing policy momentum, higher fossil fuel prices and energy security concerns drive adoption of solar and wind power, the agency said in a report last month.

The growth will continue in 2024, with the world’s total renewable electricity capacity rising to 4,500 gigawatts, equivalent to the total power output of China and the US combined, according to the agency.

Updated: July 19, 2023, 12:28 PM