Topline
Growing global demand for electricity is expected to slow in 2023 amid ongoing fallout from economic downturns and the energy crisis triggered by Russia’s invasion of Ukraine, the International Energy Agency said Wednesday, as it pushes for a greater focus on renewables ahead of an expected rebound in demand next year.
Key Facts
Global electricity demand is set to increase by just less than 2% in 2023, the IEA forecast in its latest Electricity Market Report, down from 2.3% in 2022 and below the average annual growth rate of 2.4% from the five years before the Covid-19 pandemic.
Dampened growth is largely driven by falling demand in advanced economies, the IEA said, many of which are facing economic downturns and dealing with shortages and soaring energy prices following Russia’s invasion of Ukraine.
The agency projected electricity demand in the U.S. and Japan will respectively fall by almost 2% and 3% in 2023, while the demand in the European Union is expected to decline by 3% for the second year running, which collectively make up the bloc’s “largest slump in demand on record” and takes consumption to levels last seen in 2002.
Growing demand for electricity is poised to bounce back in 2024 alongside the improving outlook for the global economy, the IEA said.
The agency said it expects the electricity demand growth to hit 3.3% in 2024.
Increasing demand is largely supported by efforts to electrify energy systems around the world to reduce emissions, “robust growth in emerging and developing economies” and the increasing use of indoor cooling like air conditioning as global temperatures climb.
What To Watch For
Next year is set to be the first year that renewable energy sources generate more than one-third of all electricity generated worldwide, the IEA forecast. Depending on weather conditions, which can affect how much energy is generated from some sources like wind power, the agency said 2024 “could well become the first year in which more electricity is generated worldwide from renewables than from coal.” While energy generated from renewables jumps, the IEA said electricity generated from fossil fuels is expected to decline, particularly energy derived from oil, which it said is a sign of an “energy transition” taking hold. The IEA report said the world is “rapidly moving towards a tipping point” where fossil fuels will be increasingly replaced by electricity from clean sources for electricity generation.
Crucial Quote
Keisuke Sadamori, the IEA’s director for energy markets and security, said global electricity needs are expected to “grow strongly” in the coming years, with the global increase in demand through 2024 expected to equal around three times Germany’s current consumption. Sadamori said it’s encouraging “to see renewables accounting for a rising share of electricity generation,” adding that “now is the time for policy makers and the private sector to build on this momentum to ensure emissions from the power sector go into sustained decline.”
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