Global electricity demand to surge strongly

According to a new report by the IEA, the world’s demand for electricity is rising at its fastest rate in years, driven by robust economic growth, intense heatwaves, and the increasing use of technologies that run on electricity such as EVs and heat pumps

The report, the IEA’s Electricity Mid-Year Update, forecasts global electricity demand to grow by around 4% in 2024, up from 2.5% in 2023. This would represent the highest annual growth rate since 2007, excluding the exceptional rebounds seen after the global financial crisis and the Covid-19 pandemic. The strong increase in global electricity consumption is set to continue into 2025, with growth around 4% again, according to the report.

Renewables surge ahead

Renewable sources of electricity are also set to expand rapidly this year and next, with their share of global electricity supply forecast to rise from 30% in 2023 to 35% in 2025. The amount of electricity generated by renewables worldwide in 2025 is forecast to surpass the amount generated by coal for the first time. Solar PV alone is expected 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 is unlikely to decline this year due to the strong growth in demand, especially in China and India. As a result, carbon dioxide (CO2) emissions from the global power sector are plateauing, with a slight increase in 2024 followed by a decline in 2025. However, considerable uncertainties remain: Chinese hydropower production recovered strongly in the first half of 2024 from its 2023 low. If this upward trend continues in the second half of the year, it could curb coal-fired power generation and result in a slight decline in global power sector emissions in 2024.

Some of the world’s major economies are registering particularly strong increases in electricity consumption. Demand in India is expected to surge by a massive 8% this year, driven by strong economic activity and powerful heat waves. China is also set to see significant demand growth of more than 6%, due to robust activity in the services industries and various industrial sectors, including the manufacturing of clean energy technologies.

“Growth in global electricity demand this year and 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,” said Keisuke Sadamori, IEA director of Energy Markets and Security. “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. At the same time, it’s crucial to expand and reinforce grids to provide citizens with secure and reliable electricity supply – and to implement higher energy efficiency standards to reduce the impacts of increased cooling demand on power systems.”

With the rise of artificial intelligence (AI), the electricity demand of data centres is drawing increased attention, underscoring the need for more reliable data and better stocktaking measures. The report highlights the wide range of uncertainties concerning the electricity demand of data centres, including the pace of deployment, the diverse and expanding uses of AI, and the potential for energy efficiency improvements. Better collection of electricity consumption data from the data centre sector will be essential to correctly identify past developments and to better understand future trends.