The world’s demand for electricity is expected to rise by less than 2% this year, down from last year’s growth pace of 2.3%, as power consumption in the United States and Europe will decline amid an economic slowdown and the effects of the energy crisis, the International Energy Agency (IEA) said in a new report on Wednesday.
Electricity demand in the United States is set to decline by nearly 2% this year, demand in Japan is expected to drop by 3%, while EU power demand is on track to fall by 3%, after a similar decline in 2022, the IEA’s latest Electricity Market Report showed today.
Europe’s two consecutive yearly declines in power demand in 2022 and 2023 would together amount to the EU’s largest slump in demand on record. This year, EU electricity consumption is poised to drop to the lowest levels since 2002, the IEA said.
Due to the lower demand in advanced economies, growth in global electricity demand is set to ease to 2% this year, down from a rate of 2.3% in 2022.
The growth rate will rebound in 2024, assuming an improving world economic outlook, and power demand could see a 3.3% increase next year, the agency’s latest estimates show.
While power demand in developed economies falls or stagnates, China and India will see robust demand growth over the next two years. China’s demand is forecast to increase at an average annual rate of 5.2% over the next two years, only slightly below the 2015-19 average growth rate. Average annual growth in India’s electricity demand is estimated at 6.5% this year and next, well above its 2015-19 average, the IEA said.
The expected rebound in global power demand growth next year suggests that “growth of renewables is more important than ever,” the agency added.
Power generation from renewables rose by 7.8% globally in 2022, the highest growth rate over the last 30 years. This year, renewable generation growth is set to ease to 7% amid lower hydropower generation, before rebounding to growth of 11% next year, according to the IEA estimates.
“By 2024, the share of renewables in global electricity generation is expected to exceed one third for the first time in history,” the agency said.
“With demand growth easing in 2023, the incremental growth in renewable generation alone is expected to cover all the additional demand increase, and will do the same in 2024 even as demand growth is expected to accelerate again.”
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By Tsvetana Paraskova for Oilprice.com
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