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In its latest Electricity Market Report, the Paris-based International Energy Agency (IEA) says that global demand for electricity is already slowing sharply thanks to slowing economic growth and high energy prices.
“Electricity demand growth is slowing significantly in 2022. After global electricity demand grew by a strong 6% in 2021, propelled by rapid economic recovery as COVID-19 lockdowns eased, we expect growth to slow to 2.4% in 2022--about the same as the average from 2015 to 2019,” according to the report.
The agency said that the slowing growth reflected slower global economic growth and higher energy prices following Russia’s invasion of Ukraine as well as renewed public health restrictions, particularly in China.
Renewable sources of energy are growing faster than demand and replacing fossil fuels, according to the international energy body, with strong capacity additions so far this year helping global renewable power generation achieve a 10% growth clip.
Further, the agency notes that the EU is gearing up to lower its reliance on Russian fossil fuel imports by accelerating the clean energy transition.
The IEA has given a poor prognosis for the coming year, too: “As of mid-2022, we expect global electricity demand growth in 2023 to remain on a similar path as this year. Strong renewables growth of 8% and recovering nuclear generation could displace some gas and coal power, resulting in the electricity sector’s CO2 emissions declining by 1%,” the IEA has predicted in its report.
If accurate, falling electricity demand is likely to be bad news for natural gas producers, with fossil fuels accounting for a whooping 25% of global electricity generation.
In more bad news for natural gas punters, the European Union has proposed to member states Wednesday to cut gas usage by 15% until March as it braces for the "likely scenario" that Russia could cut off gas flows to Europe.
By Alex Kimani for Oilprice.com
Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com.