IEA Reports Surge in Global Electricity Demand; Solar to Cover Half of Growth in 2024 and 2025

The International Energy Agency (IEA) has reported a significant surge in global electricity demand, projecting a 4 percent increase in 2024, up from 2.5 percent in 2023. This marks the fastest growth rate in two decades, surpassing all but post-financial crises and pandemic rebounds since 2007. The demand is expected to continue rising at a similar pace into 2025.

Renewable energy is set for rapid expansion, with its share of global electricity supply predicted to climb from 30 percent in 2023 to 35 percent by 2025. For the first time, renewables are forecast to generate more electricity than coal by 2025. Solar energy alone is anticipated to fulfill approximately half of the new demand growth in 2024 and 2025. Combined with wind power, renewables are expected to cover up to 75 percent of the increased demand.

Despite this surge in renewables, coal power generation is likely to remain steady this year due to increased demand, particularly in China and India. This stability means CO2 emissions from the power sector are projected to plateau in 2024 before declining in 2025. However, if China’s hydropower production, which rebounded strongly in the first half of 2024, continues to rise, it might slightly reduce coal power generation and emissions this year.

India's electricity demand is forecast to leap by 8 percent in 2024, driven by robust economic activity and severe heatwaves. China will also experience a significant demand increase of over 6 percent, fueled by activity in the services and industrial sectors, including clean energy.

In the US, after a decline in 2023 due to mild weather, electricity demand is expected to bounce back by 3 percent in 2024. This rebound is attributed to steady economic growth, rising cooling needs, and an expanding data center sector. The IEA report highlights uncertainties surrounding the electricity demands of data centers, such as the pace of their expansion and energy efficiency improvements.

The European Union will see a more modest increase in electricity demand, projected at 1.7 percent, following two years of contraction due to the energy crisis, says the report.

"Global electricity demand is set to grow at one of the fastest rates in the past two decades this year and next, underscoring electricity's increasing importance in our economies and the impact of severe heatwaves," said Keisuke Sadamori, IEA Director of Energy Markets and Security. "While it's encouraging that clean energy's share of the electricity mix continues to rise, this progress must accelerate to meet international energy and climate goals. Additionally, expanding and reinforcing grids is crucial to ensuring secure and reliable electricity supply for citizens, and implementing higher energy efficiency standards is essential to mitigate the effects of increased cooling demand on power systems," he added.

Further, the report said, "The rise of artificial intelligence (AI) is drawing attention to the electricity demand of data centres, highlighting the need for more reliable data and better stocktaking measures. The report points out the significant uncertainties surrounding data centres' electricity demand, such as the pace of deployment, the diverse and expanding uses of AI, and the potential for energy efficiency improvements. Accurate data collection on electricity consumption in the data centre sector will be essential to correctly identifying past developments and better understanding future trends."