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According to new report from the IEA (International Energy Agency), the renewable sources should cover any additional demand in electricity in the world over the next three years.
O Electricity 2024 is the latest edition of the Agency's annual analysis of electricity market developments and policies, providing forecasts for the sector's demand, supply and CO2 emissions until 2026.
The research finds that while global electricity demand growth slowed slightly to 2.2% in 2023 due to falling energy consumption in advanced economies, it is forecast to accelerate to an average of 3.4% from 2024 to 2026.
According to the study, around 85% of the increase in global electricity demand by 2026 is expected to come from outside advanced economies – mainly China, India and Southeast Asian countries.
However, record electricity production from renewables – including solar, wind and hydro, as well as nuclear power – is expected to reduce the role of fossil fuels in powering homes and businesses.
Low-emissions sources are predicted to account for almost half of global electricity production by 2026, up from just under 40% in 2023.
Renewable energies are expected to represent more than a third of total electricity production by the beginning of 2025, overtaking coal. By 2025, nuclear energy production is also expected to reach an all-time high worldwide, as France's production increases, several plants in Japan come back online and new reactors begin commercial operations in many markets, including China. , India, Korea and Europe.
When the percentage of fossil fuels in global production falls below 60%, it will be the first time that the percentage of such fuels will be below this threshold in IEA records going back more than five decades.
“The energy sector currently produces more CO2 emissions than any other in the world economy, so it is encouraging that the rapid growth of renewables and a steady expansion of nuclear power are together on track to match all the increase in global electricity demand over the next three years,” said Fatih Birol, executive director of the IEA.
“This is largely due to the huge momentum behind renewables, with increasingly cheaper solar leading the way, and support from the important return of nuclear, whose generation is expected to reach an all-time high by 2025. While more is needed progress, and fast, these are very promising trends”, he highlighted.
Other highlights
The report further concludes that the increase in electricity production from renewables and nuclear appears to be “pushing” energy sector emissions into a structural decline. Global emissions from electricity production are forecast to decrease by 2.4% in 2024, followed by smaller declines in 2025 and 2026.
According to the IEA, the decoupling between global electricity demand and emissions would be significant given the growing electrification of the energy sector, with more consumers using technologies such as electric vehicles and heat pumps.
Electricity represented 20% of final energy consumption in 2023, up from 18% in 2015, although meeting global climate objectives will require electrification to advance significantly faster in the coming years.
Pricing
Electricity prices were generally lower in 2023 than in 2022. However, cost trends varied widely between regions, affecting their economic competitiveness. “Wholesale” electricity prices in Europe declined by an average of more than 50% in 2023, after reaching record highs in 2022 following Russia’s invasion of Ukraine.
However, they said electricity costs in Europe last year were still more than double pre-Covid levels, while prices in the United States were around 15% higher than in 2019.
Energy demand in the European Union declined for the second year in a row in 2023, and is not expected to return to levels seen before the global energy crisis until 2026 at the earliest.
Emerging and developing economies
Although electricity demand in Europe and the United States declined in 2023, many emerging and developing economies recorded robust growth that is expected to continue through 2026 in response to population growth and industrialization.
Over the outlook period, China is expected to account for most of the global increase in electricity demand in terms of volume, even as its economic growth slows and it becomes less dependent on heavy industry.
Meanwhile, India is expected to see energy demand increase the fastest among major economies, with added demand over the next three years expected to be roughly equivalent to the UK's current electricity consumption.
As a region, Africa remains an outlier in electricity demand trends, according to the report's analysis. While per capita energy consumption in India and Southeast Asia has increased rapidly, it has been effectively stagnant in Africa for more than three decades.
“Electricity consumption is a key indicator of economic development in any country and is a grim sign that it has stabilized in Africa on a per capita basis for more than three decades,” Birol reported.
“Access to reliable, affordable and sustainable energy for all citizens is essential for African countries to achieve their economic and climate goals. The international community needs to work together with African governments to enable the urgent progress that is needed”, he concluded.
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