Growth in electricity demand in 2024 and 2025 is forecast to be among the highest levels in the past two decades, a new IEA report has found, with solar alone expected to meet half of the increase.
The study says the rise is driven by robust economic growth, intense heatwaves and increasing uptake of technologies that run on electricity such as EVs and heat pumps.
At the same time, renewables continue their rapid ascent, with solar on course to set new records, the analysis found.
Global electricity demand is forecast to grow by around 4% in 2024, up from 2.5% in 2023, the IEA’s Electricity Mid-Year Update reports.
This would represent the highest annual growth rate since 2007, excluding the exceptional rebounds seen in the wake of 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 study.
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 energy generated by renewables worldwide in 2025 is on track to eclipse the amount generated by coal for the first time.
Solar alone is expected to meet roughly half of the growth in global electricity demand over 2024 and 2025 – with PV and wind combined meeting as much as three-quarters of the rise.
But the report said 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 emissions from the global power sector are plateauing, with a slight increase anticipated 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 8% this year, driven by strong economic activity and powerful heatwaves.
China is also set to see significant demand growth of more than 6%, as a result of robust activity in the services industries and various industrial sectors, including the manufacturing of clean energy technologies.
After declining in 2023 amid mild weather, electricity demand in the US is forecast to rebound this year by 3% amid steady economic growth, rising demand for cooling and an expanding data centre sector.
By contrast, the European Union will see a more modest recovery in electricity demand, with growth forecast at 1.7%, following two consecutive years of contraction amid the impacts of the energy crisis.
In many parts of the world, increasing use of air-conditioning will remain a significant driver of electricity demand. Multiple regions faced intense heatwaves in the first half of 2024, which elevated demand and put electricity systems under strain, said the report.
“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 IEA director of energy markets and security Keisuke Sadamori.
He added: “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.”
The IEA report said 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 study 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 information of the sector will be essential to identify past developments correctly and to better understand future trends.