With global temperatures expected to surge to fresh record levels in the coming five years and beyond, European energy market experts are growing increasingly concerned about an additional strain on electricity demand on top of energy transition electrification – the rising need for space cooling.

The past eight years have been the warmest on record and the summer of 2023 looks likely to bring new temperature peaks, as the first days of June showed considerably hotter weather than normal. The unusually high temperatures last month laid bare how severe the consequences of increasing cooling demand are on power grids. In Texas, electricity demand reached new record highs powered by air conditioning, Chinese local governments called on citizens and businesses to reduce electricity demand, and power reserves reached a record low in Mexico.

Similar consequences are currently less strongly felt in Europe, where electricity demand from air conditioning remains relatively low and has mainly been concentrated in the Mediterranean region. However, the expected rise in temperatures across the whole continent and improved standards of living will move Europe’s electric cooling demand increasingly into the spotlight.

‘With the trend of higher temperatures and the growing stock of installed air conditioning (AC) equipment, the impact of cooling on electricity demand will need to receive increased attention. In many regions such as the US, Japan and India, the issue of supply adequacy to meet peak demand during heatwaves is already a concern,’ says Eren Çam, Energy Analyst in the gas, coal and power markets division at the International Energy Agency (IEA).

The organisation expects global air conditioning ownership to rise to nearly 45% by 2030, up from 35% in 2021, as more households can afford them and populations, especially in cities that are typically warmer, continue to grow. The additional strain on the world’s electricity grids is enormous, with the IEA predicting that the need for cooling will be the second-largest contributor to global electricity demand growth in the coming decades, behind electric vehicles.

The expected rise in temperatures across the whole continent and improved standards of living will move Europe’s electric cooling demand increasingly into the spotlight.

Even north-western Europe is heating up
In Europe, summer cooling needs have been a factor in electricity market planning in southern countries such as Spain, Italy and Greece, but middle and northern European grid operators will increasingly have to factor in electric cooling demand going forward.

‘Weather patterns are changing across Europe and what we know about summer power demand based on past experiences might be changing too. The year 2022 showed us that heatwaves are expanding from the southern regions, where they have been traditionally experienced, into the north-western European regions,’ says a senior market analyst at a European utility.

One of the affected regions is the Netherlands, where national electricity grid operator Tennet says it is taking into account that it will have to cope with increasing cooling demand. The country’s network operator association Netbeheer Nederland predicts that cooling demand from Dutch homes will increase by an average of 2.5% a year between 2019 and 2050, and 2% per year from other buildings, with the vast majority of demand covered by electric AC and heat pumps.

As larger parts of Europe’s common electricity market are facing the impact of growing cooling demand, traders and analysts actively assessing supply and demand fundamentals are also increasingly building cooling factors into their calculations. ‘Most traders have some sort of risk premium in their own considerations for this summer’s cooling demand,’ says Klaas Dozeman, Meteorologist and Market Analyst at Brainchild Commodity Intelligence.

With the growing need for cooling buildings across Europe established, the question remains how Europe will address this rise in the most sustainable way to ensure it is compatible with the continent’s target to become climate neutral by 2050.

Energy efficiency is key
As with any form of energy conservation, using energy in the most efficient way also applies to cooling demand. In the case of space cooling, this means improving the way in which buildings absorb and maintain thermal energy. Up to 95% of today’s European buildings will still be standing in 2050, but three-quarters of them have a poor energy rating. By 2030, the European Union aims to have improved the region’s energy efficiency levels in buildings by 13% from 2020.

Better energy efficiency also applies to the cooling technology itself. Currently, there is a vast gap between some of the most and least efficient AC devices available, presenting a huge opportunity for lowering the amount of electricity needed for space cooling.

The most efficient technology available today is more than twice as efficient as the average unit sold, according to the IEA. Under the body’s Net Zero Scenario, global average AC efficiency rating needs to increase by at least 50% by 2030.

District cooling
One of the most environmentally friendly options for cooling is the use of cold water from lakes, rivers and seas. Europe has some of the most sophisticated district cooling networks in the world, stretching across nearly 1,500 km of pipelines that deliver roughly 3 TWh/y of cooling energy to 150 systems.

‘District cooling comes with some high benefits because the infrastructure makes use of free cooling, which refers to the use of water from a lake or the sea. You can use this water directly to cool down buildings so it’s a 100% renewable solution,’ says Eloi Piel, Director of Market Intelligence at Euroheat & Power (EHP), a Brussels-based network for district energy.

Swedish utility Vattenfall, for example, runs two district cooling networks in Amsterdam and the surrounding areas, which use the thermodynamics of two nearby lakes to cool down Dutch households. The energy supplier sources cool water, at around 5°C, from the depths of the lakes to pump through its district cooling networks.

‘The cooling system is very reliable, so for customers it is an affordable and sustainable cooling alternative to the use of chillers or individual thermal storage. District cooling also means no large technical installation and no burden for maintenance of that system,’ comments Raymond van Bulderen, Business Manager for Vattenfall Heat in the Netherlands.

The limits to expanding district cooling, however, are that they are capital intensive projects and that building out pipeline infrastructure often requires cumbersome construction work in densely populated areas.

Reversible heat pumps
A less time-consuming option is the installation of reversible heat pumps. These dual heating and cooling units are able to pump heat into buildings during cold winter months and to extract heat from buildings during the warm season.

In order to comply with sustainability criteria, reversible heat pumps need to source electricity from renewable energy. As such, a reversible heat pump for cooling purposes is extremely well suited to go hand-in-hand with the installation of a solar PV module. Cooling demand driven by hot weather runs largely in parallel with electricity production from a solar panel.

‘During sunny days in the summer when there is sometimes overproduction in solar power, we could use the cooling system like a tool to help utilise this overproduction,’ says Miloslav Fialka, Manager of the Energy and Resources Department at consultancy EY in the Czech Republic.

With the help of digital technology, modern cooling devices can indeed act as helpful tools to balance the increasingly decentralised electricity market. If aggregated into larger blocks, electric cooling devices can be offered as ancillary services into the demand-side response market, therefore helping to even out supply and demand swings instead of adding to them.

However, European policymakers have so far largely disregarded the growing impact of cooling demand on Europe’s energy market, let alone how it could be utilised to serve the energy transition. ‘One big problem is the lack of awareness on how to address cooling demand. There are ways to address this problem if you look at policies on more efficient buildings or better urban planning, for example,’ notes EHP’s Piel.

Life or death
While the subject of heating regained high political importance last winter amid skyrocketing energy prices that caused widespread energy poverty, cooling demand is not a topic that has been addressed in detail, despite it being a subject of life or death. Between 2002–2004 and 2019–2021, the average annual number of heat-related deaths among people aged 65 years or older increased by 61%, reaching an estimated 300,000 or more deaths, according to the IEA.

‘I don’t think a coordinated process is likely unless we get to a point where there’s a threat to life. So, we probably need another event like the 2003 heatwave [when thousands died] and then you might start to see a change,’ says Simon Minnet, Managing Director at Brussels-based consultancy Challoch Energy.