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New Energy World
New Energy World embraces the whole energy industry as it connects and converges to address the decarbonisation challenge. It covers progress being made across the industry, from the dynamics under way to reduce emissions in oil and gas, through improvements to the efficiency of energy conversion and use, to cutting-edge initiatives in renewable and low carbon technologies.
Renewables and nuclear power are expected to grow to reach an all-time high in the next three years, according to a new report by the International Energy Agency (IEA).
The report finds that while global growth in electricity demand eased slightly to 2.2% in 2023 due to falling electricity consumption in advanced economies, it is projected to accelerate to an average of 3.4% from 2024–2026. About 85% of the increase in the world’s electricity demand to 2026 is expected to come from countries including China, India and countries in south-east Asia.
Record-setting electricity generation from low-emissions sources should reduce the role of fossil fuels in providing power for homes and businesses. Low-emissions sources are expected to account for almost half of the world’s electricity generation by 2026, up from a share of just under 40% in 2023.
Renewables are set to make up more than one-third of total electricity generation by early 2025, overtaking coal. By 2025, nuclear power generation is also forecast to reach an all-time high globally as output from France climbs, several plants in Japan come back online and new reactors begin commercial operations in many markets, including in China, India, Korea and Europe. When the share of fossil fuels in global generation falls beneath 60%, this will mark the first time it has gone below this threshold in IEA records dating back more than five decades, the report says.
‘The power sector currently produces more CO2 emissions than any other in the world economy, so it’s encouraging that the rapid growth of renewables and a steady expansion of nuclear power are together on course to match all the increase in global electricity demand over the next three years,’ comments IEA Executive Director Fatih Birol. ‘This is largely thanks to the huge momentum behind renewables, with ever cheaper solar leading the way, and support from the important comeback of nuclear power, whose generation is set to reach a historic high by 2025. While more progress is needed, and fast, these are very promising trends.’
The report finds that the increase in electricity generation from renewables and nuclear appears to be pushing the power sector’s emissions into structural decline. Global emissions from electricity generation are expected to decrease by 2.4% in 2024, followed by smaller declines in 2025 and 2026.
The decoupling of global electricity demand and emissions would be significant given the energy sector’s increasing electrification, with more consumers using technologies such as electric vehicles and heat pumps. Electricity accounted for 20% of final energy consumption in 2023, up from 18% in 2015, although meeting the world’s climate goals would require electrification to advance significantly faster in the coming years, says the IEA.
Electricity prices were generally lower in 2023 than in 2022. However, price trends varied widely among regions, affecting their economic competitiveness. Wholesale electricity prices in Europe declined by more than 50% on average in 2023 after having reached record highs in 2022 following Russia’s invasion of Ukraine. Yet electricity prices in Europe last year were still more than double pre-COVID levels, while prices in the US were about 15% higher than in 2019. Electricity demand in the European Union declined for the second consecutive year in 2023, and it is not expected to return to levels seen before the global energy crisis until 2026 at the earliest, according to the report.
Although demand for electricity in Europe and the US declined in 2023, many emerging and developing economies recorded robust growth that is set to continue through 2026 in response to increasing populations and industrialisation. During the outlook period, the report says that China is expected to account for the largest share of the global increase in electricity demand in terms of volume, even as its economic growth slows and becomes less reliant on heavy industry. Meanwhile, India is set to see electricity demand rise the fastest among major economies, with demand added over the next three years forecast to be roughly equivalent to the current electricity consumption of the UK.
As a region, Africa remains an outlier in electricity demand trends, according to the report’s analysis. While electricity use per capita in India and south-east Asia has risen rapidly, it has been effectively stagnant in Africa for more than three decades. Dr Birol notes: ‘Electricity use is a key indicator of economic development in any country, and it’s a grim sign that it has flatlined in Africa on a per capita basis for over three decades. Access to reliable, affordable and sustainable energy for all citizens is essential for African countries to achieve their economic and climate goals.’