Executive summary – Electricity Mid-Year Update - July 2024 – Analysis - IEA (2024)

In 2024 and 2025, the world’s electricity demand is set to grow at the fastest pace since its post-Covid rebound

Over the 2024-2025 forecast period of this report, global electricity consumption is expected to increase at the fastest pace in years, fuelled by robust economic growth, intense heatwaves and continued electrification worldwide. The 4% growth expected for 2024 is the highest since 2007, with the exceptions of the sharp rebounds in 2010 after the global financial crisis and in 2021 following the Covid-induced demand collapse. The growth is driven by strong electricity demand in multiple regions and countries, especially in the People’s Republic of China (hereafter, “China”), India and the United States. We expect this demand trend to continue in 2025, with growth also at 4%. In both 2024 and 2025, the rise in the world’s electricity use is projected to be significantly higher than global GDP growth of 3.2%. In 2022 and 2023, electricity demand grew more slowly than GDP.

Year-on-year growth rate in global electricity demand, 1991-2025

Openexpand

Electricity demand in China is forecast to increase by 6.5% in 2024, similar to its average rate between 2016 and 2019. This still strong annual growth represents a modest slowdown from 7% in 2023 amid the ongoing restructuring of the Chinese economy. Electricity consumption in 2024 and 2025 is expected to be driven by robust activity in the services industries and various industrial sectors, including a rapid rise in solar PV, electric vehicle (EV) and battery production, and the electricity-intensive processing of related materials. Continued expansion of 5G networks and data centres as well as strong EV uptake in the domestic market are also contributing factors. Over the last three years, China has been adding electricity demand roughly equivalent to that of Germany each year, on average, and this trend is expected to continue through 2025, with growth forecast at 6.2%.

India, the fastest growing major economy in the world, is forecast to post an 8% rise in electricity consumption in 2024, matching the rapid growth it saw in 2023. This is supported by strong GDP growth and increased cooling demand due to long and intense heatwaves. In the first half of 2024, the country grappled with heatwaves of record duration, with peak load reaching a new high and putting exceptional strains on power systems. Assuming a return to average weather conditions, we expect electricity demand growth in India to ease moderately to 6.8% in 2025.

Electricity demand in the United States is set to rebound significantly in 2024, increasing by 3% year-on-year. The stronger growth rate is due, in part, to the comparison with 2023 when demand declined by 1.6% amid mild weather. Electricity consumption is boosted by an improved economic outlook as well as rising demand for air conditioning amid severe heatwaves and the surge in data centre expansions. Demand is forecast to rise by 1.9% in 2025.

Electricity demand in the European Union is expected to increase by 1.7% in 2024 as economic difficulties ease, but uncertainty over the pace of growth remains. EU electricity consumption had contracted over the two previous years, with the decline in output from energy-intensive industries an important driver. Signs of a recovery in EU electricity demand emerged starting in the fourth quarter of 2023. Growth gained further traction during the first half of 2024 as energy prices stabilised and various industries that had previously curtailed operations restarted. Nevertheless, while coming down from previous highs, energy prices in Europe are still elevated compared with pre-Covid levels. This, combined with a moderately sluggish macroeconomic outlook, continues to weigh on some industries and raises uncertainties over the pace of the demand recovery.

The rise of artificial intelligence (AI) has put the electricity consumption of data centres in focus, making better stocktaking more important than ever. In many regions, historical estimates of data centres’ electricity consumption are hampered by a lack of reliable data. At the same time, future projections include a very wide range of uncertainties related to the pace of deployment, the diverse and expanding applications of AI, and the potential for energy efficiency improvements. Expanding and improving the collection of electricity demand data from the sector will be crucial to identify past developments correctly and to understand future trends better. The International Energy Agency (IEA) has been a frontrunner in studying the links between the energy sector and digitalisation. To provide more insight into the topic, the IEA will be hosting the Global Conference on Energy and AI in December 2024, bringing together governments, industry, researchers and other stakeholders.

Heatwaves continue to strain power systems worldwide

Many regions struggled with intense heatwaves in the first half of 2024, which elevated electricity demand and strained power grids. May 2024 was the hottest month since global records began and the 12th consecutive month of record-high temperatures. India, Mexico, Pakistan, the United States, VietNam, and many other countries saw severe heatwaves with surging peak loads due to the increased need for cooling. As more households begin to purchase air conditioners (ACs), the impact will grow substantially, particularly in emerging economies where the proportion of households with ACs is currently much lower compared with advanced economies with comparable climates. Implementing higher efficiency standards for air conditioning will be crucial to mitigate the impact of increased cooling demand on power systems. The expansion and reinforcement of power grids will also be very important to ensure reliability.

Clean energy sources will set new records through 2025

Despite the sharp rise in electricity use, solar PV alone is expected to meet roughly half of the growth in global electricity demand to 2025. Together with wind power generation, it will make up almost 75% of the increase.

Global electricity generation from solar PV and wind is expected to surpass that from hydropower in 2024. This follows a massive 33% year-on-year increase in global solar PV generation and sustained growth in wind generation of 10%. The global energy transition is set to achieve another significant milestone by 2025, with total renewable generation poised to overtake coal-fired electricity output. The share of renewables in global electricity supply rose to 30% in 2023 and is projected to climb further to 35% in 2025.

Global electricity generation by source, 2014-2025

Openexpand

Global renewable electricity generation by source, 2014-2025

Openexpand

In the European Union, wind and solar PV generation is set to exceed fossil-fired output in 2024. Wind and solar PV’s combined share in total electricity supply is forecast to rise from 26% in 2023 to 30% in 2024, and to 33% in 2025. The primary driver is the rapid growth of solar PV, led by reduced prices of solar modules combined with strong policy support. The share of all renewable energies in total generation is expected to reach 50% in 2024.

Global nuclear generation is on track to reach a new high in 2025, surpassing its previous record in 2021. Nuclear generation is forecast to rise globally by 1.6% in 2024, and by 3.5% in 2025. This growth is supported by a steady increase in output by the French nuclear power fleet as maintenance works are completed, by the restarting of reactors in Japan, and by new reactors coming online in various markets, including China, India, Korea and Europe.

Power sector emissions are plateauing, with a slight increase in 2024 followed by a decline in 2025

Coal-fired output is set to remain resilient in 2024 due to strong electricity demand growth, hindering a decline in global power sector CO2 emissions. Despite the rapid growth of renewables, the brisk increase in electricity consumption, especially in China and India, is resulting in the use of more coal-fired generation to meet demand. Global coal-fired output is expected to increase by less than 1% in 2024, but this is highly dependent on hydropower trends, especially in China. Chinese hydropower output rebounded strongly in the first half of 2024 from its 2023 low, and a further improvement in hydropower trends in the second half of the year could curb coal-fired power generation and reduce global power sector emissions. Global natural gas-fired output is forecast to grow on average by around 1% over the 2024-2025 period. Significant declines in Europe are set to be offset by increases in Asia, amid rising LNG imports, and in the Middle East, driven by switching from oil-fired to gas-fired generation.

Global CO2 emissions from electricity generation are set to remain broadly on a plateau through 2025. The slight increase in power sector emissions in 2024 is expected to be followed by a decrease of less than 1% in 2025. This will be driven by a modest fall in coal-fired output due to further expansion of clean energy sources and the continued decline in oil-fired generation. While extreme weather conditions such as heatwaves and droughts, as well as economic shocks or changes in government policies, can cause an uptick in emissions in individual years, the structural trend of clean energy sources constraining fossil fuels will remain robust.

The United States is forecast to see an uptick in power sector CO2 emissions in 2024 before a decline in 2025. The United States is one of the few advanced economies that will see its power sector CO2 emissions rise in 2024, though they will still be almost 30% lower than a decade earlier. The 2024 increase follows a sharp decline of 8% in 2023, when there was a massive 20% drop in coal-fired power generation due to strong competition from very low natural gas prices and lower electricity demand amid mild weather. In 2024, US coal-fired generation is expected to grow by around 2% and natural gas by 1.5%, leading to an increase in emissions. This is driven by a significant rebound in US electricity demand growth after the decline in 2023 and by the limited scope for further coal-to-gas switching, given the current fuel price dynamics. Nevertheless, these trends will be highly dependent on further developments in market prices for natural gas and weather trends in the second half of 2024.

Rising frequency of negative electricity prices signals the urgent need to increase system flexibility

There has been a significant increase in 2024 in the frequency of negative wholesale price events in numerous power markets. In the first half of the year, the share of negatively priced hours in Southern California was above 20%, more than tripling from a year before. In some markets, such as South Australia, prices have been negative for about 20% of the time since 2023. Negative prices occur because generation is not flexible enough due to technical, economic, contractual or regulatory reasons. They indicate that the demand side is not sufficiently responsive to prices and that there is not enough storage available. Rising frequency of negative prices sends an urgent signal that greater flexibility of supply and demand is needed. The appropriate regulatory frameworks and market designs will be important to allow for an uptake in flexibility solutions such as demand response and storage.

Executive summary – Electricity Mid-Year Update - July 2024 – Analysis - IEA (2024)

FAQs

What does the IEA say in its electricity 2024 report? ›

Global power consumption is expected to grow by around 4% in 2024, which would be the largest growth rate since 2007, with the trend expected to continue at the same pace in 2025, compared to a 2.5% demand increase in 2023, IEA data showed.

What is the outlook for electricity in 2024? ›

We forecast a moderate increase in demand of 2.5% in 2024, assuming a reversion to average weather conditions.

What is the global energy perspective in 2024? ›

Global energy consumption will grow by 1.8% in 2024, largely driven by strong demand in Asia. Despite still-high prices and unsolved supply chain disruptions, demand for fossil fuels will reach record levels, but demand for renewable energy will rise by 11%.

What is the global electricity demand forecast? ›

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 finds. 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.

What is the outlook for electricity generation in the US? ›

July 9 (Reuters) - U.S. power consumption will rise to record highs in 2024 and 2025, the U.S. Energy Information Administration (EIA) said in its Short Term Energy Outlook (STEO) on Tuesday. EIA projected power demand will rise to 4,123 billion kilowatt-hours (kWh) in 2024 and 4,198 billion kWh in 2025.

What is the future of electricity? ›

Clean electricity could represent more than 80% of total electricity generation in 2030. Power system costs could be slashed by $50 to $115 billion through 2030, saving consumers money. Power-sector carbon dioxide emissions could decline by 84% in 2030 relative to 2005 levels, avoiding climate damages of $880 billion.

What are the energy challenges in 2024? ›

These include resilience, diversity of supplies, climate change, the energy-water-food nexus, shifts in supply chains and accessibility of critical minerals and metals. The shift towards resilience is observed in both this report and the 2024 World Energy Trilemma Report.

What is the forecast for electricity in the US? ›

Residential electricity prices

We expect that the U.S. price of electricity to residential end-use customers will average 16.2 cents per kilowatthour in 2024, which would be 1% higher than the average price in 2023. The forecast average U.S. price to residential end-use customers increases by about 2% in 2025.

What is the renewable forecast for 2024? ›

EIA expects electricity from solar, wind, and hydropower combined to account for 22% of total U.S. generation in 2024, increasing to 24% in 2025. Electricity from those three sources had made up 21% of U.S. generation in 2023. EIA also forecasts solar will provide 41% more electricity in 2024 than in 2023.

What are the main predictions of the IEA in the world energy outlook? ›

Changing Fossil Fuel Dynamics: The report suggests that all fossil fuels (oil, natural gas and coal) are on track to peak before 2030, the first time this is predicted to happen in a World Energy Outlook scenario, indicating a fundamental shift in the energy landscape.

What is the world energy transition outlook for 2024? ›

Global energy investment is set to exceed USD 3 trillion for the first time in 2024, with USD 2 trillion going to clean energy technologies and infrastructure.

What is the energy of 2024? ›

2024 Is A Number Eight Year

The number 8 relates to the flow of the Universe and can attract conditions that can bring financial benefits or losses. It's a good year to focus on your finances, your career or your business, and your ability to create abundance.

How much electricity will the US use in 2024? ›

EIA projected power demand will rise to 4,112 billion kilowatt-hours (kWh) in 2024 and 4,123 billion kWh in 2025. That compares with 3,994 billion kWh in 2023 and a record 4,070 billion kWh in 2022.

Which country has the highest electricity demand? ›

China is the world's largest consumer of electricity, using over 5.934 trillion kWh of energy annually. China accounts for almost one-quarter of global energy consumption. The country is known for running mainly on coal but has also shifted to natural gas and renewable energy sources in recent years.

What will provide about 6% of the world's electricity this year? ›

Today solar power is long past the toy phase. Panels now occupy an area around half that of Wales, and this year they will provide the world with about 6% of its electricity—which is almost three times as much electrical energy as America consumed back in 1954.

How much will electricity cost in China in 2024? ›

Over the past few years, the average industrial power rate in China has increased slightly, reaching approximately US$0.088/kWh in 2024, up from US$0.084/kWh in 2019.

What is the outlook for nuclear energy in the IEA? ›

In the 2023 edition of the IEA's World Energy Outlook (WEO 2023), nuclear capacity reaches 557 GWe in 2040 and 622 GWe in 2050 in the STEPS; and 677 GWe and 769 GWe in the APS.

What is the forecast for electricity consumption? ›

Households in the U.S. residential sector purchased 5.1 quadrillion British thermal units (quads) of electricity in 2022. Our projections of residential consumption of purchased electricity increase between about 14% and 22% from 2022 to 2050 across all cases, reaching between 5.9 quads and 6.3 quads.

What is the IEA Energy Security Index? ›

The International Energy Security Risk Index, a first-of-its-kind energy risk indicator, uses quantifiable data, historical trend information, and government projections to identify the policies and other factors that contribute positively or negatively to international energy security.

Top Articles
Latest Posts
Recommended Articles
Article information

Author: Cheryll Lueilwitz

Last Updated:

Views: 5613

Rating: 4.3 / 5 (74 voted)

Reviews: 81% of readers found this page helpful

Author information

Name: Cheryll Lueilwitz

Birthday: 1997-12-23

Address: 4653 O'Kon Hill, Lake Juanstad, AR 65469

Phone: +494124489301

Job: Marketing Representative

Hobby: Reading, Ice skating, Foraging, BASE jumping, Hiking, Skateboarding, Kayaking

Introduction: My name is Cheryll Lueilwitz, I am a sparkling, clean, super, lucky, joyous, outstanding, lucky person who loves writing and wants to share my knowledge and understanding with you.