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

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.

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.

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.

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.