The world is witnessing a significant transformation in energy paradigms, evolving from the eras dominated by coal and oil to an emerging and unprecedented age characterized by electricity as the foundational energy sourceThe International Energy Agency (IEA) has recently shed light on this transition through its "Electricity Report 2025," which anticipates the future trajectory of global electricity consumption from now until 2027, outlining the evolving trends and challenges: a considerable surge in electricity demand is expected globally.
According to the IEA report, the anticipated growth will lead to an increase of 3,500 terawatt-hours (TWh) in global electricity consumption over the next three yearsThis figure equates to the annual electricity consumption of an entire country, specifically Japan, indicating the magnitude of change underway in the energy sector.
"The rapid acceleration in global electricity demand highlights a significant shift in the global energy system and heralds the advent of a new electrical age," stated Keisuke Sadamori, Director of Energy Markets and Security at the IEAHowever, he also cautioned that this shift poses complex challenges for nations seeking to ensure a secure, affordable, and sustainable electricity supply.
The report emphasizes that between 2025 and 2027, the world's electricity consumption is projected to rise sharply due to an increase in industrial production needs, growing use of air conditioning, an accelerated trend toward electrification, and the expansion of global data centersIt is estimated that electricity demands will escalate from 27,178 TWh in 2022 to approximately 32,542 TWh in 2027, marking an almost 20% increaseNotably, the growth from 2023 to 2024 is expected to peak at 4.3%, reflecting one of the highest rates seen in recent years.
Regionally, the Asia-Pacific region is projected to lead the surge in electricity consumption, with demand in this area set to reach 15,452 TWh, a staggering increase of 5.9% from the previous year
Advertisements
Specifically, China's demand for electricity is expected to witness a 7% growth in 2024, driven by industrial development, enhanced cooling demands due to rising temperatures, and the proliferation of data centers and 5G networksOver the period from 2025 to 2027, it is anticipated that China's electricity demand will grow at an average annual rate of 6%. Similarly, in India, the electricity demand is expected to rise by 5.8% in 2024, primarily fueled by robust economic growth alongside increased cooling needs, leading to an average growth rate of 6.3% from 2025 to 2027.
Contrasting the years 2022-2023 with 2023-2024, it becomes evident that the demand for electricity in emerging economies is a key driver behind the rapid increase in global electricity consumptionDuring this period, regions like Australia, the United States, and parts of Europe have experienced instances of negative electricity prices, indicative of surplus supply and insufficient demand, which further underscores the dynamic shifts in global energy markets.
It is also essential to consider the implications of the post-pandemic economic recovery, which significantly contributed to the soaring electricity demands in emerging economiesAs we move into 2023 and beyond, prolonged trends of electrification and data center expansion will undoubtedly continue to shape global energy landscapes.
According to analysis from Precedence Research, the global data center market is expected to expand rapidly between 2023 and 2034, with its market size anticipated to leap from $114 billion in 2023 to approximately $365 billion by 2034, showcasing more than doubling over 11 years.
A historical perspective on global energy and electricity demand changes from 2010 to 2035 reveals that despite anticipated population growth and uneven economic recovery across regions, the annual growth rate of energy demand is expected to decelerate to just 0.5% from 2023 to 2030. Conversely, electricity demand is on track to increase from 2.7% growth during 2010-2023 to an estimated 3% during 2023-2035.
When examining power supply, it becomes clear that renewable energy now plays a pivotal role
Advertisements
The report indicates a consistent increase in the share of renewable energy within global power supply, with forecasts suggesting that these sources will account for a remarkable 95% of the growth in global electricity demand from 2025 to 2027. Solar photovoltaic (PV) and wind energy are poised to be the primary contributors to this growthIn the previous year alone, global solar PV generation saw an impressive 30% increase, with predictions indicating that it will account for half of the growth in global electricity demand by 2027.
The IEA report attributes the robust growth in renewable energy sources like solar PV to advances in technology and decreasing costsWhile the growth in 2022-2023 was largely isolated to a select few countries, the expansion expected from 2023 onwards is anticipated to be inclusive of a broader range of nations and regions.
As demand for electricity climbs, the report acknowledges the series of challenges faced by various regions within the electricity marketOne optimistic trend is the amplification of carbon reduction effects correlated with the rising share of renewables in electricity usageThe report forecasts that CO2 emissions from the global electricity sector will likely remain relatively stable between 2024 and 2027, fundamentally attributed to the growth of both renewable energy and nuclear energy initiatives, resulting in a 3% reduction in emission intensity.
In order to sustain this positive trend, the IEA underscores the necessity for heightened investments in renewable energy systems, particularly in areas of grid enhancements and energy storage solutions. "Advanced renewable energy technologies such as solar PV, wind, and hydrogen will possess significant potential for emissions reductions in the futureCollectively, these technologies are expected to bear the burden of three-quarters of carbon reductions by 2050. Thus, addressing deployment barriers, improving grid infrastructure, and expanding storage capacities are critical for achieving the global transition in energy," stated the report.
Encouragingly, in 2023, nearly $2 trillion in investments have flowed annually into the renewable energy sector, representing a sum nearly double that invested in traditional fossil fuel projects.
Furthermore, the report not only underscores the increasing share of renewables in generation but also addresses contemporary concerns related to extreme weather events, which have cast significant implications on the stability and reliability of electricity supply systems globally
Advertisements
Advertisements
Advertisements