Global Electricity Demand Set for 4% Increase in 2024, with Solar PV Meeting Half the Demand, Says Report

The global demand for electricity is surging at an unprecedented pace, driven by robust economic growth, intense heatwaves, and the increasing adoption of electricity-dependent technologies such as electric vehicles (EVs) and heat pumps. The International Energy Agency’s (IEA) recent Electricity Mid-Year Update predicts that electricity demand will increase by about 4% in 2024, rising from 2.5% in 2023. This represents the highest annual growth rate since 2007, not counting the exceptional rebounds seen after the global financial crisis and the Covid-19 pandemic. This trend is projected to continue into 2025, with demand growth anticipated to remain around 4%.

Driving Forces Behind the Surge

Several factors are contributing to this rapid increase in electricity consumption. Economic activities are rebounding strongly in many parts of the world, while extreme weather conditions, particularly heatwaves, are elevating demand for cooling. Additionally, the accelerated uptake of technologies that rely heavily on electricity, such as EVs, heat pumps, and various digital tools, is further amplifying demand.

Renewable Energy’s Rapid Ascent

In tandem with the rising demand for electricity, renewable energy sources are also experiencing significant growth. The IEA forecasts that the share of renewables in global electricity supply will rise from 30% in 2023 to 35% by 2025. This increase is primarily driven by solar photovoltaics (PV) and wind energy, with solar PV alone expected to meet roughly half of the growth in global electricity demand over 2024 and 2025. Combined, solar and wind are projected to account for as much as three-quarters of the increase in electricity consumption during this period.

Solar PV: Leading the Renewable Charge

Solar PV is set to play a crucial role in the expansion of renewable energy. The technology’s cost-effectiveness, scalability, and declining installation costs have made it a preferred choice for new electricity generation projects worldwide. By 2025, the electricity generated by renewables is forecast to surpass that generated by coal for the first time, marking a significant milestone in the transition to cleaner energy sources.

Coal and Carbon Emissions: A Complex Picture

Despite the rapid growth of renewables, coal-fired power generation is expected to remain substantial due to the robust increase in electricity demand, particularly in China and India. As a result, carbon dioxide (CO2) emissions from the global power sector are projected to plateau, with a slight increase in 2024 followed by a decline in 2025. However, uncertainties remain, especially regarding hydropower production in China, which saw a strong recovery in the first half of 2024. Continued growth in hydropower could curb coal-fired power generation and lead to a slight decline in global power sector emissions in 2024.

Regional Highlights: India, China, the United States, and the European Union

India: India is expected to experience the most significant increase in electricity demand, projected to surge by 8% in 2024. This growth is driven by strong economic activity and severe heatwaves that elevate the need for air conditioning.

China: China’s electricity demand is also set to rise significantly, with growth exceeding 6% due to robust activity in the services and industrial sectors, including the manufacturing of clean energy technologies.

United States: After a decline in 2023 due to mild weather, electricity demand in the United States is forecast to rebound by 3% in 2024, spurred by steady economic growth, rising cooling needs, and an expanding data center sector.

European Union: The European Union is expected to see a more modest recovery in electricity demand, with growth forecast at 1.7% following two years of contraction amid the energy crisis. The region’s demand is influenced by ongoing economic recovery and efforts to enhance energy efficiency.

The Role of Air Conditioning and Heatwaves

The increasing use of air conditioning is a significant driver of rising electricity demand worldwide. Multiple regions experienced intense heatwaves in the first half of 2024, which strained electricity systems and heightened the need for reliable power supply. As global temperatures continue to rise, the demand for air conditioning is expected to grow, further driving electricity consumption.

Challenges and Opportunities in the Data Center Sector

The rise of artificial intelligence (AI) and the expanding data center sector are drawing increased attention to their electricity demand. The IEA report highlights the wide range of uncertainties regarding the electricity consumption of data centers, including the pace of deployment, the diverse applications of AI, and potential energy efficiency improvements. Accurate data collection on electricity consumption in the data center sector is essential for understanding past trends and forecasting future demands.

Implications for Energy Policy and Grid Infrastructure

The rapid growth in electricity demand underscores the need for robust energy policies and infrastructure investments. Expanding and reinforcing grids is crucial to provide secure and reliable electricity supply. Additionally, implementing higher energy efficiency standards can help mitigate the impacts of increased cooling demand on power systems.

The Electricity Mid-Year Update highlights the dynamic and rapidly evolving landscape of global electricity demand and supply. The projected growth in electricity consumption, driven by economic activity, heatwaves, and electrification, presents both challenges and opportunities. The ascent of renewable energy, particularly solar PV, is a positive development, but the persistence of coal-fired power generation and the complexities of managing rising demand require comprehensive and forward-thinking energy policies. Ensuring a secure, reliable, and sustainable electricity supply will be essential for meeting international energy and climate goals in the coming years.