Report: Clean energy to meet increase in global electricity demand in next three years

Advanced economies witnessed a record decline in CO2 emissions due to clean energy growth.

This is based on the IEA’s annual report “Electricity 2024,” providing an analysis of global electricity market developments and policies.

In 2023, global annual growth in electricity demand slightly eased to 2.2% due to reduced consumption in advanced economies. However, the IEA projects a subsequent acceleration, with an average growth rate of 3.4% from 2024 through 2026.

The majority of this surge—about 85%—is anticipated to come from outside advanced economies, notably from China, India and Southeast Asian countries.

Moreover, the report underscores a significant shift towards low-emission electricity sources, including renewables (solar, wind and hydro) and nuclear power. By 2026, these sources are expected to contribute nearly half of the world’s electricity generation, up from just under 40% in 2023.

Renewables are projected to surpass coal, making up more than one-third of total electricity generation by early 2025.

The report suggests that the increase in electricity generation from renewables and nuclear sources is contributing to a structural decline in the power sector’s emissions. Global emissions from electricity generation are expected to decrease by 2.4% in 2024, with further declines anticipated in 2025 and 2026.

IEA’s executive director Fatih Birol said: “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.”

“This is largely thanks to the huge momentum behind renewables, with ever cheaper solar leading the way. While more progress is needed, and fast, these are very promising trends.”

Regional economic performance

In 2023, electricity accounted for 20% of final energy consumption, up from 18% in 2015. While electricity prices generally declined in 2023 compared to 2022, regional variations impacted economic competitiveness.

Europe saw a significant decline in wholesale electricity prices, but the prices remained double pre-Covid-19 levels. In contrast, the US experienced a 15% price increase compared to 2019.

Despite a decline in electricity demand in the EU for the second consecutive year, emerging and developing economies recorded robust growth, driven by increasing populations and industrialisation.

China is expected to lead the global increase in electricity demand, with India experiencing the fastest growth among major economies.

Africa, however, stands out as an outlier in electricity demand trends. While electricity use per capita has surged in India and Southeast Asia, Africa has witnessed effectively stagnant consumption for over three decades.

Dr Birol added: “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. The international community needs to work together with African governments to enable the urgent progress that is needed.”

Decline in power sector emissions

According to the report, the decoupling of global electricity demand and emissions would be significant, particularly as the energy sector experiences increasing electrification, driven by technologies such as electric vehicles (EVs) and heat pumps.

However, the Global Carbon Project cautioned last year that, despite a major upswing in global renewable energy generation, the failure to tackle fossil fuel consumption has resulted in a rise in global carbon emissions.