Solar and wind are poised to cover 75% of increased demand as world electricity consumption hits a 17-year high.
Global electricity demand is set to surge at its fastest pace in nearly two decades, driven by robust economic growth, intense heat waves, and the rapid adoption of electric vehicles and heat pumps, according to the International Energy Agency’s (IEA) latest Electricity Mid-Year Update.
The report forecasts electricity demand growth of around 4% in both 2024 and 2025, marking the highest sustained increase since 2007, excluding post-crisis rebounds.
This unprecedented growth in electricity consumption underscores the accelerating electrification of the world’s energy systems. However, it also poses significant challenges for power grids and raises concerns about carbon emissions from the electricity sector.
Emphasising the dual nature of this trend, Keisuke Sadamori, IEA director of Energy Markets and Security, said: “Growth in global electricity demand this year and next is set to be among the fastest in the past two decades, highlighting the growing role of electricity in our economies as well as the impacts of severe heat waves.”
Therefore, renewable energy sources are expanding rapidly to meet this surging demand. The IEA projects that the share of renewables in global electricity supply will rise from 30% in 2023 to 35% in 2025. In a historic milestone, electricity generated from renewables worldwide is forecast to surpass that from coal for the first time in 2025.
Solar photovoltaic (PV) technology is leading this charge. It is expected to meet roughly half of the growth in global electricity demand over 2024 and 2025. Combined with wind power, these two renewable sources could satisfy as much as three-quarters of the increased demand.
Despite this significant growth in clean energy, the substantial demand increase means that global power generation from coal is unlikely to decline this year. This is particularly true in China and India, where electricity consumption is soaring. As a result, carbon dioxide emissions from the global power sector are expected to plateau, with a slight increase in 2024 followed by a decline in 2025.
Regional variations in electricity demand growth are notable. India is projected to see a massive 8% increase in demand this year, driven by strong economic activity and powerful heat waves. China’s market is expected to grow by more than 6%, fueled by robust activity in the services industries and various industrial sectors, including clean energy technology manufacturing.
On the other hand, the US is forecast to experience a 3% rebound in electricity demand this year, following a decline in 2023. This growth is attributed to steady economic expansion, rising cooling needs, and an expanding data centre sector. In contrast, the European Union will see a more modest recovery in electricity demand, with growth forecast at 1.7%, following two consecutive years of contraction amid the impacts of the energy crisis.
The report also highlights the growing impact of air conditioning on electricity demand, as multiple regions faced intense heat waves in the first half of 2024. This trend is putting increased strain on electricity systems worldwide. Another factor contributing to electricity demand growth is the rise of AI and its associated data centre requirements.
The IEA emphasises the need for more reliable data and better stock-taking measures to accurately understand data centre electricity consumption. To address these challenges, Sadamori stressed the importance of accelerating the transition to clean energy: “It’s encouraging to see clean energy’s share of the electricity mix continuing to rise, but this needs to happen at a much faster rate to meet international energy and climate goals.”
He also emphasised the critical need for infrastructure improvements: “At the same time, it’s crucial to expand and reinforce grids to provide citizens with secure and reliable electricity supply — and to implement higher energy efficiency standards to reduce the impacts of increased cooling demand on power systems.”
With the surge in electricity consumption, the global focus is now on ensuring that sustainable energy sources can meet this rapid rise. The upcoming two years will be crucial in determining whether the worldwide power sector can effectively manage this sudden increase while advancing decarbonisation objectives.
