The International Energy Agency (IEA) Electricity Mid-Year Update report forecasts that global electricity demand will grow by 4% in 2024.
As demand grows at an increasing rate (for comparison, it increased 2.5% in 2023), renewable sources will continue increasing their share of total electricity output to reach 35% in 2025.
Global economic growth, intense heatwaves and increasing uptake of technologies including electric vehicles (EVs) and heat pumps are behind the rapid growth – the fastest in five years.
In fact, this year is expected to see the highest annual growth since 2007, excluding two years of exceptional circumstances with the 2008 global financial process and 2020 covid-19 pandemic.
For the first time, in 2024 renewable sources of electricity will outstrip coal generation which is expected to drop from a 36% share to 33% over the same period.
Solar PV alone is expected to meet roughly half of the growth in global electricity demand over 2024 and 2025. Solar and wind combined could meet as much as three-quarters of the growth.
All the same, global coal-fired generation is anticipated to increase slightly in 2024, growing by less than 1%, following a 1.9% increase in 2023 growth in demand particularly from India and China.
“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 heatwaves,” said Keisuke Sadamori, IEA director of Energy Markets and Security.
“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. 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.”
Addressing AI’s electricity demand
The IEA report acknowledges that there is now a focus on electricity demand from data centres as artificial intelligence technology continues to grow. It estimates that the electricity consumption of data centres accounted for 1-1.3% of global electricity demand in 2022.
This share could get within the range of 1.5-3% by 2026, according to IEA predictions. By contrast, EVs consumed 0.2% of the world’s electricity in 2022, with consumption forecast to range from less than 1.5% to 2% by 2026.
The report does acknowledge that historically data centre electricity consumption has seen a wide range of estimates – a lack of reliable data contributes to some uncertainty about consumption levels.
Improving the collection of energy consumption data of the sector is important to correctly identify past developments. This in turn helps to better understand future trends in order to inform the public debate more accurately.
Some data centre providers are working to meet their power needs with carbon-free electricity, utilising wind, solar, storage and firm clean energy. In this context, the data centre sector has traditionally driven clean energy deployment via power purchase agreements (PPAs).
We recently explored the strain of AI on the grid in a blog post, which is available here.
