The International Energy Agency (IEA) has reported that the ongoing energy crisis and economic downturn are likely to result in a deceleration of global power demand growth in 2023. The projected growth rate for energy consumption in 2023 is expected to be slightly less than 2%, down from 2.3% in 2022 and the five-year pre-COVID 19 average of 2.4%.
Nevertheless, the IEA anticipates a rebound in 2024, with the growth rate projected to rise to 3.3% as the global economic outlook improves.
To address the increasing energy demands in the future, the IEA emphasizes the necessity of developing more renewable energy capacity. The agency foresees that renewable energy sources will play a vital role in covering the expected growth in energy consumption for both 2023 and 2024. In fact, renewable energy is set to surpass one-third of the total global power supply for the first time in the upcoming year.
However, one concern highlighted by the IEA is the decline in hydropower. Between 2020 and 2022, hydropower has fallen by approximately 2% compared to figures from 1990 to 2016. This decrease represents a significant drop of around 240 terawatt-hours, which is equivalent to the annual energy consumption of Spain.
This decline underscores the importance of diversifying renewable energy sources and investing in their development to meet the increasing power demand while mitigating environmental impacts.
“Anticipating challenges on hydropower related to climate change, and planning accordingly, will be crucial for the efficient and sustainable use of hydro resources,” the IEA said.
According to the International Energy Agency (IEA), the growth of renewable energy is expected to play a crucial role in reducing global emissions. The increase in emissions observed in countries like China and India is likely to be balanced out by emission declines in other nations due to the expanding deployment of renewable energy and the ongoing shift from coal to natural gas.
Notably, the European Union (EU) has made significant progress in reducing emissions from power generation, accounting for 40% of the total global decline, as per data from the IEA. In the first half of the current year, the EU witnessed a notable 6% decrease in power demand. This reduction was attributed to energy-intensive industries, such as aluminum, steel, paper, and chemical industries, cutting back their energy usage in response to higher prices. Additionally, a relatively mild winter had a limited impact on demand reduction, as stated by the IEA.
While wholesale electricity prices have substantially dropped from the records set in the previous year due to the disruption caused by Russia’s invasion of Ukraine, average prices in Europe are still more than double their 2019 levels. India’s average prices have surged by 80%, and Japan’s by more than 30%, showcasing the continuing challenges faced by these regions in managing energy costs.
Overall, the IEA’s findings underscore the importance of the continued growth of renewable energy sources to combat emissions and stabilize electricity prices in different parts of the world.
Prices in the United States, however, have retreated almost to 2019 levels. The country’s demand is expected to decline by 1.7% in 2023 due to slowing economic growth, and to rebound in 2024 to 2%, down from the 2.6% recorded in 2022.
In China, demand is expected to grow 5.3% in 2023 and 5.1% in 2024, after a moderate 3.7% rise in 2022, the IEA data showed. Increased use of cooling to cope with summer heatwaves is expected to drive the demand growth there this year.
India’s consumption is expected to rise by 6.8% in 2023 and 6.1% in 2024 – when it is expected to surpass that of Japan and Korea combined – but down from the 8.4% rise recorded in 2022.
The growth is expected to come from increased use of household appliances, a rise in electrical machinery usage, an increase in electric vehicles, and greater demand for cooling.