The International Energy Agency (IEA) announced on Wednesday that the ongoing energy crisis and economic downturn will have a significant impact on global power demand growth in 2023. However, the agency predicts a probable rebound in 2024, emphasizing the urgent need for developing more renewable capacity.
According to IEA data, the global growth rate for energy consumption is projected to slow to just under 2% in 2023, compared to 2.3% in 2022. This decline follows the five-year pre-COVID 19 average of 2.4%. However, the rate is expected to rise to 3.3% in 2024 as the global economic outlook improves.
The IEA forecasts that renewable energy will cover the expected growth in power demand for both this year and the next. Furthermore, it anticipates that power generated from renewable sources will exceed one third of the total global power supply for the first time in 2024.
In contrast, hydropower has experienced a decline of approximately 2% between 2020 and 2022, compared to figures from 1990 to 2016. This decline amounts to around 240 terawatt-hours, equivalent to Spain's annual consumption. The IEA highlights the importance of anticipating climate change-related challenges in hydropower and planning accordingly to ensure efficient and sustainable use of hydro resources.
The IEA also states that the growth of renewable energy should contribute to reducing global emissions. While China and India are expected to see increases in emissions, these are anticipated to be offset by declines in other countries with growing renewable deployment and the continued substitution of coal with natural gas.
The data from the IEA reveals that the European Union alone accounts for 40% of the total decline in emissions from power generation. In the first half of this year, the EU recorded a 6% decrease in power demand, attributed to energy-intensive industries like aluminum, steel, paper, and chemicals cutting back their usage in response to high prices. Additionally, a relatively mild winter had a limited impact on reducing demand.
While wholesale electricity prices have fallen significantly from the previous year's records due to the disruption caused by Russia's invasion of Ukraine, average prices in Europe remain more than double their 2019 levels. In contrast, the United States has seen prices retreat to almost 2019 levels. The country's power demand is expected to decrease by 1.7% in 2023 due to slowed economic growth but rebound by 2% in 2024, down from the 2.6% recorded in 2022.
In China, power demand is projected to grow by 5.3% in 2023 and 5.1% in 2024 following a moderate 3.7% increase in 2022. The IEA attributes this growth to the increased use of cooling systems to cope with summer heatwaves.
India's power consumption is expected to rise by 6.8% in 2023 and 6.1% in 2024, surpassing the combined consumption of Japan and Korea. However, this growth rate is lower than the 8.4% rise recorded in 2022. The anticipated increase in power demand in India is attributed to the greater usage of household appliances, electrical machinery, electric vehicles, and cooling systems.