The International Energy Agency (IEA) has released its “Power Market Outlook 2023 and 2024”. The decline in electricity consumption in developed economies is dragging down global electricity demand growth. Global electricity demand growth is expected to slow in 2023 before accelerating in 2024. Demand growth is expected to be slightly below 2% in 2023, down from 2.3% in 2022 and an average annual growth rate of 2.4% over the 2015-2019 period.
Electricity demand in the EU will fall for the second consecutive year in 2023 to its lowest level in 20 years.
Europe’s energy-intensive industries have yet to recover from last year’s production slump, as evidenced by a 6% year-on-year decline in total EU electricity demand in the first half of 2023.
The sharp decline in demand in developed economies contrasts with demand growth in emerging economies such as China and India.
Decline in fossil fuel generation
The accelerating growth in renewable energy capacity additions suggests that renewable generation could overtake coal as early as 2024 if weather conditions are favorable. Coal-fired generation is projected to grow by 1.5% in 2022 before declining slightly in 2023 and 2024, when high natural gas prices drive demand for alternative sources of energy. the growth in coal-fired generation in Asia in 2023 and 2024 will be offset by sharp declines in the US and Europe.
Renewable energy will meet all additional demand in 2023 and 2024.
By 2024, fossil-fueled generation is projected to decline fourfold in six years.
Emissions from electricity generation will decline slightly by 2024
Increases in power generation emissions in China and India are expected to be offset by decreases in emissions elsewhere. The EU alone is projected to account for 40% of the total decline in power generation emissions in 2023 and 2024 (excluding China and India). This is closely followed by the United States, where renewable energy deployment is growing strongly and natural gas is gradually replacing coal-fired supplies.
Wholesale electricity prices indicate growing demand for flexibility
Despite regional variations, wholesale electricity prices have fallen significantly in many countries, but remain high.
The impact of weather on electricity demand and supply is becoming more pronounced
Growing demand for cooling is overloading global power systems.
Hydropower availability needs more attention.