【Report】IEA Electricity Market Report 2023


IEA Electricity Market Report 2023
Low-emissions sources are set to cover the growth in global electricity demand, CO2 emissions from the power sector are coming to a head

The International Energy Agency (IEA) has released its “Electricity Market Report 2023”, which offers a thorough analysis of recent policies, trends and market developments related to the electricity market. It also provides forecasts through 2025 for electricity demand, supply and CO2 emissions – with a detailed study of the evolving generation mix.

Global electricity demand remained resilient in 2022, but is expected to accelerate, and this report shows that low-emissions sources are set to cover almost all of the growth in global electricity demand by 2025. It also notes that CO2 emissions from the power sector are likely to come to a head due to the expansion of those power sources.

Trends in electricity demand

In 2022, the global energy crisis caused sharp price rise for natural gas and coal, leading to a strong increase in the electric generation cost, which in turn slowed the economy and rise in electricity prices, curbing growth in electricity demand in most parts of the world. Global electricity demand growth was slightly slowed down to 2%, but is expected to accelerate to an average of 3% per year over the next three years. Driving this growth will be the emerging and developing economies of Asia. Over the next three years, more than 70% of the growth in global electricity demand is set to come from China, India and Southeast Asia combined. Although considerable uncertainty remains about developments in China, China’s share of global electricity consumption is forecast to rise to one-third by 2025, compared with one-quarter in 2015. At the same time, global electricity demand in the developed countries is expected to grow at a much faster pace of 3% per year over the 2023-2025 period, due to electrification of transportation, heating, and industrial sectors toward decarbonization society.

Global electricity generation from both natural gas and coal is expected to remain broadly flat between 2022 and 2025

While gas-fired generation in the European Union is forecast to decline, significant growth in the Middle East will partly offset this decrease. Similarly, drops in coal-fired generation in Europe and the Americas will be matched by a rise in Asia Pacific. Although the percentage of either power generation source is expected to decrease as renewable energy increases, the trends in fossil-fired generation remain subject to developments in the global economy, weather events, fuel prices and government policies.

Low-carbon generation sources – renewables and nuclear – are expected to meet almost all of the additional electricity demand by 2025

Renewables are showing strong growth and its share in the global power generation mix is expected to rise from 29% in 2022 to 35% in 2025. China is a major driving source of this increase. China accounts for more than 45% of the growth in renewable generation, followed by the EU with 15%. Regarding nuclear energy, discussions on the future role in the energy mix have resurfaced. Global nuclear power generation is set to grow on average by almost 4% over 2023-2025, which comes from just four countries: China, India, Japan and Korea.

Renewables and nuclear energy will dominate the growth of global electricity supply over the next three years, together meeting on average more than 90% of the additional demand by 2025.

After reaching an all-time high in 2022, power generation emissions are set to plateau through 2025

Electricity generation-related CO2 emissions reached a record high in 2022. Last year, the CO2 intensity of power generation increased in Europe as a result of increased coal and gas use due to drought-induced low hydropower supply and maintenance and the constrained nuclear output, but globally it is expected to decline in the coming years. As power generation emissions are expected to decrease on average by about 10% annually through 2025, the setback in the European Union will be only temporary.

This new report from the IEA states that global electricity demand and supply are increasingly weather-dependent, highlighting the need to prevent climate change by accelerating decarbonization and expanding renewable energy.

Related Links

  • IEA Press Release:Low-emissions sources are set to cover almost all the growth in global electricity demand in the next three years(Link
  • Executive summary:Global electricity demand growth slowed only slightly in 2022 despite energy crisis headwinds(Link
  • Download Report:Electricity Market Report 2023(Link

 

Written/Published by: International Energy Agency (IEA)
Published: February 8, 2023