Executive summary – Electricity 2024 – Analysis - IEA (2024)

Falling electricity consumption in advanced economies restrained growth in global power demand in 2023. The world’s demand for electricity grew by 2.2% in 2023, less than the 2.4% growth observed in 2022. While China, India and numerous countries in Southeast Asia experienced robust growth in electricity demand in 2023, advanced economies posted substantial declines due to a lacklustre macroeconomic environment and high inflation, which reduced manufacturing and industrial output.

Global electricity demand is expected to rise at a faster rate over the next three years, growing by an average of 3.4% annually through 2026. The gains will be driven by an improving economic outlook, which will contribute to faster electricity demand growth both in advanced and emerging economies. Particularly in advanced economies and China, electricity demand will be supported by the ongoing electrification of the residential and transport sectors, as well as a notable expansion of the data centre sector. The share of electricity in final energy consumption is estimated to have reached 20% in 2023, up from 18% in 2015. While this is progress, electrification needs to accelerate rapidly to meet the world’s decarbonisation targets. In the IEA’s Net Zero Emissions by 2050 Scenario, a pathway aligned with limiting global warming to 1.5 °C, electricity’s share in final energy consumption nears 30% in 2030.

Electricity consumption from data centres, artificial intelligence (AI) and the cryptocurrency sector could double by 2026. Data centres are significant drivers of growth in electricity demand in many regions. After globally consuming an estimated 460 terawatt-hours(TWh) in 2022, data centres’ total electricity consumption could reachmore than 1000 TWh in 2026. This demand is roughly equivalent to the electricity consumption of Japan. Updated regulations and technological improvements, including on efficiency, will be crucial to moderate the surge in energy consumption from data centres.

China provides the largest share of global electricity demand growth in terms of volume, but India posts the fastest growth rate through 2026 among major economies.Following a 7% increase in India’s electricity demand in 2023, we expect growth above 6% on average annually until 2026, supported by strong economic activity and expanding ownership of air conditioners. Over the next three years, India will add electricity demand roughly equivalent to the current consumption of the United Kingdom. While renewables are set to meet almost half of this demand growth, one-third is expected to come from rising coal-fired generation. We also expect Southeast Asia to see robust annual increases in electricity demand of 5% on average through 2026, led higher by strong economic activity.

While electricity use per capita in India and Southeast Asia is rapidly rising, it has been effectively stagnant in Africa for more than three decades. Per capita consumption in Africa even declined in recent years as the population grew faster than electricity supply was made available, and we only expect it to recover to its 2010-15 levels by the end of 2026 at the earliest. Thirty years ago, a person in Africa consumed more electricity on average than someone living in India or Southeast Asia. However, strong increases in electricity demand and supply in India and Southeast Asia in recent decades – which have gone hand in hand with a boom in economic development – have transformed these regions at a spectacular pace. Meanwhile, Africa's per capita electricity consumption in 2023 was half that of India and 70% lower than in Southeast Asia. Our forecast for Africa for the 2024-26 period anticipates average annual growth in total electricity demand of 4%, double the mean growth rate observed between 2017 and 2023. Two-thirds of this growth in demand is set to be met by expanding renewables, with the remainder covered mostly by natural gas.

Electricity demand in the United States fell by 1.6% in 2023 after increasing 2.6% in 2022, but it is expected to recover in the 2024-26 outlook period. A key reason for the decline was milder weather in 2023 compared with 2022, though a slowdown in the manufacturing sector was also a factor. We forecast a moderate increase in demand of 2.5% in 2024, assuming a reversion to average weather conditions. This will be followed by growth averaging 1% in 2025‑26, led by electrification and the expansion of the data centre sector, which is expected to account for more than one-third of additional demand through 2026.

Electricity demand in the European Union declined for the second consecutive year in 2023, even though energy prices fell from record highs. Following a 3.1% drop in 2022, the 3.2% year-on-year decline in EU demand in 2023 meant that it dropped to levels last seen two decades ago. As in 2022, weaker consumption in the industrial sector was the main factor that reduced electricity demand, as energy prices came down but remained above pre-pandemic levels. In 2023, there were also signs of some permanent demand destruction, especially in the energy-intensive chemical and primary metal production sectors. These segments will remain vulnerable to energy price shocks over our outlook period.

EU electricity consumption is not expected to return to 2021 levels until 2026 at the earliest. Electricity demand in the European Union’s industrial sector fell by an estimated 6% in 2023 after a similar decline in 2022. Assuming the industrial sector gradually recovers as energy prices moderate, EU electricity demand growth is forecast to rise by an average 2.3% in 2024-26. Electric vehicles, heat pumps and data centres will remain strong pillars of growth over the period – together accounting for half of expected gains in total demand.

Renewables are set to provide more than one-third of total electricity generation globally by early 2025, overtaking coal. The share of renewables in electricity generation is forecast to rise from 30% in 2023 to 37% in 2026, with the growth largely supported by the expansion of ever cheaper solar PV. Through this period, renewables are set to more than offset demand growth in advanced economies such as the United States and the European Union, displacing fossil-fired supply. At the same time, in China, the rapid expansion of renewable energy sources is expected to meet all additional electricity demand, though the weather and the extent to which the country’s demand growth eases remain key sources of uncertainty for the outlook. The strong expansion in renewable power capacity must also be accompanied by accelerated investment in grids and system flexibility to ensure its smooth integration.

The rapid growth of renewables, supported by rising nuclear generation, is set to displace global coal-fired generation, which is forecast to fall by an average of 1.7% annually through 2026. This follows a 1.6% increase in coal-fired output in 2023 amid droughts in India and China that reduced hydropower output and increased coal-fired generation, more than offsetting strong declines in coal-fired generation in the United States and the European Union. The major factor that will determine the global outlook is evolving trends in China, where more than half of world’s coal-fired generation takes place. Coal-fired generation in China is currently on course to experience a slow structural decline, driven by the strong expansion of renewables and growing nuclear generation, as well as moderating economic growth. Despite the commissioning of new plants to boost the security of energy supply, the utilisation rate of Chinese coal-fired plants is expected to continue to fall as they are used more flexibly to complement renewables. Nevertheless, coal-fired generation in China will be influenced significantly by the pace of the economy’s rebalancing, hydropower trends, and bottlenecks in integrating renewables into the country’s power system.

Natural gas-fired generation is expected to rise slightly over the outlook period. In 2023, sharp declines in gas-fired power generation in the European Union were more than offset by massive gains in the United States, where natural gas, which has increasingly replaced coal, recorded its highest-ever share in power generation. Global gas-fired output grew by less than 1% in 2023. Through 2026, we forecast an average annual growth rate of around 1%. While gas-fired output in Europe is expected to continue declining, global growth will be supported by significant gains in Asia, the Middle East and Africa amid rising demand for power in these regions and the availability of additional liquefied natural gas (LNG) supply from 2025 onward.

Global hydropower generation declined in 2023 due to weather impacts such as droughts, below average rainfall and early snowmelts in numerous regions. Canada, China, Colombia, Costa Rica, India, Mexico, Türkiye, the United States, and Vietnam, along with other countries, all saw hydropower generation decline. The global hydropower capacity factor, a key measure of utilisation rate, fell to below 40%, the lowest value recorded in at least three decades. In certain countries, diminished hydropower output led to energy shortages, heightened reliance on fossil sources such as coal and gas, and raised concerns about the stability of electricity supply. The overall trend underscores the susceptibility of hydropower to weather patterns and the potential exposure of countries that rely heavily on hydro to generate electricity. Diversifying energy sources, building regional power interconnections and implementing strategies for resilient generation in the face of changing weather patterns will be increasingly important.

Extreme weather events triggered major power outages in 2023 in the United States and India. This underlined the need to boost resilience as weather impacts on power systems increase, with both supply and demand becoming more weather-dependent. Insufficient power capacity, fuel supply challenges and grid-related technical issues also continued to cause significant power shortages in many regions. The majority of these outages were observed in emerging economies such as Pakistan, Kenya and Nigeria, which are particularly affected by insufficient electricity supply, infrastructure problems and strained grids in the face of rising power demand. Expanded, stronger grids would not only ensure reliable electricity but also serve as a vital backbone for integrating renewables into power systems. Improving data collection, digitalisation and greater data transparency regarding outages is also essential to provide better insight into why faults occurred and to help develop preventative measures.

Specific operating measures and new markets for ensuring the stability of power systems are becoming more common. Countries with high shares of variable renewable generation are implementing mechanisms to ensure a steady power system frequency. Some regions are establishing minimum requirements for system inertia, a property typically provided by conventional generators with spinning rotors that helps enhance the power system’s resilience during disturbances. Additionally, various countries including the United Kingdom, Ireland and Australia have been introducing markets and measures such as fast frequency response and similar services that stabilise the power system rapidly after disruptions. Battery storage systems can provide such services for grid stability while enhancing system flexibility, thus playing a crucial role in integrating renewable energy sources.