Global power demand growth to rebound in 2024 after slowdown, IEA says

An ongoing energy crisis and an economic downturn is expected to slow global power demand growth in 2023, but a probable rebound in 2024 means more renewable capacity needs to be developed, the International Energy Agency (IEA) said on Wednesday.

The global growth rate for energy consumption is set to slow to slightly less than 2% in 2023, down from 2.3% in 2022, which was also down from the five-year pre-COVID 19 average of 2.4%.

For 2024, the rate is expected to rise to 3.3%, as the economic outlook improves, the IEA data showed.

The Paris-based agency predicted renewable energy would cover the expected growth this year and next and power from renewable sources would exceed one third of the total global power supply for the first time next year.

However, hydropower has declined, falling about 2% in 2020-2022 compared to 1990-2016 figures, which represents about 240 terawatt-hours, or the annual consumption of Spain.

"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.

The renewable growth should help to cut global emissions, as emissions increases in China and India are expected to be offset by declines in other countries where renewable deployment is growing and natural gas continues to replace coal, the IEA said.

The European Union alone accounts for 40% of the total decline in emissions from power generation, the IEA data showed.

In the first half this year, the EU recorded a 6% decline in power demand as energy-intensive industries, including aluminum, steel, paper, and chemical industries, cut their use in response to high prices. A relatively mild winter also had a more limited impact on reducing demand, the IEA said.

Wholesale electricity prices, have fallen significantly from records hit last year as a result of the disruption caused by Russia's invasion of Ukraine, but average prices in Europe are still more than double their 2019 levels, India's are up 80%, and Japan's more than 30%.

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.