- The year 2021 placed exceptional demands on electricity markets around the world according to the IEA causing prices to spike.
- Strong economic growth, combined with colder winters and warmer summers, boosted global electricity demand by more than 6% – the largest increase since the recovery from the financial crisis in 2010.
The fast rebound in overall energy demand strained supply chains for coal and natural gas, pushing up wholesale electricity prices. Despite the impressive growth of renewable power, electricity generation from coal and gas hit record levels. As a result, the global electricity sector’s annual carbon dioxide emissions leaped to a new all-time high after having decreased for the previous two years.
Building on our analysis of these recent events, the January 2022 edition of the IEA Electricity Market Report presents our forecasts for demand, supply and emissions in global electricity markets through 2024. While renewables are set to meet the vast majority of the increase in global electricity demand in the coming years, this trend would only result in a plateauing of emissions from electricity generation. That is insufficient for the power sector to fulfil its critical role as a leading force in the decarbonisation of economies around the world.
Key takeaways
Renewables growth
“During 2022-2024, we expect rapidly growing renewables to almost match moderate demand growth. We anticipate average annual electricity demand growth of 2.7%, but the Covid-19 pandemic and high energy prices add uncertainty to this. Record- breaking renewables growth (up 8% per year on average) is set to serve more than 90% of net demand growth during this period. We expect nuclear-based generation to grow by 1% annually during the same period (meeting 4% of global demand growth). “
Fossil fuel generation is set to stagnate over the next three years.
“As a consequence of slowing electricity demand growth and significant additions of renewable power capacity, fossil fuel-based generation is seen broadly flat in the coming years. We expect coal- fired generation to fall slightly as phase-outs and declining competitiveness relative to natural gas in markets like the United States and Europe are offset by growth in China and India. Gas-fired generation is forecast to grow annually by around 1%.”
Coal met more than half of the increase in global demand
“Coal-fired electricity generation reached an all-time peak, growing by 9%, the fastest since 2011, propelled by the exceptional demand and coal’s cost competitiveness in some markets compared to gas. Renewables grew strongly, by 6%, despite growth being limited by unfavourable weather conditions (in particular for hydropower). Gas-fired generation grew by 2%, while nuclear increased by 3.5%, almost reaching its 2019 levels. In total, CO2 emissions from electricity rose by close to 7%, taking them to a record high.”
After a strong increase in 2021, demand growth slows in the coming years
Due to the fast recovery in 2021, the IEA have revised their expectations for electricity demand growth in 2022 down from 4% to 3%.
Link to full report HERE
Author: Bryan Groenendaal
