Global electricity demand is set to grow at its fastest pace in nearly 20 years, driven by a surge in air conditioning use due to rising temperatures, the International Energy Agency (IEA) reported on Friday. This trend is expected to continue through 2025, sustaining the use of coal power even as renewable energy production increases.
The IEA report highlighted that the increase in air conditioning usage, spurred by record global temperatures and severe heatwaves, is the primary driver of this demand growth. As a result, power grids are being pressured to maintain a reliable baseload supply from sources like coal, despite its environmental impact.
“Growth in global electricity demand this year and next is set to be among the fastest in the past two decades, highlighting the growing role of electricity in our economies as well as the impacts of severe heatwaves,” said Keisuke Sadamori, IEA Director of Energy Markets and Security.
Additionally, the rising electricity demand from artificial intelligence (AI) is drawing attention to consumption patterns in data centers, raising questions about deployment, demand projections, and energy efficiency.
Global power consumption is expected to grow by around 4 percent in 2024, marking the largest growth rate since 2007, with the trend projected to continue at the same pace in 2025. This compares to a 2.5 percent demand increase in 2023. India is expected to lead in demand growth with an 8 percent increase in 2024, while China is projected to see a 6 percent growth rate, down 1 percent from 2023 as its economy continues to restructure. The European Union is anticipated to rebound from two years of contraction with a 1.7 percent growth, although uncertainty remains about the pace of this recovery. The United States is also expected to bounce back with a 3 percent growth after a decline in 2023 due to mild weather.
Renewable energy production is forecasted to rise over the coming years, with renewables expected to account for 35 percent of the global supply by 2025, up from 30 percent in 2023. This increase is expected to push solar and wind energy past hydropower’s share in the global energy mix.
Total renewable generation is anticipated to overtake coal-fired electricity output in 2025, though coal is expected to remain resilient in 2024, adding less than 1 percent depending on hydropower output, especially in China. Consequently, carbon emissions from the global power sector are plateauing, with slight growth expected this year before declining in 2025, according to the IEA.