According to the IEA’s Electricity Mid-Year Update, the growth is being driven by strong economic activity in many regions, continued electrification of power systems and transport, and cooling demand arising from intense heatwaves. The report also highlights the increasing electricity demand associated with data centres, particularly the rapid expansion of resource-heavy generative AI.
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Global electricity demand is forecast to grow by around four per cent in 2024, up from 2.5 per cent in 2023. The IEA said this would represent the highest annual growth rate since 2007, excluding the exceptional rebounds experienced in the aftermath of the global financial crisis and the COVID-19 pandemic. The upward curve is set to continue into 2025, with the report predicting growth around the four per cent mark again.
“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.
The report claims that the expansion of renewables will help to meet a substantial amount of the increased electricity demand. According to the IEA, solar PV alone is expected to meet roughly half of the growth in global electricity demand across 2024 and 2025 – with solar and wind combined meeting as much as three-quarters of the growth. Overall, the share of global electricity supply provided by renewables is forecast to rise from 30 per cent in 2023 to 35 per cent in 2025.
“It’s encouraging to see clean energy’s share of the electricity mix continuing to rise, but this needs to happen at a much faster rate to meet international energy and climate goals,” Sadamori continued.
“At the same time, it’s crucial to expand and reinforce grids to provide citizens with secure and reliable electricity supply – and to implement higher energy efficiency standards to reduce the impacts of increased cooling demand on power systems.”
For data centres, the report highlights the wide range of uncertainties concerning their electricity demand, including the pace of deployment, the expanding uses of AI and the potential for energy efficiency improvements. According to the IEA, improved transparency around electricity demand across the data centre sector will be essential to ‘identify past developments correctly and to better understand future trends’.
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