Global electricity demand set to slow in 2022 and 2023: IEA

PARIS (REUTERS) – The growth of global electricity demand is slowing sharply in 2022 from its strong recovery in 2021 due to slower economic growth, soaring electricity prices and health restrictions, the International Energy Agency (IEA) said Wednesday (July 20).

Global electricity demand is seen rising 2.4 per cent in 2022, lower than the 3 per cent forecast in January, and is expected to maintain a similar growth rate in 2023, down from a 6 per cent rise in 2021 and in line with the five-year average prior to the Covid-19 pandemic.

Demand growth in Asia-Pacific is seen at 3.4 per cent in 2022, a full percentage point lower than expected in its previous report, and is expected to rise 4 per cent in 2023.

In China, demand is seen increasing 3 per cent in 2022 though the outlook remains highly uncertain, the report said, adding that a 4 per cent increase is expected in 2023, supported by recovery from suppressed demand due to lockdowns the year prior.

Growth in the Americas is expected at 2 per cent in 2022 and to fall below 1 per cent for 2023, while that in Europe is seen at less than 1 per cent for 2022 with an uncertain 2023 forecast.

Demand in the Middle East is seen up 2 per cent in both 2022 and 2023, and in Africa up 4 per cent in 2022 and 3 per cent in 2023.

Electricity demand is seen falling 1 per cent in Eurasia in 2022, driven mostly by a worse economic outlook for Russia – which accounted for 80 per cent of absolute electricity demand and demand growth in the region in 2021 – and down 1 per cent further in 2023.

A notable exception to the demand slowdown is India, where high temperatures caused an upward revision for 2022 to 7 per cent, while the 2023 growth forecast is 5 per cent, reflecting high global prices and a correction from temperature-driven growth in 2022.

Fossil fuel prices, economic growth and ongoing sanitary measures related to Covid-19 are the main uncertainties affecting the 2023 forecast for global electricity demand and generation mix, the IEA said.

Renewables lead supply growth

Global renewable power generation is set to be the fastest-growing source of electricity supply in 2022, up 10 per cent, while low-carbon generation is seen up 7 per cent, which is expected to exceed demand growth and lead to a 1 per cent drop in total fossil fuel generation.

Renewable growth is expected to be up 8 per cent globally in 2023, which, combined with recovering nuclear generation, could displace more gas and coal power use.

Rising renewable use is also expected to drive global emissions down half a per cent in 2022 and 1 per cent in 2023, following an all-time high in 2021.

In the Americas, renewables are expected to continue to drive growth, led by the United States, where total renewable output is seen up 11 per cent in 2022 and 6 per cent in 2023, leading to the largest emission declines globally.

However, global coal use is expected to increase slightly in 2022 as Europe plans to turn to the more polluting resource in the short term to end reliance on Russian natural gas, increasing coal use by 8 per cent while gas declines 7 per cent in 2022.

India is similarly expected to increase coal use by 6 per cent in 2022 while adding 9 per cent to renewable generation.