World entering the “age of electricity” as demand outpaces all other forms of energy
Energize Weekly, October 23, 2024
The world is set to enter the “age of electricity” as demand has grown more quickly than any other energy source and is set to accelerate even more, according to the International Energy Agency’s (IEA) World Energy Outlook.
Between 2010 and 2023, electricity demand grew 2.7 percent annually, while overall energy demand rose 1.4 percent. In the next 10 years, electricity demand will grow at a rate of 3 percent a year – six times faster than overall energy demand.
Between 2023 and 2035, the world electricity demand will increase by 2,200 terawatt-hours (TWh), a 6 percent increase overall. That is the equivalent of adding Japan’s annual electricity demand to grids each year.
The growth in load is being driven by the shift in industry and transport to electric power, increased demand for cooling and the proliferation of data centers with increased electricity demands for artificial intelligence.
Climate change will also play a role as the combination of rising incomes and increasing global temperatures will generate more than 1,200 TWh of extra global demand for cooling by 2035.
“In energy history, we’ve witnessed the Age of Coal and the Age of Oil – and we’re now moving at speed into the Age of Electricity, which will define the global energy system going forward,” Fatih Birol, the IEA executive director, said in a statement.
The story is much the same in the U.S., where in the 2010s, the economy expanded 24 percent while electricity demand remained steady. That is about to change, and “the U.S. electric utility industry has been caught flat-footed,” according to industry consultant Wood Mackenzie.
A Wood Mackenzie report projects a yearly increase in demand of 4 percent to as much as 15 percent in some regions – equal to a total of 25 gigawatts (GW) of capacity, over the next five years.
The main driver is data centers, with Wood Mackenzie having identified 51 GW of new data center capacity announced since January 2023. These data centers will be competing with a burgeoning industrial sector, especially in the areas of batteries, solar cells, and semiconductors, which are projected to add 15 GW of demand.
Beneficial electrification – shifting activities such a heating and transportation to electricity – could add another 7 GW of demand.
Transmission planning, permitting, and construction look to be bottlenecks to meeting the growth in demand, the report said.
“This will be a major challenge,” Chris Seiple, vice chairman of power and renewables with Wood Mackenzie, said in a statement. “The last time the U.S. electricity industry saw unexpected new demand growth like this was during World War II.”
Between 1939 and 1944, manufacturing output tripled, and electricity demand rose 60 percent. “It was a closely coordinated national effort that brought together industry and policymakers to address the challenge and find innovation along the way,” Seiple said. “A similar effort is needed now.”
Globally, the IEA projects enough generating capacity – primarily solar, wind and nuclear – being built to meet demand.
“Clean energy is entering the energy system at an unprecedented rate, including more than 560 GW of new renewables capacity added in 2023, but deployment is far from uniform across technologies and countries,” the IEA said.
Still, the agency said that “is more than enough, in aggregate, to cover the growth in global electricity demand, and to push coal-fired generation into decline.”
Photovoltaic solar is projected to grow more than fivefold between 2024 and 2035 to 10.7 TWh and wind to increase nearly threefold to 7.5 TWh. Nuclear generation will rise 32 percent to 3.5 TWh during the same period.
Natural gas and hydropower are forecast to remain flat, and coal is set to decline 35 percent to 7 TWh.
Investment in clean energy projects is nearing $2 trillion a year, almost double the amount spent on new oil, coal, and gas supplies. The IEA projects renewable power generation rising to 10,000 GW in 2030 from 4,250 GW today.
This, however, still falls short of the tripling of renewable energy capacity needed to meet the climate goals set by the United Nations Climate Chane Conference, the IEA said.
