- Electricity demand is set to grow by 4% in 2024, driven by AI and rising temperatures.
- Renewable energy sources are expanding, expected to make up 35% of global electricity by 2025.
- India’s electricity demand surged by 8%, with strong growth in China and the U.S. as well.
Global electricity demand is expected to rise significantly in 2024, marking the fastest growth rate in almost two decades, according to a report by the International Energy Agency (IEA).
This surge in consumption is fueled by a combination of rising global temperatures, economic expansion, and the rapid deployment of artificial intelligence (AI) technologies.
Electricity Demand on the Rise
The IEA’s latest mid-year update projects a 4% increase in global electricity demand in 2024, a substantial jump from the 2.5% growth observed in 2023.
If this forecast holds true, it will be the highest annual growth rate since 2007, excluding years of exceptional circumstances like the recovery following the global financial crisis or the COVID-19 pandemic.
The demand is anticipated to continue growing at a similar rate, with another 4% increase projected for 2025.
A significant factor contributing to this rise is the increasing use of air conditioning as the world grapples with higher temperatures due to climate change.
Intense heatwaves experienced in the first half of 2024 have already pushed electricity demand to new heights, putting additional strain on power systems globally.
The Role of AI in Electricity Consumption
The rapid expansion of AI technologies is another key driver of electricity demand. Data centers, which are crucial for AI operations, consume vast amounts of power, although the exact figures remain uncertain.
The IEA notes that predicting the future electricity needs of AI is challenging due to the lack of reliable data and the unpredictable pace of AI adoption.
As AI becomes more integrated into various sectors, its energy footprint is expected to grow. However, there is ongoing debate about the net impact of AI on energy consumption. While AI requires significant power, it also holds the potential to enhance energy efficiency across various industries.
For instance, AI can optimize electricity grids, making them more efficient and potentially reducing overall energy consumption.
Tech industry leaders, including Microsoft co-founder Bill Gates, believe that AI could play a crucial role in meeting climate goals by improving how we manage and use energy.
Renewable Energy’s Growing Share
Despite the increase in electricity demand, there is good news on the renewable energy front. The IEA report forecasts a sharp expansion in renewable energy sources, which are expected to make up 35% of global electricity generation by 2025, up from 30% last year.
This growth is driven primarily by solar and wind energy, which together are predicted to meet 75% of the global increase in electricity demand over the next two years.
Notably, the report highlights that for the first time, electricity generated from renewables is expected to surpass that generated from coal by 2025.
Solar power alone is projected to account for nearly half of the growth in electricity demand during 2024 and 2025. However, coal will continue to play a significant role in countries like India and China, where it remains a major energy source.
While the increasing share of clean energy in the global electricity mix is encouraging, the IEA emphasizes that this transition needs to accelerate to meet international climate goals.
Expanding and reinforcing electricity grids is crucial to ensure a reliable power supply, especially as demand for cooling and other energy-intensive technologies grows.
