Global electricity demand set to surge, threatens climate goals, IEA warns

PARIS, FRANCE: According to the International Energy Agency, global electricity consumption is projected to increase annually by more than Japan’s total consumption, driven by a surge in electric transportation, air conditioning, and data centres.

The agency has revised its growth forecast for the upcoming years, estimating an increase of nearly 4 percent per year until 2027, a rise from its previous estimate of 3.4 percent.

The Paris-based agency suggests that we are entering a “new age of electricity” amid the ongoing climate crisis. This shift is catalysed by a growing reliance on air conditioning to combat rising temperatures and a movement away from fossil fuels toward cleaner energy sources.

An increasing number of governments are prioritizing electricity to power transportation, heating, and heavy industries, as highlighted in the report. Additionally, there is anticipated rapid growth in energy-intensive data centres, which are instrumental in training artificial intelligence (AI).

These projections may raise concerns that the rush to establish more data centres to accommodate the AI boom could deplete energy resources, leading to soaring costs and hindering progress towards reducing fossil fuel reliance in electricity generation.

China is expected to lead this surge in electricity consumption, with demand having risen by 7 percent in the past year and predictions of a 6 percent annual increase over the next three years. This growth is partly attributed to the country’s burgeoning manufacturing sectors for solar panels, batteries, and electric vehicles.

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In the United States, rising electricity demand is anticipated to add an amount equivalent to California’s current power usage to the national total by 2027. Meanwhile, the European Union is expected to see more moderate growth, reverting to its 2021 consumption levels by 2027 after a significant decline in recent years due to skyrocketing costs during the energy crisis.

Keisuke Sadamori, a director at the IEA, noted that the rapid increase in global electricity demand signifies important transformations occurring in energy systems worldwide, ushering in a new age of electricity. However, he also emphasized the challenges that governments face in ensuring that electricity remains secure, affordable, and sustainable.

Dave Jones, a director at the global energy think tank Ember, acknowledged that while the expansion of clean energy projects worldwide would likely match the unexpected surge in electricity demand, it may not be sufficient to replace the current levels of fossil fuel-generated electricity.

According to Jones, “Increased investment in clean electricity is essential; otherwise, the levels of coal and gas generation could remain at the same record highs in 2027 as in 2024.”

He stressed the importance of ensuring that the transition into the age of electricity also marks the transition to a commitment to clean energy, thereby unlocking the cost, security, and environmental benefits associated with electrification.