Over the next three years, global electricity demand is set to surge, but renewable sources such as wind, solar, and nuclear energy are expected to meet the sharply rising power needs.
The increase in renewable and nuclear energy generation appears to be driving a structural decline in emissions from the power sector.
The International Energy Agency (IEA) stated on Wednesday that global electricity demand will accelerate over the next three years. However, the surge in demand is expected to be met by increased electricity generation from renewable sources like wind, solar, and nuclear energy. The IEA also added that carbon emissions from the power industry are on the decline.
According to the latest report from the IEA, driven by the flourishing development of emerging economies, artificial intelligence, cryptocurrencies, and data centers, electricity demand is projected to grow at an average annual rate of 3.4% from now until 2026. Approximately 85% of this demand growth is expected to come from China, India, and Southeast Asia, while developed economies will see a decrease in electricity consumption.
However, global carbon dioxide emissions from power generation are expected to decrease. By 2026, the share of low-emission energy sources such as wind, solar, hydropower, and nuclear energy in the global total electricity generation may approach half, compared to less than 40% in 2023. Renewable energy generation is anticipated to surpass coal-fired generation by early 2025, accounting for over one-third of total electricity generation.
IEA Executive Director Fatih Birol commented, “Currently, the power sector produces more carbon dioxide emissions than any other industry. However, it is encouraging to see the rapid growth of renewable energy and the steady expansion of nuclear power, which are expected to collectively meet the increased global electricity demand over the next three years.”
Birol added, “This is largely attributed to the significant momentum in renewable energy development, led by increasingly affordable solar power, and also benefits from the significant comeback of nuclear power. By 2025, nuclear power generation is expected to reach historic highs, and the trend is expected to continue.”
The report states, “Given the increasing electrification of the energy sector, with more consumers using technologies such as electric cars and heat pumps, the decoupling of global electricity demand and emissions will be of significant importance.”
Continued Expansion of Nuclear Power
The increase in renewable energy and nuclear power generation seems to be driving a structural decline in emissions from the power sector. It is reported that global carbon dioxide emissions from power generation increased by 1% in 2023, but the IEA predicts a reduction of over 2% this year, with even smaller declines in the next two years. The IEA predicts that coal-fired electricity generation will decrease by an average of 1.7% per year from now until 2026.
The rapid growth of renewable energy will be supported by nuclear power. The report mentioned above states that despite some countries gradually phasing out or prematurely closing nuclear power plants, nuclear power generation is still expected to grow by an average of about 3% per year by the end of 2026.
As France’s electricity production continues to recover from the low point in 2022, several nuclear power plants in Japan are back online, and new reactors in Europe, China, India, and South Korea are set to start operating. It is expected that global nuclear power generation will also reach record levels.
The IEA stated that Asia is likely to remain the main driving force for nuclear power growth, with Asian nuclear power expected to account for 30% of global nuclear power generation by 2026.
By 2023, electricity prices are expected to be generally lower than in 2022. However, there are significant regional differences in price trends, impacting their economic competitiveness. Following the Russia-Ukraine conflict, wholesale electricity prices in Europe hit a historic high in 2022, but by 2023, they had fallen by over 50% on average. However, electricity prices in Europe last year were still more than twice as high as pre-pandemic levels, while U.S. electricity prices were about 15% higher than in 2019.