India, China to drive global electricity demand in 2024-2025: IEA

The world's electricity demand is set to grow at the fastest pace since its post-COVID rebound over 2024-2025 driven by India, China and the US amid robust economic growth, intense heatwaves, and continued electrification worldwide, according to a report by the International Energy Agency July 19.

Electricity demand growth is expected to be about 4% in 2024 and 2025 and the rise in the world's electricity use is projected to be significantly higher than global gross domestic product [GDP] growth of 3.2% in 2024 and 2025, IEA said in its Electricity Mid-Year Update report, noting that in 2022 and 2023, electricity demand grew slower than GDP.

"The 4% growth [in electricity demand] expected for 2024 is the highest since 2007, with the exceptions of the sharp rebounds in 2010 after the global financial crisis and in 2021 following the COVID-induced demand collapse," IEA said.

"Power demand in Asia is growing at high levels, and a lot of that has to do with economic expansion," Andre Lambine, Senior Analyst at S&P Global Commodity Insights Asia Power said July 22.

"For 2025, higher power demand in India should continue to be met by mostly coal, Lambine said, adding that "in China, growth from non-thermal fuels will become increasingly important."

S&P Global expects Asia-Pacific's GDP to grow at 4.2% for 2024, which is much higher than 2.3% for North America and only 0.8% in the Eurozone, Lambine said.

India to see 8% growth in power demand

Electricity demand in China is forecast to increase by 6.5% in 2024, similar to its average rate between 2016 and 2019 and lower than the 7% growth seen in 2023, as Chinese economy is on the recovery mode. Demand is expected to ease to 6.2% in 2025.

"Despite the expected slowdown in the Chinese economy and the continuing structural shift to towards becoming less reliant on heavy industries, the rapidly expanding production of solar PV modules, electric vehicles, batteries, and the processing of related materials are all supporting electricity demand growth," IEA said. "Over the last three years, China has been adding on average roughly one Germany each year in terms of electricity demand and this trend is expected to continue through 2025."

Meanwhile, India, the fastest growing major economy in the world, is forecast to post an 8% rise in electricity consumption in 2024, matching the rapid growth it saw in 2023, IEA said, supported by strong GDP growth and increased cooling demand due to long and intense heatwaves.

"In the first half of 2024, the country grappled with heatwaves of record duration, with peak load reaching a new high and putting exceptional strains on power systems," IEA said. "Assuming a return to average weather conditions, we expect electricity demand growth in India to ease moderately to 6.8% in 2025."

For the first six months of 2024, power demand in India has increased by 8.3%, said Lambine. Coal-fired power generation is the largest segment in the power mix accounting for 78% of the year-on-year increase in supply, he noted.

In China, power demand has increased by 8.1% for the first half of 2024, he said, adding that while all fuels in the generation mix have grown compared to the same period in 2023, thermal fuels accounted for only 25% of the year-on-year increase. Renewables and hydro power have had faster growth rates, he added.

US, EU also to likely see demand growth

Electricity demand in the US is set to rise by 3% year on year in 2024 and 1.9% in 2025, boosted by an improved economic outlook as well as rising demand for air conditioning amid severe heatwaves and the surge in data centre expansions, IEA said.

Meanwhile, electricity demand in the EU is expected to increase by 1.7% in 2024 as economic difficulties ease, but uncertainty over the pace of growth remains. the agency noted.

"In the European Union, wind and solar PV generation is set to exceed fossil fired output in 2024," IEA said, adding that wind and solar PV's combined share in total electricity supply is forecast to rise from 26% in 2023 to 30% in 2024, and to 33% in 2025.

Global nuclear generation may also reach a new high in 2025, rising by 1.6% in 2024, and by 3.5% in 2025, as French nuclear power fleet increases output following completion of maintenance works, Japan restarts reactors and new reactors come online in various markets, including China, India, South Korea and Europe, IEA added.