Clean energy to outpace demand through 2026

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Renewables are continuing to grow “rapidly,” and with the addition of nuclear growth, clean energy is on track to outpace electricity demand growth at least through 2026, the International Energy Agency (IEA) said in a new report.

By early 2025, the IEA expects renewables to make up more than a third of total generation, overtaking coal. “Low-emissions” generation, including nuclear, is expected to account for almost half of global electricity generation by 2026, compared to 40% in 2023.

The report, Electricity 2024, is the latest edition of the IEA’s annual analysis of electricity market developments and policies, providing forecasts for demand, supply, and carbon dioxide (CO2) emissions from the sector through 2026.

The IEA found that although global electricity demand growth eased to 2.2% in 2023, it is expected to jump to an average of 3.4% from 2024 to 2026. About 85% of that increase is expected to come from “outside advanced economies” like China, India, and countries in Southeast Asia.

In the U.S., electricity demand fell by 1.6% in 2023 after increasing 2.6% in 2022 but is expected to grow between 2024-2026. The IEA says one major reason for the decline was milder weather in 2023 compared to 2022, in addition to a slowdown in the manufacturing sector. The report projects an increase of 2.5% in U.S. demand in 2024, followed by an average growth of 1% in 2025 to 2026, primarily due to electrification and data centers.

“The power sector currently produces more CO2 emissions than any other in the world economy, so it’s encouraging that the rapid growth of renewables and a steady expansion of nuclear power are together on course to match all the increase in global electricity demand over the next three years,” said IEA Executive Director Fatih Birol. “This is largely thanks to the huge momentum behind renewables, with ever cheaper solar leading the way, and support from the important comeback of nuclear power, whose generation is set to reach a historic high by 2025. While more progress is needed, and fast, these are very promising trends.”

Global emissions from electricity generation are expected to decrease by 2.4% this year, followed by smaller declines in 2025 and 2026, the report said. Growth in coal-fired generation, such as in China and India amid a reduction in hydropower output, was responsible for the global energy sector’s CO2 emissions. Global fossil fuel generation is expected to decline from 61% in 2023 to 54% in 2026.

Electricity consumption from data centers, artificial intelligence, and cryptocurrency could double by 2026, the IEA said, and data centers are “significant” drivers of growth in electricity demand in many regions. After globally consuming an estimated 460 terawatt-hours (TWh) in 2022, data centers’ total electricity consumption could reach more than 1,000 TWh in 2026.