Magazine

Last edition
January-February 2025

Home › Energy efficiency ›India and Southeast Asia to Spark Surge in Electricity Demand Through 2026: IEA

India and Southeast Asia to Spark Surge in Electricity Demand Through 2026: IEA

While China leads in volume, India is expected to post the fastest growth rate among major economies through 2026.

January 30, 2024. By Abha Rustagi

In a recent report from the International Energy Agency (IEA), it has been revealed that global electricity demand experienced moderate growth in 2023 but is poised for a more rapid expansion through 2026.

The report indicates that falling electricity consumption in advanced economies contributed to restrained growth in global power demand in 2023. While countries such as China, India, and numerous Southeast Asian nations saw robust growth, advanced economies faced declines due to a lackluster macroeconomic environment and high inflation impacting manufacturing and industrial output.

The IEA projects a faster growth trajectory for global electricity demand over the next three years, with an anticipated average annual increase of 3.4 percent through 2026. This surge is expected to be driven by an improved economic outlook, fostering faster electricity demand growth in both advanced and emerging economies.

Notably, the ongoing electrification of residential and transport sectors, along with a significant expansion in the data center sector, is expected to support electricity demand in advanced economies and China. The share of electricity in final energy consumption reached 20 percent in 2023, up from 18 percent in 2015, signaling progress; however, the report emphasizes the need for accelerated electrification to meet global decarbonization targets.

One striking revelation from the report is the potential doubling of electricity consumption from data centers, artificial intelligence (AI), and the cryptocurrency sector by 2026. Data centers, in particular, are identified as significant drivers of growth in electricity demand globally. The report underscores the importance of updated regulations and technological improvements, including efficiency measures, to moderate the surge in energy consumption from data centers.

The report highlights emerging and developing economies as the engines of global electricity demand growth. Approximately 85 percent of additional electricity demand through 2026 is projected to come from outside advanced economies, with China making substantial contributions despite undergoing structural changes. While China leads in volume, India is expected to post the fastest growth rate among major economies through 2026. The report predicts robust annual increases in electricity demand in Southeast Asia, driven by strong economic activity.

However, the report also raises concerns about electricity use per capita in Africa, which has effectively stagnated for more than three decades. Despite recent declines, there are expectations for a recovery to 2010-15 levels by the end of 2026.

The report contrasts the rapid increases in electricity demand and supply in India and Southeast Asia, transforming these regions at a spectacular pace, with Africa's slower progress. The forecast for Africa for the 2024-26 period anticipates average annual growth in total electricity demand of 4 percent, with two-thirds of this growth expected to be met by expanding renewables and the remainder covered mostly by natural gas.

In summary, the IEA report paints a dynamic picture of the global electricity landscape, shaped by economic conditions, technological advancements, and the growing emphasis on decarbonization and electrification. The prospects for increased demand and the evolving patterns across different regions underscore the complex challenges and opportunities in the global energy sector.

Tags:

artificial intelligence

IEA report

Natural gas

Cryptocurrency

International Energy Agency