Executive Summary
Global electricity demand growth slowed only slightly in 2022 despite energy crisis headwinds World electricity demand remained resilient in 2022 amid the global energy crisis triggered by Russia’s invasion of Ukraine. Demand rose by almost 2% compared with the 2.4% average growth rate seen over the period 2015-2019. The electrification of the transport and heating sectors continued to accelerate globally, with record numbers of electric vehicles and heat pumps sold in 2022 contributing to growth. Nevertheless, economies around the world, in the midst of recovering from the impacts of Covid-19, were battered by record-high energy prices. Soaring prices for energy commodities, including natural gas and coal, sharply escalated power generation costs and contributed to a rapid rise in inflation. Economic slowdowns and high electricity prices stifled electricity demand growth in most regions around the world.

Large regional differences in thermal generation costs by 2025, with Europe about twice as high
as Asia

China Electricity demand growth slowed in 2022 as the zeroCovid policy weighed heavily on economic activity Under pressure from the large-scale lockdowns affecting the economy, electricity demand growth in China slowed to an estimated 2.6% y-o-y in 2022 (significantly below pre-pandemic rates). With industrial electricity consumption growth subdued, the increase was mainly driven by residential sector demand. China’s decision to ease severe pandemic restrictions on 7 December has paved the way for a recovery in its economy, and, in tandem, a rebound in electricity growth from 2022 lows. Between 2023 and 2025, demand growth is forecast to grow by 5.2% per year on average, led by continued electrification across the energy sector, especially in buildings and transport. Nonetheless, our forecast is slightly below the pre-pandemic trend of 5.4% in 2015-2019. Uncertainty remains around the pace of China’s economic recovery, which could affect our forecast.

Most of the Chinese demand growth out to 2025 is met by renewables, followed by coal

India Strong demand growth in 2022 led by record heatwaves and economic recovery Electricity demand in India grew strongly in 2022, by 8.4%, driven by a combination of continued economic recovery after the Covid-19 pandemic slowdown and peak summer temperatures. We expect demand growth to continue at close to 5.6% on average per year during 2023-2025. India experienced extreme heatwaves in 2022. The hot season arrived earlier than usual, resulting in the hottest March in over a century. Electricity demand from April to July was 14% higher than the same period in 2021 and heatwaves led to a record peak power demand of 211 GW on 10 June 2022. The sharp growth in summer demand was primarily met by coalfired generation, which registered a significant year-on-year growth of 21.3% in April-July 2022 from April-July 2021. Following from this, India experienced coal supply shortages and the Ministry of Power directed state generating companies and independent power producers to meet a 10% blending requirement, meaning that 10% of their coal demand should be met by imported coal. This was required to ensure adequate coal stocks before the onset of monsoons. In August 2022, the government withdrew these blending requirements when adequate stock levels at power plants were reached.

Coal- and gas-fired generation set to remain significant in meeting Southeast Asia’s demand

Renewables meet most of additional demand in the Americas while coal-fired power declines Electricity demand in the Americas region rose for the second year in a row, up by 2.3% in 2022, though slightly below growth in 2021. Regional demand declined in both 2019 and 2020. We expect electricity consumption to stagnate in 2023 due to weaker economic growth, before rebounding to 1.5% per year in 2024 and 2025. The recovery is largely driven by the United States, which accounts for two-thirds of overall regional electricity demand. US electricity consumption rose by 2.6% in 2022, but demand is forecast to decline by 0.6% in 2023 before increasing to an average of 1.2% in 2024 and 2025. Canada, the third largest consuming nation in the Americas (behind the United States and Brazil), mirrors the US trend, as demand rose by almost 2% in 2022 before declining 1% in 2023 and then recovering to growth of an average 2.5% in 2024 and 2025,We estimate that demand in Mexico rose by almost 4% in 2022, but expect growth to average 2.3% over the next three years. In Central and South America, annual demand growth moderated to an estimated 1% in 2022 from 4.4% in 2021. For 2023-2025, we forecast electricity consumption to increase at an annual average rate of 2%. Weaker growth in 2022 was largely due to a slowdown in Brazil, the region’s second largest consumer. Brazilian demand growth rose by a modest 0.3% in 2022, down from 6% in 2021. We forecast an annual average increase of 2% for the country over the 2023-2025 period. In 2022, electricity demand in Argentina (0%), Colombia (1%) and Chile (2%) saw modest increases while Peru posted more robust growth (4%). Going forward, we expect growth to accelerate in Colombia and Chile while the pace slows in Peru and Argentina in 2023-2025.

Electricity demand growth will slow along with economic activity in 2023, but rebound in 2024

Canada Electricity security also remains a concern in Canada. The NERC’s November 2022 winter reliability assessment cites Alberta and the Maritimes as being at risk of insufficient electricity this winter due to higher-than-average peak electricity demand growth combined with the potential for high generator unavailability. The continued economic recovery from the pandemic-induced slowdown, as well as Canada’s position as a commodities exporter, has sheltered it from high input costs, resulting in electricity demand growth of 2% year-on-year in 2022. The expected economic slowdown in 2023 will lead to a decline in demand of 1%. Total thermal generation is expected to remain steady over our forecast period, but gas will increasingly replace coal in the generation mix. This will result in an 18% share for gas and 2% share for coal in 2025, compared to roughly equal shares of 10% in 2015 For nuclear output, the refurbishment programme at the Darlington and Bruce reactors will intensify in 2023, resulting in the temporary shutdown of five out of ten units in the second half of the year for refurbishment. This will decrease output of the overall fleet by almost one-quarter over 2023-2025 compared to 2015-2019 averages.

While gas dominates incremental supply in Canada and Mexico, renewables expand in Brazil

Market trends in selected other countries in the Americas In Chile, electricity demand grew by about 2% in 2022, following the end of lockdowns in 2021. For 2023-2025, we expect an average annual growth of 4% in electricity demand, supported by economic growth and increased electrification (for example, in transport). Given the country’s coal-power phase-out plan by 2040 at the latest, coal-fired generation is forecast to decline by an average of more than 7% per year in 2023-2025, due to some of these plants being decommissioned in this period (about 1 GW). Benefiting from its large wind and solar power potential, the decline in coal-fired power in the coming years is more than offset by growth in renewables. We forecast total renewable output will reach over 65% of the country’s electricity generation mix by 2025. Addressing concerns over renewable curtailment related to transmission bottlenecks (for example, between northern and central regions) and increasing flexibility requirements, the Chilean government passed a law to support energy storage development in October 2022. Additionally, a new electricity tariff stabilisation fund law was passed in July 2022 aimed at avoiding price hikes that would put additional pressure on households’ expenses. This stabilisation fund was first implemented in October 2019 in the wake of public demonstrations and social unrest.

Support measures in Europe helped dampen the impact of high prices on consumers

European electricity-intensive industries decrease their production Exceptionally high prices are having a significant impact on some industrial sectors with high electricity use, which has led to a sharper drop in national electricity consumption. Among energyintensive industries (e.g. chemical, iron and steel, non-ferrous metal production, paper mills, and others), aluminium production seems to be hit the hardest by steep electricity prices in Europe. Permanent downsizing of European BASF’s capacities due to high natural gas and electricity prices underscore concerns about declining competitiveness of European production. Similarly, nonferrous metal producers have voiced their concerns over continuing operations with the current energy prices. For example, in August 2022, aluminium smelters in Slovakia halted their production until energy prices reach acceptable levels. The largest aluminium producer in Germany, Trimet, decreased production in multiple sites due to the high energy prices, with the production capacity in Essex halved in March 2022. Stainless steel production stopped in fifteen plants across the European continent. Thus, some metal producers have requested to be shielded by political interventions. However, metal producers are also hit by a decrease in demand caused by slowing economic activity. Hence, the current crisis is affecting both the demand and supply sides.

Evolution of the German gas replacement reserve, 2022-2024

In 2024-2025, we expect Germany to fully return to its coal phaseout plan and, hence, coal-fired power generation to decline. By then, renewable power generation is forecast to grow significantly, driven by increased renewable targets, reduced bureaucratic hurdles and high energy prices. The government aims to install a total of 38 GW of solar capacity, 19 GW of onshore wind and 3.5 GW of offshore wind capacity from 2023 to 2025. Acceleration of the permitting procedures and grid build-out will be important factors to achieve these targets. While our forecast shows Germany will likely continue to be a net exporter of electricity also in 2023 after 2022, the likelihood increases significantly that it switches from being a net exporter of electricity to a net importer from 2024 onward.

Renewables lead generation growth in most large European countries until 2025

We forecast an average 3% growth per year in Tunisia’s electricity consumption in the 2023-2025 period, principally met by growing domestic renewable generation. Generation from renewable sources is expected to increase by 80% between 2022 and 2025 and reach around 2 TWh by the end of the period – or the equivalent of close to 8% of Tunisia’s electricity consumption, against less around 5% in 2022. Tunisia’s energy strategy plan to 2030 targets a 30% share of renewables by the end of the decade.

Source:http://IEA