INDUSTRY REPORT and clean electricity is pivotal to energy transitions , but in the absence of faster structural change in the sector , rising demand over the next three years could result in additional market volatility and continued high emissions , according to a January 2022 IEA report .
Driven by the rapid economic rebound , and more extreme weather conditions than in 2020 , ( including a colder than average winter ) last year ’ s 6 % rise in global electricity demand was the largest in percentage terms since 2010 when the world was recovering from the global financial crisis . In absolute terms , last year ’ s increase of over 1,500 terawatt-hours was the largest ever , according to the January 2022 edition of the IEA ’ s semi-annual Electricity Market Report .
“ The steep increase in demand outstripped the ability of sources of electricity supply to keep pace in some major markets , with shortages of natural gas and coal leading to volatile prices , demand destruction and negative effects on power generators , retailers and end-users , notably in China , Europe and India . Around half of last year ’ s global growth in electricity demand took place in China , where demand grew by an estimated 10 %. China and India suffered from power cuts at certain points in the second half of the year because of coal shortages ,” said the IEA .
“ Sharp spikes in electricity prices in recent times have been causing hardship for many households and businesses around the world and risk becoming a driver of social and political tensions ,” said IEA Executive Director , Fatih Birol . “ Policymakers should be taking action now to soften the impacts on the most vulnerable and to address the underlying causes . Higher investment in low-carbon energy technologies including renewables , energy efficiency and nuclear power – alongside an expansion of robust and smart electricity grids – can help us get out of today ’ s difficulties .”
The energy challenge
The IEA ’ s price index for major wholesale electricity markets almost doubled compared with 2020 and was up 64 % from the 2016-2020 average . In Europe , average wholesale electricity prices in the fourth quarter of 2021 were more than four times their 2015-2020 average . Besides Europe , there were also sharp price increases in Japan and India , while they were more moderate in the United States where gas supplies were less perturbed .
Electricity produced from renewable sources grew by 6 % in 2021 , but it was not enough to keep up with galloping demand . Coal-fired generation grew by 9 %, serving more than half of the increase in demand and reaching a new all-time peak as high natural gas prices led to gas-to-coal switching . Gas-fired generation grew by 2 %, while nuclear increased by 3.5 %, almost reaching its 2019 levels . In total , carbon dioxide ( CO₂ ) emissions from power generation rose by 7 %, also
The power of wind ( Shutterstock . com ).
Power generation is a key challenge ( Shutterstock . com ).
reaching a record high , after having declined the two previous years .
“ Emissions from electricity need to decline by 55 % by 2030 to meet our Net Zero Emissions by 2050 Scenario , but in the absence of major policy action from governments , those emissions are set to remain around the same level for the next three years ,” said Dr Birol . “ Not only does this highlight how far off track we currently are from a pathway to net zero emissions by 2050 , but it also underscores the massive changes needed for the electricity sector to fulfil its critical role in decarbonising the broader energy system .”
For 2022-2024 , the report anticipates electricity demand growing 2.7 % per year on average , although the COVID-19 pandemic and high energy prices bring some uncertainty to this outlook . Renewables are set to grow by 8 % per year on average , serving more than 90 % of net demand growth during this period . The IEA expects nuclear-based generation to grow by 1 % annually during the same period .
“ As a consequence of slowing electricity demand growth and significant renewables additions , fossil fuel-based generation is expected to stagnate in the coming years , with coal-fired generation falling slightly as phase-outs and declining competitiveness in the United States and Europe are balanced by growth in markets like China and India . Gas-fired generation is seen growing by around 1 % a year . Rapid increase in demand in 2021 has pushed power prices and emissions to record levels , with serious implications for consumers , economies and clean energy transitions ,” commented the IEA .
An eye on renewables
New capacity for generating electricity from solar , wind and other renewables increased to a record level worldwide in 2021 and will grow further this year as governments increasingly seek to take advantage of renewables ’ energy security and climate benefits , according to the International Energy Agency .
The world added a record 295 gigawatts of new renewable power capacity in 2021 , overcoming supply chain challenges , construction delays and high raw material prices , according to the IEA ’ s latest Renewable Energy Market Update ( May 2022 ). Global capacity additions are expected to rise this year to 320 gigawatts , equivalent to an amount that would come close to meeting the entire electricity demand of Germany or matching the European Union ’ s total electricity generation from natural gas . Solar PV is on course to account for 60 % of global renewable power growth in 2022 , followed by wind and hydropower .
In the European Union , annual additions jumped by almost 30 % to 36 gigawatts in 2021 , finally exceeding the bloc ’ s previous record of 35 gigawatts set a decade ago . The additional renewables capacity commissioned for 2022 and 2023 has the potential to significantly reduce the European Union ’ s dependence on Russian gas in the power
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