Renewables and nuclear energy will dominate the growth of global electricity supply over the next three years, together meeting on average more than 90% of the additional demand. China accounts for more than 45% of the growth in renewable generation in the period 2023-2025, followed by the EU with 15%. The substantial growth of renewables will need to be accompanied by accelerated investments in grids and flexibility for their successful integration into the power systems. The increase in nuclear output results from an expected recovery in French nuclear generation as more plants complete their scheduled maintenance, and from new plants starting operations, largely in Asia. 

Global electricity generation from both natural gas and coal is expected to remain broadly flat between 2022 and 2025. While gas-fired generation in the European Union is forecast to decline, significant growth in the Middle East will partly offset this decrease. Similarly, drops in coal-fired generation in Europe and the Americas will be matched by a rise in Asia Pacific. However, the trends in fossil-fired generation remain subject to developments in the global economy, weather events, fuel prices and government policies. Developments in China, where more than half of the world’s coal-fired generation occurs, will remain a key factor.

China’s share of global electricity consumption is forecast to rise to one-third by 2025, compared with one-quarter in 2015. Over the next three years, more than 70% of the growth in global electricity demand is set to come from China, India and Southeast Asia combined. Emerging and developing economies’ growth is accompanied by a corresponding rise in demand for electricity. At the same time, advanced economies are pushing for electrification to decarbonise their transportation, heating and industrial sectors. As a result, global electricity demand is expected to grow at a much faster pace of 3% per year over the 2023-2025 period compared with the 2022 growth rate. The total increase in global electricity demand of about 2 500 terawatt-hours (TWh) out to 2025 is more than double Japan's current annual electricity consumption. Nevertheless, uncertainties exist regarding the growth of electricity demand in China. While the country recently eased its stringent Covid restrictions in early December 2022, the full extent of the economic impacts remain unclear. 

Due to historic drought conditions, hydropower generation in Europe was particularly low in 2022. Italy saw a drop in hydropower generation of more than 30% compared with its 2017-2021 average, followed closely by Spain. Similarly, France recorded a 20% decline in its hydro output compared with the previous five-year average.

Nuclear generation in the European Union was 17% lower in 2022 than in 2021 due to closures and unavailabilities. Plant closures in Germany and Belgium reduced the available nuclear capacity in 2022. At the same time, France faced record-low nuclear availability due to ongoing maintenance work and other challenges in its nuclear fleet. The constrained nuclear output and low hydropower supply in Europe – combined with reduced dispatchable capacity due to previous retirements of thermal generation plants – put additional pressure on remaining dispatchable capacities to meet demand. As a result, although variable renewable generation grew and record-high gas prices supported fuel-switching from gas to coal, gas-fired generation grew in 2022 by 2% in the European Union. These factors have also contributed to significant changes in the traditional import-export structure of electricity in Europe: France became a net importer and the United Kingdom a net exporter for the first time in decades.

In order to increase the security of electricity supply, reserve capacities of conventional power generation have been brought back in Europe for the 2022-2023 and 2023-2024 winters. Similarly, some plants that were previously set to be decommissioned were also extended. Germany had the highest share of such plants in Europe, having delayed the planned shutdown of its three remaining nuclear reactors, as well as delaying the closure or reactivating fossil-fired plants that make up 15% of its current fossil-fired generation capacity. An increased risk of power outages was reported in some European countries during several weeks of cold weather combined with lower-than-average hydro and nuclear output. Security of supply was achieved through successful short-term planning and management.

The increase in wholesale electricity prices was most pronounced in Europe in 2022, where they were, on average, more than twice as high as in 2021. The exceptionally mild winter so far in 2022/23 in Europe has helped temper wholesale electricity prices, but they remain high compared with recent years. Elevated futures prices for winter 2023/24 reflect the uncertainties regarding gas supply in Europe over the coming year.

In the European Union, a wide range of responses to the energy crisis have been observed. In order to reduce reliance on fossil fuels and to increase resilience to price shocks, the European Commission published its REPowerEU plan in May 2022 to accelerate clean energy deployment. At the same time, discussions about electricity market design gained momentum due to soaring wholesale prices, and the Commission launched a consultation on market design reform. To dampen the effects of high electricity prices on consumers, many countries introduced measures such as the regulation of wholesale and retail prices; revenue caps on infra-marginal technologies such as renewables, nuclear and coal- plants; reductions of energy taxes and VAT; and direct subsidies. While such market interventions can help mitigate the impacts of the energy crisis, the potential creation of uncertainty in the investment landscape needs to be minimised to ensure that responses to the crisis do not come at the expense of much-needed investment. 

The energy crisis has renewed interest in the role of nuclear power in contributing to energy security and reducing the CO₂ intensity of power generation. In Europe and the United States, discussions on the future role of nuclear in the energy mix have resurfaced. At the same time, other parts of the world are already seeing an accelerated deployment of nuclear plants. As a result, global nuclear power generation is set to grow on average by almost 4% over 2023-2025, a significantly higher growth rate than the 2% over 2015-2019. This means that in every year to 2025, about 100 TWh of additional electricity is set to be produced by nuclear power, the equivalent of about one-eighth of US nuclear power generation today.

More than half of the growth in global nuclear generation to 2025 comes from just four countries: China, India, Japan and Korea. Among these countries, while China leads in terms of absolute growth from 2022 to 2025 (+58 TWh), India is set to have the highest percentage growth (+81%), followed by Japan. This results from the Japanese government’s push to ramp up nuclear generation in order to reduce reliance on gas imports and strengthen energy security. Outside Asia, the French nuclear fleet provides more than one-third of the absolute growth in global nuclear generation to 2025 as it gradually recovers.