World Energy Outlook 2019

Electricity

Introduction

Electricity is at the heart of modern economies and it is providing a rising share of energy services. Demand for electricity is set to increase further as a result of rising household incomes, with the electrification of transport and heat, and growing demand for digital connected devices and air conditioning.

Rising electricity demand was one of the key reasons why global CO2 emissions from the power sector reached a record high in 2018, yet the commercial availability of a diverse suite of low emissions generation technologies also puts electricity at the vanguard of efforts to combat climate change and pollution. Decarbonised electricity, in addition, could provide a platform for reducing CO2 emissions in other sectors through electricity-based fuels such as hydrogen or synthetic liquid fuels. Renewable energy also has a major role to play in providing access to electricity for all.

Outlook by scenario

Electricity demand by sector and scenario, 2018-2040

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Electricity generation by fuel and scenario, 2018-2040

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In the Stated Policies Scenario, global electricity demand grows at 2.1% per year to 2040, twice the rate of primary energy demand. This raises electricity’s share in total final energy consumption from 19% in 2018 to 24% in 2040. Electricity demand growth is set to be particularly strong in developing economies. Government policies, market conditions and available technologies collectively set a course for electricity supply to shift towards low-carbon sources, with their share increasing from 36% today to 52% in 2040 in the Stated Policies Scenario.

In the Sustainable Development Scenario electricity plays an even larger role, reaching 31% of final energy consumption. In the Sustainable Development Scenario, electricity is one of the few energy sources that sees growing consumption in 2040 – mainly due to electric vehicles – alongside the direct use of renewables, and hydrogen. The share of electricity in final consumption, less than half that of oil today, overtakes oil by 2040. Accelerated efforts on renewables, nuclear power and carbon capture technologies rapidly decarbonise electricity supply, compensating for the sharp decline of coal-fired power generation and reducing power sector CO2 emissions by three-quarters by 2040.

Highlights

Electricity demand follows two distinct regional paths. In advanced economies, future growth linked to increasing digitalisation and electrification is largely offset by energy efficiency improvements. In developing economies, rising incomes, expanding industrial output and a growing services sector push demand firmly up. Developing economies contribute nearly 90% of global electricity demand growth to 2040 in the Stated Policies Scenario, but demand per person in these economies remains 60% lower than in advanced economies.

Global electricity demand by region in the Stated Policies Scenario, 2000-2040

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Industry and buildings account for over 90% of global electricity demand today, while transport makes up less than 2%. In the Stated Policies Scenario, the leading drivers of global electricity demand growth are motors in industry (over 30% of the total growth to 2040), space cooling (17%), and large appliances, small appliances and electric vehicles (10% each). Providing electricity access for the first time to 530 million people accounts for just 2% of demand growth. In the Sustainable Development Scenario, electric vehicles become the main source of demand growth.

Electricity demand growth by end-use and scenarios in advanced and developing economies, 2018-2040

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In the Stated Policies Scenario, electricity generation from renewables increases rapidly, surpassing coal by 2026. Renewables contribute three-quarters of electricity supply growth to 2040, underpinned by policy support in nearly 170 countries and falling costs. Coal-fired output remains broadly flat, though its share declines significantly, while natural gas and nuclear power maintain their shares.

 

In the Sustainable Development Scenario, renewables provide two-thirds of electricity supply worldwide by 2040: solar PV and wind together provide 40%, with a further 25% from dispatchable renewables, including hydro and bioenergy. Nuclear power expands and close to 320 GW of coal and gas-fired capacity is equipped with CCUS. Unabated coal-fired power is almost completely phased out by 2040, addressing the largest single source of CO2 emissions, while gas-fired power remains an important source of flexibility.

Global electricity generation mix by scenario, 2018, Stated Policies and Sustainable Development Scenarios 2040

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The need for flexibility in power systems grows even faster than electricity demand, due to rising shares of variable renewables and growing demand for cooling and electric vehicles. Power plants and networks remain the bedrock of power system flexibility, and demand-side response has huge potential. As the fastest growing flexibility option, battery storage capacity rises 40-fold by 2040, due to its falling costs, short construction periods, widespread availability and scalability.

Growth in electricity demand and flexibility needs by selected region and scenario, 2018-2040

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In the Stated Policies Scenario, solar becomes the largest source of installed capacity around 2035, surpassing coal and gas. Global coal-fired capacity plateaus, with the project pipeline of 710 GW, mainly in Asia, just exceeding coal plant retirements, mainly in advanced economies. Renewables make up two-thirds of all capacity additions to 2040 globally. Wind power capacity triples, with offshore wind taking off in Europe, China and the United States. Gas-fired capacity grows in most markets for reliability purposes and battery storage skyrockets.

Installed power generation capacity by source in the Stated Policies Scenario, 2000-2040

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In the Stated Policies Scenario, global power sector investment totals $20 trillion over the period to 2040, on average this is 20% higher than annual spending from 2010 to 2018. The power sector represents 50% of total energy supply investment worldwide and includes spending on new power plants, transmission and distribution lines, as well as refurbishments and upgrades.

 

In the Sustainable Development Scenario, power sector investment is nearly $1.2 trillion per year on average to 2040, some 60% higher than recent spending levels. In this scenario, power sector investment accounts for two-thirds of total energy supply investment, compared with almost half today. Annual spending on renewables doubles.

Global annual average power sector investment, historical and by scenario, 2019-2040

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