IEA (2022), World Energy Outlook 2022, IEA, Paris https://www.iea.org/reports/world-energy-outlook-2022, License: CC BY 4.0 (report); CC BY NC SA 4.0 (Annex A)
Electricity accounts for about 20% of the world’s total final consumption of energy, but its share of energy services is higher due to its efficiency. It is central to many aspects of daily life and becomes more so as electricity spreads to new end-uses, such as electric vehicles (EVs) and heat pumps. The electricity sector accounted for 59% of all the coal used globally in 2021, together with 34% of natural gas, 4% of oil, 52% of all renewables and nearly 100% of nuclear power. It also accounted for over one-third of all energy-related CO2 emissions in 2021.
- Global electricity demand rises by 5 900 terawatt-hours (TWh) in the Stated Policies Scenario (STEPS) and over 7 000 TWh in the Announced Pledges Scenario (APS) by 2030, equivalent to adding the current level of demand in the United States and the European Union. In advanced economies, transport is the largest contributor to increased electricity demand as the market share of electric cars rises from about 8% in 2021 to 32% in the STEPS and almost 50% in the APS by 2030. In emerging market and developing economies, population growth and rising demand for cooling contribute to increasing electricity demand. In China, air conditioner ownership expands by around 40% from current levels in the STEPS and APS by 2030. Electricity provides a rising share of total final energy consumption in all economies. Global electricity demand in 2050 is over 75% higher in the STEPS than it is today, 120% higher in the APS and 150% higher in the Net Zero Emissions by 2050 (NZE) Scenario.
- Recently, coal use in the electricity sector has seen an uptick in many countries in response to strong demand, high natural gas prices and energy security concerns, but this is expected to be temporary. Even in the STEPS, unabated coal falls from 36% of generation in 2021 to 26% in 2030 and 12% in 2050, reflecting renewables growth, led by solar PV and wind. In the APS, pledges including net zero emissions targets in 83 countries and the European Union, are met on time and in full. This accelerates clean energy transitions. Renewables in electricity generation rise from 28% in 2021 to about 50% by 2030 and 80% by 2050. Unabated coal falls to just 3% in 2050. Solar PV capacity additions expand from 151 gigawatts (GW) in 2021 to 370 GW in 2030 and almost 600 GW in 2050, while wind capacity additions double to 210 GW in 2030 and rise to 275 GW in 2050. Recent events, market conditions and policies are shifting views on natural gas and limiting its role, while underlining the potential for nuclear power to cut emissions and strengthen electricity security.
- Electricity systems faced a number of challenges to affordability and security over the last year. We estimate that market conditions and the energy crisis are raising the global average cost of electricity supply by almost 30% in 2022. The European Union is facing particular pressures following a tripling of wholesale electricity prices in the first-half of 2022 relative to the previous year. This is mainly a consequence of record high natural gas prices, but it also reflects higher coal, oil and CO2 prices, exacerbated by reduced availability of nuclear and hydropower. Actions to reduce energy use, projected reductions in fuel prices, planned nuclear restarts and possible market design reforms all offer potential future relief. Climate-related risks, including heatwaves, droughts, extreme cold and extreme weather events, have strained electricity grids and caused outages around the world. The evolving electricity mix is likely to improve some aspects of climate resilience but exacerbate others.
- The electricity sector emitted 13 gigatonnes of carbon dioxide (Gt CO₂) in 2021, accounting for over one-third of global energy-related CO₂ emissions. Electricity sector CO2 emissions peak in the near future in all our scenarios, with steep reductions of 40% in the STEPS and over 80% in the APS by 2050. In the NZE Scenario, net emissions from electricity reach zero by 2040. In advanced economies, electricity sector emissions have been declining since 2007, with a temporary rise in 2021 due to the recovery from Covid-19, and fall by 5% per year in the STEPS and 14% in the APS. In emerging market and developing economies, emissions peak soon and then decline by over 1% annually in the STEPS to 2050 and 6% in the APS. Higher electricity sector investment enables these reductions, rising from an annual average of USD 860 billion in 2017-2021 to about USD 1.2 trillion in 2022-2050 in the STEPS, USD 1.6 trillion in the APS and USD 2.1 trillion in the NZE Scenario.
- System flexibility is the cornerstone of electricity security. Changing demand patterns and rising solar PV and wind shares double flexibility needs in the APS by 2030 and increase them almost fourfold by 2050. Flexibility needs also rise rapidly in the STEPS, where they more than triple by 2050. Today, power system flexibility is mainly provided by unabated coal, natural gas and hydro, but tomorrow’s systems will rely increasingly on batteries, demand response, bioenergy and other dispatchable renewables, fossil fuels with carbon capture, hydrogen and ammonia.
- Electricity networks are the backbone of electricity systems, and need to expand and modernise to support energy transitions. Total grid lengths increase by about 90% from 2021 to 2050 in the STEPS, and another 30% in the APS. Annual investment rises in the STEPS from around USD 300 billion in recent years to USD 550 billion by 2030 and averages USD 580 billion per year to 2050. In the APS, investment rises further to USD 630 billion in 2030 and USD 830 billion in 2050. However, complex projects can take a decade or more to deliver, which is twice as long in most cases as developing solar PV, wind or electric vehicle charging infrastructure. Long-term planning is vital and must account for, among other things, demand growth, increasing amounts of variable renewables, as well as opportunities for digitalisation.
- Critical mineral demand linked to the electricity sector is set to rise from 7 Mt per year in 2021 to reach 11 Mt in 2030 and 13 Mt in 2050 in the STEPS as a result of increasing deployment of renewables, battery storage and networks. It grows much faster in the APS and NZE Scenario, reaching 20 Mt per year by 2050. Copper for grids, silicon for solar PV, rare earth elements for wind turbine motors and lithium for battery storage will be pivotal; critical minerals are a key component of the energy and electricity security landscape. Additional R&D is needed to reduce mineral intensity and enable mineral substitution in key applications, along with recycling, reuse of electric vehicle batteries and end-user energy efficiency measures.