World Energy Outlook 2024: cooling drives electricity demand, especially in developing countries

In October 2024, the International Energy Agency (IEA) released its annual World Energy Outlook report, which identifies global trends in energy demand and supply. Total global energy demand rose by around 2% in 2023, with declines in advanced economies more than offset by large increases in emerging market and developing economies. According to the IEA’s modelling, electricity demand is expected to grow by 6% (about 2,200 terawatt-hours (TWh)) by 2035 in a “business as usual” scenario, known as STEPS (STated Energy Policies Scenario). The main drivers of electricity demand are light industrial consumption, electric mobility, cooling, and data centres and AI.

 

The impact of air conditioning on global electricity demand

 

With rising incomes and increasing global temperatures, the demand for air conditioning is expected to grow, with a cumulative combination of increased use and ownership which accelerates electricity demand growth.

 

A sensitivity analysis was performed to explore the impact of more frequent, intense and lengthy heat waves on air conditioner ownership and usage. Results indicate that due to air conditioning, electricity demand could increase by 500 TWh in 2030 and by as much as 700 TWh in 2035, representing 20% more than projected in the STEPS. About 80% of this additional increase occurs in emerging market and developing economies, mostly in developing Asia.

In advanced economies, cooling demand increases by just over 10% since air conditioner ownership is already near saturation levels.

 

Overall, energy consumption in the buildings sector from air conditioning and appliances is set to increase in the STEPS by 35% to 2030 and 60% by 2035.

 

 

The IEA models that air conditioning will generate over 1 200 TWh of extra global demand for cooling by 2035 in the STEPS scenario.

 

Energy efficiency improvements, supported by strong policy measures, are necessary to moderate this growth.

 

The “smaller” impact of data centres on global electricity demand

 

Comparatively, data centres account for a relatively small share of overall electricity demand growth to 2030. Data centre electricity consumption was estimated in 2022 to be in the range of 240 to 340 TWh, around 1% to 1.3% of total electricity consumption (excluding data networks and crypto mining).

 

In 2024, there are over 11,000 data centres registered worldwide. Global server capacity is expected to more than double by 2030, driven by the rising demand for both AI and more conventional data centre services. Therefore, it is projected that electricity demand for data centres will grow quickly, while still representing a small share of overall global demand.

            

However, data centres are very spatially concentrated, and constraints on generation and grid capacity may be more severe at the local level.

 

 

 

Disclaimer: The IEA scenario analysis is designed to inform decision makers as they consider options, not to predict how they will act, and none of the scenarios should be viewed as a forecast.

 

For more information, the complete report is available on FRIDOC or on the IEA website.

 

 

Sources

IEA (2024), World Energy Outlook 2024, IEA, Paris https://www.iea.org/reports/world-energy-outlook-2024, Licence: CC BY 4.0 (report); CC BY NC SA 4.0 (Annex A)

IEA (2019), Understanding the World Energy Outlook scenarios, IEA, Paris https://www.iea.org/commentaries/understanding-the-world-energy-outlook-scenarios

Malcom Moore. Air conditioning to be major driver of electricity demand, says IEA. Financial times (16 Oct 2024). https://www.ft.com/content/de175bfd-aaf1-4adc-b4b5-3e9973aed522