Business Energy Broker
The latest insights from the IEA report on the rapid increase in global demand in 2021 and the implications for the market, consumers and emissions.
The global electricity demand in 2021 created tight supply outlooks across the commodity markets that increased market prices and emissions to unprecedented highs. Without the rapid transition to clean electricity, the rising demand within the next 3-years could continue to cause unstable market volatility and accumulate higher emissions.
The 6% rise in global demand from 2020 – to 2021 is a result of the accelerated bounce back for the global economy and extreme weather that saw cold temperatures and low winds. This has been the largest percentage increase since the 2010 recovery from the financial crisis and, in units, was over 1,500 TWh according to IEA reports.
In some major economies, such as China and India, the sharp increase resulted in an unbalanced supply and demand and shortages in natural resources. Both economies suffered from power cuts due to their high demands, where China is estimated to cause half of the global demand increase and a 10% increase within their economy.
Major wholesale electricity markets experienced dramatic price increases that were close to double the 2020 markets. Within Europe, the last quarter of 2021 in the market was recorded at over 4x the average price when compared to 2015 – 2020 prices.
Although renewable energy contributions increased by 6% in 2021, demand significantly outweighed supply. Unfortunately, more than half of the demand had to be met by coal-powered generation that grew 9%, reaching a record high. The increase in coal was also significantly aided by the gas to coal switch, caused by high and unsustainable natural gas prices.
Carbon dioxide (CO2) emissions followed the trends of unsustainable power generation, increased by 7%, breaking the 2-year decline and reaching a record high.
Dr Fatih Birol, IEA Executive Director, commented:
“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.”