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This is the first ever Electricity Market Report produced by the International Energy Agency (IEA). Designed to complement other reports in the Market Report Series on energy efficiency, renewables, coal, natural gas and oil, this report focuses on developments in the world’s electricity markets amid the Covid-19 pandemic. It includes an assessment of 2020 trends and 2021 forecasts for electricity demand, supply, capacity and emissions – both globally and by country. Starting in 2021, the IEA will publish a new edition of the report on a half-yearly basis with the latest updates on key developments in global electricity markets.
In the first half of 2022, many electricity markets continued to experience skyrocketing prices, particularly in Europe, reflecting deep uncertainties over both fossil fuel supplies and the economic outlook. Russia’s invasion of Ukraine shattered any hope of energy prices declining in the near term following the strong increases seen in the second half of 2021. In Europe, the situation prompted heightened ambitions and strengthened policies to advance clean energy transitions and reduce dependency on fuel imports. But in the short term, it also resulted in a partial return to coal-fired electricity generation. Sluggish economic growth is expected to dampen global electricity demand growth in 2022 and 2023 to less than half the rate seen in 2021. Despite gas-to-coal switching and low nuclear power plant availability in Europe, global electricity sector emissions may decline slightly in 2022 and 2023 – reflecting a combination of slowing power demand and displacement of fossil fuels by renewables.
This July 2022 update of the IEA Electricity Market Report presents our latest forecasts for global electricity demand, supply and emissions through 2023. In light of Russia’s invasion of Ukraine, we also provide a special focus on the situation in Europe, discussing recent developments and future plans.
The year 2021 placed exceptional demands on electricity markets around the world. Strong economic growth, combined with more extreme weather conditions than in 2020, including a colder than average winter, boosted global electricity demand by more than 6% – the largest increase since the recovery from the financial crisis in 2010. The fast rebound in overall energy demand strained supply chains for coal and natural gas, pushing up wholesale electricity prices. Despite the impressive growth of renewable power, electricity generation from coal and gas hit record levels. As a result, the global electricity sector’s annual carbon dioxide emissions leaped to a new all-time high after having decreased for the previous two years.Building on our analysis of these recent events, the January 2022 edition of the IEA Electricity Market Report presents our forecasts for demand, supply and emissions in global electricity markets through 2024. While renewables are set to meet the vast majority of the increase in global electricity demand in the coming years, this trend would only result in a plateauing of emissions from electricity generation. That is insufficient for the power sector to fulfil its critical role as a leading force in the decarbonisation of economies around the world.
When the IEA published its first Electricity Market Report in December 2020, large parts of the world were in the midst of the Covid-19 pandemic and its resulting lockdowns. Half a year later, electricity demand around the world is rebounding or even exceeding pre-pandemic levels, especially in emerging and developing economies. But the situation remains volatile, with Covid-19 still causing disruptions. Despite record additions of renewable generation capacity, fossil fuel-based generation and associated emissions are rising along with electricity demand. This mid-2021 edition of the Electricity Market Report highlights recent developments and forecasts demand, capacity, supply and emissions through 2022. The report also analyses electricity market prices and electricity security.