Climate change is pushing power demand and straining grids

The world’s demand for electricity in 2024 is set to grow at its fastest pace in years, but clean energy sources will also soar through 2025, the International Energy Agency forecasts.

“The 4% growth expected for 2024 is the highest since 2007, with the exceptions of the sharp rebounds in 2010 after the global financial crisis and in 2021 following the Covid-induced demand collapse,” the report states, citing hotter weather, economic growth and strong demand, especially in China, India and the US.

However, solar panels alone will likely meet “roughly half of the growth in global electricity demand to 2025. Together with wind power generation, it will make up almost 75% of the increase,” the report added.

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AI will continue to play a big part in driving demand in the years to come. However, a lack of reliable historical data on how much power data centers consumed and a “very wide range of uncertainties related to the pace of deployment” make future predictions tricky, the report said.

In the US, there are huge swings in where consulting firms, investment banks, and industry see AI’s consumption levels, with forecasts showing data centers using anywhere between 4% to 10% of total electricity by 2030, according to Friday’s report. The IEA’s own forecasts see the consumption from data centers, excluding cryptocurrencies, to grow from about 1-1.3% of global electricity demand in 2022 to about 1.5%-3% by 2026.

Heat waves will continue to push electricity demand, with May 2024 the Earth’s 12th consecutive month of record-breaking temperatures.

From Vietnam to the US, scorching heat has seen the demand for cooling straining grids. That impact will only grow as households in developing economies purchase more air-conditioners.

“Implementing higher efficiency standards for air conditioning will be crucial to mitigate the impact of increased cooling demand on power systems,” according to the report. “The expansion and reinforcement of power grids will also be very important to ensure reliability.”