The future is in electrification, electricity will take over oil’s growth role, says IEA

In its annual forecast, the IEA predicts that electricity will play a major role in the future. According to the forecast, electricity could account for up to 40 % of total growth in energy demand. The largest increase can be expected in China and India, although demand is also expected to rise significantly in the EU.

The International Energy Agency (IEA), one of the most important bodies in the sector, predicts in its World Energy Outlook that electricity will play a similar role to that played by oil over the past 25 years. According to the agency, oil also accounted for 40 % of growth in energy demand over the past 25 years.

The IEA attributes the largest share of the increase, roughly one-third, to the use of industrial electric motors. Another significant factor behind rising consumption will be households, which, thanks to rising living standards, will make greater use of electrical appliances and air conditioning. In air conditioning alone, the IEA forecasts that household consumption in China will equal that of all of Japan today by 2040.

In addition to rising household electricity consumption, the forecast notes that by 2040 the number of people with access to electricity worldwide will grow by as many as 45 million a year.

According to the IEA, further growth in the use of electricity can be expected in heating and transport. In particular, further growth in transport is supported by recent measures by some countries (such as France and the United Kingdom), which plan to ban the sale of new passenger cars with internal combustion engines by 2040.

Partly because of these measures, the IEA has raised its estimate for the number of electric vehicles to 280 million in 2040, while their current number stands at two million.

As shown in the chart above, the largest increase in consumption can be expected in China and India. The increase in consumption in China will be equal in volume to the current consumption of the entire United States. India’s electricity consumption will grow by approximately the same amount as the European Union’s current consumption.

Electricity consumption is also expected to rise in the European Union, despite energy-saving measures that the EU is seeking to implement through legislative targets. While EU electricity consumption currently stands at 2857 TWh, it is expected to increase by a further 321 TWh, more than five times the net consumption of the Czech Republic.

The expected development of the power sector is also why investment in the electricity sector was higher than investment in the oil and gas sector for the first time in 2016. The IEA warns that, given current rising demand, ensuring the effective decarbonisation of the sector will be a very difficult task.