Friday, April 19, 2024
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Flexibility of power systems while ensuring network security and reliance “crucial” says IEA report

The International Energy Agency (IEA) has published its Electricity Market Report 2023, providing an assessment of the global electricity market including electricity consumption generation, carbon emissions in the power sector and prospects for future trends in electricity supply such as the role of renewable energy.

The Electricity Market Report revealed that electricity demand trends varied widely in 2022. Demand in the EU contracted due to unusually mild winter weather and a decline in electricity consumption in the industrial sector, which significantly scaled back production because of high energy prices and supply disruptions caused by Russia’s invasion of Ukraine. The 3.5 per cent decrease in EU demand was its second-largest percentage decline since the global financial crisis in 2009, with the largest being the exceptional contraction due to the Covid shock in 2020, the report noted.

Looking specifically at electricity demand in Central and Eastern Europe, Carlos Fernández Álvarez, who contributed to the report, tells CEENERGYNEWS that there are no major disparities in the East-West dimension in Europe. “In general, electricity demand has decreased more in Western Europe than in Eastern Europe; but it also depends on how you define the regions. If you consider EU-OECD Eastern countries, electricity demand has been more resilient, but when you add non-OECD countries (Romania and Bulgaria), numbers are close to those in Western Europe,” he adds. 

From a global perspective, India’s electricity consumption rose strongly, while China’s growth was more subdued due to its zero-Covid policy weighing heavily on economic activity. The United States recorded a robust increase in demand, driven by economic activity and higher residential use amid hotter summer weather and a colder-than-normal winter, the report added.

“In 2021 the exceptionally mild winter of 2022 to 23 in Europe helped temper wholesale electricity prices, yet elevated future prices for the winter 2023/24,” said Keisuke Sadamori, Director of the IEA Energy Markets and Security, who provided expert guidance and advice for the report.

The IEA report noted that electricity demand and supply worldwide are becoming increasingly weather dependent, with extreme conditions a recurring theme in 2022. In addition to the drought in Europe, there were heatwaves in India, resulting in the country’s highest-ever peak in power demand. Similarly, central and eastern regions of China were hit by heatwaves and drought, which caused demand for air conditioning to surge amid reduced hydropower generation in Sichuan province. The United States also saw severe winter storms in December, triggering massive power outages.

Calls for greater flexibility amid global energy transition

The above developments highlighted the need for faster decarbonisation and accelerated deployment of clean energy technologies, according to the report. At the same time, as the clean energy transition gathers pace, the impact of weather events on electricity demand will intensify due to the increased electrification of heating, while the share of weather-dependent renewables will continue to grow in the generation mix. In such a world, increasing the flexibility of power systems while ensuring security of supply and resilience of networks will be crucial.

In terms of global electricity generation, the report said that the role of natural gas and coal is expected to remain broadly flat between 2022 and 2025. While gas-fired generation in the EU is forecast to decline, significant growth in the Middle East will partly offset this decrease. Similarly, drops in coal-fired generation in Europe and the Americas will be matched by a rise in Asia Pacific. However, the trends in fossil-fired generation remain subject to developments in the global economy, weather events, fuel prices and government policies. Developments in China, where more than half of the world’s coal-fired generation occurs, will remain a key factor.

Conversely, renewables are set to dominate the growth of the world’s electricity supply over the next three years as together with nuclear power they meet the vast majority of the increase in global demand in the coming years, making significant rises in the power sector’s carbon emissions unlikely. In particular, renewables and nuclear energy together are estimated to meet on average more than 90 per cent of the additional demand in the next three years.

However, as the authors of the report emphasised, the substantial growth of renewables will need to be accompanied by accelerated investments in grids and flexibility for their successful integration into the power systems. “[A] successful integration of renewables requires an accelerated investment in these components,” one of the main authors of the report, Eren Çam, pointed out.

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