Executive Summary - Electricity Market Report 2023 - Analysis - IEA (2023)

Global electricity demand remained robust in 2022amid the global energy crisis sparked by Russia's invasion of Ukraine. Demand increased by almost 2% compared to the average growth rate of 2.4% over the period 2015-2019. Electrification of the transport and heating sectors continued to accelerate globally, with record numbers of electric vehicles and heat pumps contributing to growth in 2022. Still, economies around the world have been hit by record-high energy prices in the midst of recovering from the impact of Covid-19. Rising prices for energy commodities, including natural gas and coal, have pushed up power generation costs sharply and contributed to a rapid rise in inflation. Economic slowdown and high electricity prices dampened growth in electricity demand in most regions of the world.

Global and regional percentage changes in electricity demand, 2019-2025


Electricity consumption in the European Union fell sharply by 3.5% year-on-year(y-o-y) in 2022, as the region was particularly hard hit by high energy prices, which led to a significant drop in demand from industrial consumers. The unusually mild winter put further downward pressure on electricity consumption. This was the second-largest percentage drop in EU electricity demand since the global financial crisis of 2009 - with the largest being the exceptional drop due to the Covid-19 shock in 2020.

Electricity demand in India and the United States rose while Covid restrictions hit China's growth.China's zero-Covid policy has weighed heavily on its economic activity in 2022, and some uncertainty remains about the pace of its electricity demand growth. We currently estimate it at 2.6% in 2022, well below the pre-pandemic average of over 5% in 2015-2019. More data, expected in due course, will provide more clarity on trends in China in 2022, which could also impact the global picture. Electricity demand in India grew by a strong 8.4% in 2022, driven by a combination of robust post-pandemic economic recovery and exceptionally high summer temperatures. The United States saw a significant 2.6% year-on-year increase in demand in 2022, driven by economic activity and higher residential use to meet both heating and cooling needs in hot summer weather and a colder-than-average winter.

Annual change in electricity demand by region, 2019-2025

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Renewable energy and nuclear power will dominate the growth of global electricity supply over the next three years, together supplying on average more than 90% of the additional demand.China accounts for more than 45% of renewable energy generation growth in 2023-2025, followed by the EU with 15%. The significant growth of renewable energies must be accompanied by accelerated investment in grids and flexibility for their successful integration into electricity systems. The increase in nuclear output stems from an expected recovery in French nuclear power generation as more plants complete their planned maintenance and from the commissioning of new plants, mainly in Asia.

Global power generation from natural gas and coal is expected to remain broadly flat between 2022 and 2025.While gas-fired power generation is expected to decline in the European Union, significant growth in the Middle East will partially offset this decline. Similarly, a decline in coal-fired power generation in Europe and America is offset by an increase in Asia-Pacific. However, trends in fossil fuel power generation remain dependent on developments in the global economy, weather events, fuel prices and government policies. The development in China, which accounts for more than half of the world's coal-fired power generation, will remain a key factor.

Changes in Global Electricity Generation by Source, 2021-2025


China's share of global electricity consumption is projected to rise to a third by 2025, up from a quarter in 2015.Over the next three years, more than 70% of the growth in global electricity demand is expected to come from China, India and Southeast Asia. The growth in the emerging and developing countries is accompanied by a corresponding increase in the demand for electricity. At the same time, advanced economies are pushing electrification to decarbonize their transportation, heating, and industrial sectors. As a result, global electricity demand is expected to grow much faster in 2023-2025 compared to the 2022 growth rate of 3% per year. The total increase in global electricity demand of around 2,500 terawatt hours (TWh) by 2025 is more than twice the current annual electricity consumption in Japan. Nevertheless, there are uncertainties regarding the growth in electricity demand in China. While the country eased its strict Covid restrictions in early December 2022, the full extent of the economic impact remains unclear.

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Global CO2Emissions from electricity generation increased in 2022 at a rate similar to the 2016-2019 average.Its 1.3% rise in 2022 is a significant slowdown from a staggering 6% rise in 2021, driven by the rapid economic recovery from the Covid shock. Nevertheless, the power generation-related CO2Emissions reached a record high in 2022.

Changes in global emissions from electricity generation, 2015-2025


The share of renewable energy in the global power generation mix is ​​set to increase from 29% in 2022 to 35% in 2025.With the expansion of renewables, the shares of coal and gas power plants will decrease. As a result, global power generation emissions and CO will stagnate by 20252The intensity will continue to decrease in the coming years.

Due to historical drought conditions, hydropower generation in Europe was particularly low in 2022.Italy recorded a drop in hydroelectric power generation of more than 30% compared to the 2017-2021 average, closely followed by Spain. Similarly, France saw its hydroelectric production fall by 20% compared to the previous five-year average.

(Video) Renewables 2022

Nuclear power generation in the European Union was 17% lower in 2022 than in 2021 due to shutdowns and unavailabilities.Plant closures in Germany and Belgium reduced available nuclear capacity in 2022. At the same time, France faced record low nuclear availability due to ongoing maintenance and other challenges in its nuclear fleet. Limited nuclear power and low hydropower supply in Europe – combined with reduced on-demand capacity due to earlier thermal power plant shutdowns – are putting additional pressure on the remaining on-demand capacity to meet demand. Although variable power generation from renewable sources increased and record high gas prices supported the switch from gas to coal, gas-fired power generation grew by 2% in the European Union in 2022. These factors have also contributed to significant changes in Europe's traditional import-export pattern of electricity: France has become a net importer for the first time in decades and the UK has become a net exporter.

In order to increase security of power supply, reserve capacities of conventional power generation were retrieved in Europe for the winters 2022-2023 and 2023-2024.Some plants that were previously supposed to be shut down were also expanded. Germany had the highest proportion of such plants in Europe after delaying the planned shutdown of its three remaining nuclear reactors and the closure or reactivation of fossil-fired plants, which account for 15% of its current fossil-fired generation capacity. An increased risk of power outages during several weeks of cold weather combined with below average hydro and nuclear power output has been reported in some European countries. Security of supply was achieved through successful short-term planning and control.

After 2021, 2022 marks the highest percentage CO growth2Emissions from electricity generation in the EU since the 1970s oil crisis,recorded a growth of 4.5% compared to the previous year. Aside from post-pandemic recovery in 2021, the European Union also saw its highest absolute growth in emissions from electricity generation in 2022 since 2003. This was mainly driven by a more than 6% increase in coal-fired electricity generation, in stark contrast to the nearly 8% % of the average annual rate of decline in coal-fired power generation during the pre-pandemic period of 2015-2019.

The setback in the European Union will be temporary, however, as emissions from electricity generation are expected to decrease by around 10% annually on average through 2025. Both coal and gas-fired power generation are projected to decline sharply, with coal down 10% annually and gas down nearly 12% on average over the forecast period as renewables ramp up and nuclear power generation recovers.

The increase in wholesale electricity prices was strongest in Europe in 2022, where they averaged more than double 2021 levels. The exceptionally mild winter of 2022/23 in Europe so far has helped dampen wholesale electricity prices, but they remain elevated compared to recent years. Increased futures prices for the winter of 2023/24 reflect the uncertainties regarding the gas supply in Europe in the coming year.

Various reactions to the energy crisis have been observed in the European Union.To reduce dependence on fossil fuels and increase resilience to price shocks, in May 2022 the European Commission published its REPowerEU plan to accelerate the deployment of clean energy. At the same time, discussions on the electricity market design gained momentum due to sharply rising wholesale prices, and the Commission launched a consultation on market design reform. To mitigate the impact of high electricity prices on consumers, many countries have introduced measures such as wholesale and retail price regulation; revenue caps for infra-marginal technologies such as renewable energies, nuclear and coal-fired power plants; reductions in energy taxes and VAT; and direct subsidies. While such market interventions can help mitigate the impact of the energy crisis, the potential creation of uncertainty in the investment landscape must be minimized to ensure that responses to the crisis do not come at the expense of much-needed investments.

Indexed quarterly average wholesale prices for selected regions, 2019-2024

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Globally, higher electricity generation costs in 2022 were driven by rising energy commodity prices.While cost increases were more moderate in countries with regulated tariffs and long-term fuel supply contracts (oil-indexed LNG, long-term contracts or fuel supply contracts), regions dependent on short-term fuel procurement markets were severely affected. In particular, record-high LNG prices created difficulties for South Asian countries trying to source gas for the power sector, contributing to blackouts and electricity rationing in the region. If energy commodity prices remain high, fuel procurement will continue to be a serious problem for emerging and developing countries.

The energy crisis has renewed interest in the role of nuclear powercontribute to energy security and reduce CO2 emissions2Intensity of power generation. Discussions about the future role of nuclear power in the energy mix have resurfaced in Europe and the United States. At the same time, other parts of the world are already seeing an accelerated deployment of nuclear power plants. As a result, global nuclear power generation will grow by almost 4% on average over the period 2023-2025, a significantly higher growth rate than the 2% in the period 2015-2019. That means about 100 TWh of additional electricity is to be generated from nuclear each year through 2025, which is about one-eighth of US nuclear power generation today.

More than half of the growth in global nuclear power generation by 2025 will come from just four countries: China, India, Japan and Korea.Among these countries, while China leads in terms of absolute growth from 2022 to 2025 (+58 TWh), India is expected to show the highest percentage growth (+81%), followed by Japan. This stems from the Japanese government's drive to ramp up nuclear power generation to reduce dependence on gas imports and improve energy security. Outside Asia, the French nuclear fleet will provide more than a third of the absolute growth in global nuclear power generation through 2025 while gradually recovering.

In a world where both demand and supply of electricity are becoming increasingly weather dependent, power security requires increased attention.In addition to the high cost of generating electricity, the world's power systems also faced challenges from extreme weather events in 2022. Alongside the drought in Europe, there were heat waves in India, which recorded the hottest March in over a century, setting the country's highest-ever peak in electricity demand. Similarly, central and eastern China has been hit by heatwaves and drought, causing air-conditioning demand to surge amid reduced hydroelectric power generation in Sichuan. Severe winter storms hit the United States in December, leading to massive power outages. Mitigating the effects of climate change requires faster decarbonization and accelerated deployment of clean energy technologies. At the same time, in the course of the clean energy transition, the influence of weather events on electricity demand will increase due to the increasing electrification of heating, while the share of weather-dependent renewable energies in the generation mix will continue to grow. In such a world, it will be crucial to increase the flexibility of energy systems while ensuring security of supply and resilience.


What is the IEA energy Outlook for 2023? ›

Global energy consumption will grow by just 1.3% in 2023, amid a slowing economy and high energy prices. Waning gas supplies and extreme weather events will force many countries to fall back on fossil fuels, delaying the green energy transition.

What is the IEA report? ›

The IEA examines the full spectrum of energy issues including oil, gas and coal supply and demand, renewable energy technologies, electricity markets, energy efficiency, access to energy, demand side management and much more.

What are the projections for electricity prices? ›

Average U.S. residential electricity prices will reach almost 15 cents/kWh in 2022 and 15.33 cents/kWh in 2023, according to the latest forecast from the U.S. Energy Information Administration.

What is the IEA Outlook for Renewables? ›

Over 2022-2027, renewables are seen growing by almost 2 400 GW in our main forecast, equal to the entire installed power capacity of China today. That's an 85% acceleration from the previous five years, and almost 30% higher than what was forecast in last year's report, making it our largest ever upward revision.

What is the outlook for the utilities industry in 2023? ›

For 2023, the outlook for the utilities sector is strong. The sector's defensive characteristics could continue to look attractive to investors seeking shelter during market and economic choppiness.

Is IEA a good company? ›

90% of employees at IEA say it is a great place to work compared to 57% of employees at a typical U.S.-based company. Source: Great Place To Work® 2021 Global Employee Engagement Study.

What is the criticism of IEA? ›

Bias against renewable energy

The IEA has been criticised for systematically underestimating the role of renewable energy sources in future energy systems such as photovoltaics and their cost reductions.

Who is behind IEA? ›

The IEA is a registered educational and research charity. The organisation states that it is funded by "voluntary donations from individuals, companies and foundations who want to support its work, plus income from book sales and conferences" and says that it is "independent of any political party or group".

Why is IEA important? ›

The IEA is at the heart of global dialogue on energy, providing authoritative analysis, data, policy recommendations, and real-world solutions to help countries provide secure and sustainable energy for all. The IEA was created in 1974 to help co-ordinate a collective response to major disruptions in the supply of oil.

Will electricity prices increase in 2023? ›

The Energy Price Guarantee caps consumer prices. It is due to increase by 20% in April 2023, despite generally lower wholesale prices from autumn 2023.

Will electricity prices ever go back down? ›

Energy bills are at record highs - and now experts say these might not go back to normal until the end of the decade.

Are electricity prices going to rise? ›

Ofgem have announced that from 1 October, most people will pay about £1,570 more per year for gas and electricity. This increase is because the energy price cap, set by energy regulator Ofgem , is set to jump by 80 per cent to reflect rising wholesale energy costs for energy suppliers.

What is the IEA analysis and forecast to 2026? ›

Forecast summary

Annual additions to global renewable electricity capacity are expected to average around 305 GW per year between 2021 and 2026 in the IEA main case forecast. This implies an acceleration of almost 60% compared to renewables' expansion over the last five years.

Is renewable energy a good long term investment? ›

If you're looking for a more future-conscious way of investing, renewable energy stocks are a great option. Not only are they good for the environment, but they also offer investors stability and growth potential.

What is the IEA outlook for solar PV? ›

Solar PV's installed power capacity is poised to surpass that of coal by 2027, becoming the largest in the world. Cumulative solar PV capacity almost triples in our forecast, growing by almost 1 500 GW over the period, exceeding natural gas by 2026 and coal by 2027.

Will energy prices come down in 2024? ›

When will my energy bills go down? Some estimates suggest that energy bills could remain high until 2024. It's difficult to know exactly when energy bills will go down, as international gas prices are continuing to fluctuate.

Why are utilities dropping? ›

Skyrocketing utility input costs and rising customer rates have caused many utility companies' cash-flow margins to decline. The Utility sector ETF XLU has had no dividend growth since 2020 and may see dividends decline as strain in the electricity market grows.

Is the utility sector a good investment? ›

The combination of predictable profitability and income generation makes utility stocks lower-risk options for investors because they're less volatile. As a result, they're often ideal choices for retirement income strategies.

Is IEA peer reviewed? ›

The International Energy Agency (IEA) has conducted in-depth peer reviews of its member countries' energy policies since 1976. This process supports energy policy development and encourages the exchange of and learning from international best practices.

Is the IEA non profit? ›

IEA is a 501(c)(3) nonprofit organization.

How many employees does IEA have? ›

Infrastructure & Energy Alternatives has 882 employees.

What are leading questions in IEA? ›

Leading questions. —Any question suggesting the answer which the person putting it wishes or expects to receive, is called a leading question.

Which are the facts under IEA which need not be proved? ›

—No fact need to be proved in any proceeding which the parties thereto or their agents agree to admit at the hearing, or which, before the hearing, they agree to admit by any writing under their hands, or which by any rule of pleading in force at the time they are deemed to have admitted by their pleadings: Provided ...

Is IEA a government? ›

The Office of Intergovernmental and External Affairs (IEA) serves as the Department's liaison to state, local, and tribal governments and non-governmental organizations. IEA facilitates communication between the Department and these stakeholders regarding HHS initiatives and policies.

Is China in IEA? ›

In November 2015, China officially became an affiliate of the International Energy Agency.

How many countries are in IEA? ›

The IEA is made up of 31 member countries.

Where is the headquarters of IEA? ›

The International Energy Agency (IEA), which has its headquarters in Paris, was set up as an autonomous agency in 1974 by member countries of the OECD in response to the mid-1970s oil crisis.

What is the IEA role of energy efficiency? ›

The IEA works with policy makers and stakeholders to scale up action on energy efficiency to mitigate climate change, improve energy security and grow economies while delivering environmental and social benefits.

What does the IEA want? ›

Through its work, the IEA advocates policies that will enhance the reliability, affordability and sustainability of energy in its 30 member countries, 8 association countries and beyond.

How does IEA work? ›

IEA Competitions

The host team arranges for the horses and equipment. Essentially, the horse is new to the rider, and the scores are based upon horsemanship, not the horse. The competitions involve six classes jumping over fences no greater than three feet and numerous flat equitation classes.

Will energy prices come down in April 2023? ›

From April 2023, prices are set to rise by 20% on average, with a typical bill rising to £3,000/year from 1 April. It's then expected to stay at this level until 31 March 2024.

Are energy prices going up in April 2023? ›

Each year our charges are subject to change. On average our charges will go up by 11.6% on 1 April 2023. This includes inflation, which is affected by energy prices, and adjustments for our past performance.

Will government help with energy bills after April 2023? ›

From April 2023, the Energy Bills Support Scheme will be scaling down, and for many will be coming to an end. Though the scheme will remain in place, the support will no longer be available to everyone. There's currently no further information on if the Energy Bills Support Scheme will be available to all next winter.

Should I fix my energy prices until 2024? ›

Fixing energy until 2024 is a risk, as there are lots of guesses involved but it is a great option for those who want some certainty. Many energy suppliers are only offering 1-year fixed deals so even fixing until 2023 may be worth it.

Will energy prices fall 2023? ›

Analysts at Cornwall Insight predict that energy prices will fall from July 2023 and the energy cap set by Ofgem, could in fact be lower than the EPG.

How long will the cost of living crisis last? ›

Cost-of-living crisis to last until end of 2024 | ICAEW.

Why is electricity getting more expensive? ›

The extraordinary increase in fossil gas prices has also had a huge impact on electricity prices. Like any other good, the price of electricity mostly depends on how much it costs to produce it. We rely a lot on expensive fossil gas to produce electricity, especially during periods of high demand.

Why are electricity bills going up so much? ›

Supply and demand issues are pushing up wholesale energy prices (that's the amount your provider pays to the energy generators for the gas and electricity they supply to your business). And it's these rising wholesale costs that are the biggest factor in the energy price spikes we've seen this year.

Why is electricity going up as well as gas? ›

There are two main factors increasing the price of electricity: the global gas shortage and environmental taxes. Whilst environmental levies have been gradually increasing the cost of electricity over time, the global gas crisis has increased prices drastically in the past year alone.

Will IEA stock go up? ›

Infrastructure and Energy Alternatives Inc quote is equal to 13.720 USD at 2023-03-01. Based on our forecasts, a long-term increase is expected, the "IEA" stock price prognosis for 2027-10-06 is 14.042 USD. With a 5-year investment, the revenue is expected to be around +2.35%.

Should I buy IEA stock? ›

4 Wall Street analysts have issued "buy," "hold," and "sell" ratings for Infrastructure and Energy Alternatives in the last twelve months. There are currently 4 hold ratings for the stock. The consensus among Wall Street analysts is that investors should "hold" IEA shares.

Which country will be the leader for total energies in renewable energy by 2025? ›

It may seem counter-intuitive, but China is the world leader in wind and solar energy production. Aiming to generate a third of their energy from renewable sources by 2025, they're also one of the biggest investors in renewable energy worldwide.

What is the most profitable renewable energy? ›

We can find out which one of these renewable alternatives and power technology examples are the most efficient by calculating the costs of the fuel, the production, and the environmental damages. Wind comes out on top by a wide margin over all the other sources.

Who has invested the most in renewable energy? ›

In 2022 chinese investment in clean energy is the highest worldwide.

What is the next big energy source? ›

Renewables [will] become the largest source of global electricity generation by early 2025, surpassing coal,” it added.

What is the solar power target of Budget 2023? ›

However, there is still much work to be done, with a need to install 25-30 GW of solar energy each year for the next eight years to meet its 280 GW solar target.

Will solar incentives increase? ›

Will there be a tax credit for solar in 2023? The tax credit for solar was originally scheduled to decrease to 22% in 2023. With the recent signing of the Inflation Reduction Act of 2022, not only will the credit still be available, but it will also increase to a 30% credit effective until at least 2032.

Will energy prices continue to rise in 2023? ›

Analysts at Cornwall Insight predict that energy prices will fall from July 2023 and the energy cap set by Ofgem, could be significantly lower than the EPG.

What are the sustainable energy trends for 2023? ›

Arguably, the most exciting energy trends in 2023 will be the growing integration of AI and Big Data in the energy industry and the development of green hydrogen energy. Big Data and AI can potentially revolutionize energy efficiency across the board.

Will energy prices go up in April 2023? ›

The Energy Price Guarantee caps consumer prices. It is due to increase by 20% in April 2023, despite generally lower wholesale prices from autumn 2023.

Are energy prices expected to fall? ›

While the full effects are not expected to be felt until the third quarter of the year, energy prices could be lower in 2023 than initially expected.

How long are energy prices going to stay high? ›

Will energy bills ever go back to normal? Some experts say gas and electricity prices may not return to pre-pandemic levels until the 2030s. Energy bills are at record highs - and now experts say these might not go back to normal until the end of the decade.

What is the most promising energy source for the future? ›

Hydrogen has the best chance of being widely used in the future. Sources of hydrogen are plentiful, it has many uses, and most of the needed technology has already been developed.

What is the biggest energy source of the future? ›

Here is what we could expect to see for the energy of the future:
  1. Nuclear Energy.
  2. Hydroelectric Energy. ...
  3. Wind Energy. ...
  4. Biomass Energy. ...
  5. Geothermal Energy. ...
  6. Solar Energy. ...
  7. Wave Energy. Wave energy is a type of energy that uses the movement of the ocean's waves to generate electricity. ...


1. David A. Morse Lecture With IEA Executive Director Fatih Birol
(Council on Foreign Relations)
2. IEA Gas Market Report Q3 2022
(Center on Global Energy Policy)
3. World Energy Outlook 2022
(International Energy Agency)
4. 13th IEA-IEF-OPEC Symposium on Energy Outlooks
(International Energy Forum (IEF))
5. Reply to Tesla Valuation Objections
(Mark Meldrum)
6. IEA releases World energy outlook 2022 suggesting energy emissions peak by 2025 | UPSC
(StudyIQ IAS)
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