IEA chief addresses energy concerns in London

Giving a keynote address on 25 February at International Energy Week in London, hosted by the Energy Institute, Dr Fatih Birol, executive director of the International Energy Agency (IEA) highlighted the soaring growth in electricity demand and its implications

“We are entering an important new chapter in the history of energy, where electricity is going to be even more important,” he said. “When we look at the numbers, we see the age of electricity is coming.”

Dr Birol pointed out that in the last 10 years global energy demand has increased – but global electricity demand has increased two and a half times higher. In the next 10 years, global electricity demand will increase six times more than global energy demand.

The biggest driver of this demand growth is the increase in air conditioning, set to increase further as incomes and temperatures rise. Growth is also coming from manufacturing, with processes becoming more electrified, and electric vehicles, with one in five cars globally being electric in 2024 compared with one in 25 five years ago. AI and data centres are also a major source of demand, with one medium-sized data centre consuming as much electricity as 100,000 homes.

“This is why we see the age of electricity coming – and it has many implications,” he said.

Constraints to growth

Addressing the constraints, Dr Birol said grids are a major bottleneck, with permitting and licensing processing being an issue. “Last year we saw 7 GB of renewables added to the global power system, the biggest in history, but 1,600 GW in renewables waiting in the queue to be connected. This is economically a criminal story.”

He also noted the bottleneck in terms of manufacturing capacity of electrical components. “If you want to buy a cable, especially a DC cable, you have to wait four years, for transformers, five years,” he noted.  

A second issue is electricity pricing, “very important for the competitiveness of any economy. It’s crucial that governments have the right pricing system. Having the right taxes and subsidies is extremely important. In Europe, electricity prices today are two times higher than before the energy crisis. We need the right diagnosis and the right cure so that economies and citizens are not hit by high electricity prices, a key indicator of whether a country can be economically competitive in the future.”

Another issue is the skyrocketing demand for copper, with a major supply deficit predicted by 2035. “The availability and affordability of copper can be a serious issue in the age of electricity.”

Fourthly, nuclear power is making a strong comeback around the world, driven by energy security concerns. “By 2025 we expect global nuclear electricity generation to be the highest in history,” Dr Birol said, noting that 70 GB of nuclear power plants are under construction, the highest amount in the last three decades, with more than 40 countries having firm plans to expand their nuclear capacity. “By around 2030 we may see commercial SMRs hitting the market,” he added.

Concluding, Dr Birol said, “We are seeing the global economy is being electrified in a rapid sense, mainly driven by emerging countries, but advanced economies are also part of it, driven by traditional as well as new sectors such as AI and electric vehicles. It will not be easy to address all the challenges that the new age will bring. Countries and companies who read what is happening and develop policies and strategies to make the most out of the age of electricity, will have a significant advantage over others in the race of global economic competition.”