Electricity Market Report 2023

World electricity demand remained resilient in 2022 amid the global energy crisis triggered by Russia’s invasion of Ukraine. Demand rose by almost 2% compared with the 2.4% average  growth rate seen over the period 2015-2019. The electrification of the transport and heating sectors continued to accelerate globally, with record numbers of electric vehicles and heat pumps sold in 2022 contributing to growth. Nevertheless, economies around the
world, in the midst of recovering from the impacts of Covid-19, were battered by record-high energy prices. Soaring prices for energy commodities, including natural gas and coal, sharply escalated power generation costs and contributed to a rapid rise in inflation. Economic slowdowns and high electricity prices stifled electricity demand growth in most regions around the world.

Electricity consumption in the European Union recorded a sharp 3.5% decline year-on-year (y-o-y) in 2022 as the region was particularly hard hit by high energy prices, which led to significant demand destruction among industrial consumers. Exceptionally mild winter added further downward pressure on electricity consumption. This was the EU’s second largest percentage decrease in electricity demand since the global financial crisis in 2009 – with the largest being the exceptional contraction due to the Covid-19 shock in 2020.

Electricity demand in India and the United States rose, while Covid restrictions affected China’s growth. China’s zero-Covid policy weighed heavily on its economic activity in 2022, and a degree of uncertainty remains over the pace of its electricity demand growth. We currently estimate it to be 2.6% in 2022, substantially below its pre-pandemic average of over 5% in the 2015-2019 period. Further data expected in due course will provide greater clarity on trends in China in 2022, which could also have implications for the global picture. Electricity demand in India rose by a strong 8.4% in 2022, due to a combination of its robust post pandemic economic recovery and exceptionally high summer temperatures. The United States recorded a significant 2.6% y-o-y demand increase in 2022, driven by economic activity and higher residential use to meet both heating and cooling needs amid hotter summer weather and a colder-than-normal winter.

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