Rising Global Demand for Electricity
The production and consumption of electricity are growing exponentially worldwide due to increased demand from various sectors. Industries are electrifying more processes, home appliances are multiplying, air conditioners are in higher use due to global warming, data centers are consuming vast amounts of energy, and electric vehicles are gaining popularity. This growth is closely tied to economic and demographic expansion.
Currently, the global total electricity production stands at 31,000 Terawatt-hours (TWh), nearly a hundred times the total electricity generation in Mexico. The International Energy Agency (IEA) projects a 3.7% increase in global demand by 2026.
In Mexico, electricity demand has risen significantly above official projections (Programa de Desarrollo del Sistema Eléctrico Nacional, PRODESEN) at 3.4% to 3.5% annually. However, recent counter-electricity reforms restricting private investment are unlikely to meet this rapid demand growth, especially in clean energy sources.
Regional Variations and Challenges
China’s electricity consumption is growing at a staggering 7% annually, accounting for half of the global increase. In the United States, demand has grown by 2.1% to 2.3% in recent years, largely due to data centers, and will increase further with AI development. Europe sees a more moderate 1% to 1.6% growth due to industrial demand contraction.
It’s worth noting that coal-based electricity generation is already declining in China and Europe.
Renewable Energy Sources on the Rise
Solar and wind energy are poised to cover 90% of the increasing electricity demand in 2025. Combined, solar and wind energy will surpass 5,000 TWh of electricity generation in 2025, accounting for 16% of the global total. By 2026, this percentage will rise to 20%, a significant leap from the mere 4% in 2015.
This growth in renewable energy sources will surpass coal-based electricity generation this year, and the total share of coal in the global electricity mix will fall below a third for the first time in history.
Nuclear and Natural Gas Contributions
Natural gas contributes 23% to global electricity generation. The IEA projects a 1.3% increase due to new gas-fired power plants in the Middle East and Asia.
Although natural gas emits half the CO2 of coal per unit of energy, it is still a fossil fuel contributing to global warming. Nuclear power is expected to reach new records in 2025 and 2026, driven by the restart of Japanese nuclear plants post-Fukushima, robust growth in France and the US, and new reactors coming online in China, India, South Korea, and other countries.
Nuclear electricity production will grow by more than 2% annually, surpassing 3,000 TWh in 2026, or 10% of the global total.
CO2 Emissions Trends
Global CO2 emissions from electricity production will peak in 2025, initiating a sustained downward trend due to the displacement of fossil fuels by renewables and nuclear energy.
China, responsible for a third of total CO2 emissions, reached its peak in 2023 and has started absolute reductions, signaling a high likelihood of meeting its goal of net-zero emissions by 2060.
However, the rapid expansion of renewables has led to increasingly frequent negative electricity prices in wholesale markets. In countries like Germany, the Netherlands, Spain, China, California, and Texas, negative prices occur in nearly 10% of hours. This results from low solar and wind energy costs and the higher cost of cycling power plants on and off compared to keeping them running.
These issues necessitate appropriate regulation, market redesigns, technological solutions like battery storage, and demand management through smart grids.
Key Questions and Answers
- What is driving the growth in global electricity demand? Increased industrial electrification, proliferation of home appliances, rising air conditioner usage due to global warming, energy-intensive data centers, and electric vehicle adoption are major factors.
- How is Mexico’s electricity demand faring? It has grown significantly, exceeding official projections by 3.4% to 3.5% annually, but recent counter-electricity reforms pose challenges.
- Which regions show the highest electricity demand growth? China leads with a 7% annual increase, followed by the US at 2.1% to 2.3%, while Europe sees a more moderate 1% to 1.6% growth.
- What role do renewable energy sources play in meeting future demand? Solar and wind energy are expected to cover 90% of the increasing demand in 2025, growing to 20% of global electricity generation by 2026.
- How will nuclear and natural gas contribute to global electricity production? Nuclear power is projected to grow by more than 2% annually, reaching 10% of global electricity generation by 2026. Natural gas will contribute 23% to global electricity production, with a 1.3% increase due to new power plants.
- What are the implications of negative electricity prices in wholesale markets? This issue stems from low solar and wind energy costs and the higher cost of cycling power plants on and off. Addressing this requires regulation, market redesigns, technological solutions, and demand management through smart grids.
