The International Energy Agency (IEA) forecasts that by 2025, renewable energy will make up over a third of the global power generation mix. Despite a 5.7% increase in renewable energy in 2022, accounting for nearly 30% of the mix, there was a decline in nuclear power production by 4.3%. The IEA's 2023-2025 outlook projects renewable energy to grow at an annual rate of over 9%, outpacing all other energy sources. This growth highlights the need for effective integration of renewables into power systems, with energy storage systems expected to play a crucial role in managing frequency control and arbitrage between peak and off-peak times. The U.S., Europe, and China are leading in renewable energy storage capacity growth, with the U.S. holding the largest cumulative installed energy storage systems and China's capacity surpassing Europe's in 2022. The IEA also notes significant regional power demand variations across Asia Pacific, the Americas, Europe, the Middle East, and Africa.

(1) Asia-Pacific: Coal is still the main force, but low-carbon energy is catching up

The IEA expects Asia-Pacific electricity demand to grow by 3.3% in 2022, with demand in India and China accounting for about 70% of the region's total electricity consumption of 13,500 TWH, or about 50% of global electricity consumption. In 2022, 57% of the region's electricity will come from coal and 32% from low-carbon sources such as renewables and nuclear power.

(2)Americas: Renewables meet most of the additional demand, with coal-fired power generation declining

The IEA expects electricity demand in the Americas to grow by 2.3% in 2022, mainly driven by the United States, which accounts for two-thirds of the region's electricity demand. In Central and South America, annual demand growth slowed from 4.4% in 2021 to 1% in 2022. Electricity consumption is expected to grow at an average annual rate of 2% from 2023 to 2025. In 2022, renewables, including hydropower, will account for 36 percent of the region's annual electricity generation, the largest share of all energy sources, followed by natural gas at 33 percent, coal at 15 percent, nuclear at 14 percent and oil at 2 percent. By 2025, renewables are expected to account for more than 40% of the electricity generation mix in the Americas.

(3)Europe: Renewable energy will lead to a sharp decline in fossil fuel power generation

Electricity consumption in Europe fell by 3.5% in 2022, the largest decline since 2009. European electricity demand is forecast to rebound slightly from 2023, with an average annual growth rate of 1.4%. Due to the energy crisis, coal-fired power generation in Europe increased again in 2022, by more than 6%, but renewable power generation grew strongly by 34%. While the global CO2 intensity of power generation declined in 2022, Europe increased its CO2 intensity by 7% due to the higher share of coal-fired power generation. The IEA expects CO2 emissions from power generation in Europe to be 28% lower in 2025 than in 2022, and CO2 intensity to be 31% lower.

(4)Middle East: Electricity demand to grow by 2% annually over the next three years

The IEA expects electricity consumption in the region to grow by 2.6% in 2022, with consumption continuing to grow at a similar but slightly reduced rate over the forecast period 2023-2025. Natural gas remains the dominant fuel for electricity production in the region, with its share of total generation set to increase from 72% in 2022 to 77% in 2025. Between 2022 and 2025, the share of oil in the power generation mix will fall from 21% to 14%. Co2 emissions from the power sector in the region increased only slightly in 2022 (about 0.7 per cent) and are expected to decline by 2 per cent between 2022 and 2025, to about 710 million tonnes of CO2.

(5)Africa: Electricity demand will accelerate to 2025

The IEA expects electricity demand in the region to grow by 1.5% in 2022, down from a previous forecast of 4%, with gas generating 42% of Africa's electricity and renewables around 24%. Africa's electricity demand growth is expected to rebound to more than 3% in 2023, followed by an average 4.5% growth in 2024 and 2025.

By 2025, most of the incremental generation will come from renewables, followed by natural gas. Renewable energy generation will increase by more than 60 TWH between 2023 and 2025, reaching almost 30% of total generation, replacing coal as the second largest source of electricity in Africa. The IEA expects the CO2 emission intensity of power generation in Africa to fall from 540 g CO2 / KWH in 2021 to around 500 g CO2 / KWH in 2025.