IEA report: ‘Weather increasingly defines energy supply and demand’

In the future, the supply and demand of electricity will increasingly depend on the weather circumstances. That is the conclusion of the International Energy Agency’s latest report presented in Paris on Wednesday. The report highlights the need for faster decarbonization and accelerated deployment of clean energy technologies.

Drought and heat waves in Europe, India, and China led to increased use of air conditioning last summer, while the onset of winter in the United States triggered significant power outages.

CO2 expected to go down

At the same time, the impact of weather events on electricity demand is intensifying due to the increasing electrification of heating, while the share of weather-dependent renewables in the electricity generation mix will continue to grow.

The strong growth of renewables means that their share of the global electricity production mix will increase from 29% in 2022 to 35% in 2025, while the share of coal and gas-fired electricity generation will decrease. As a consequence, carbon dioxide emissions (CO2) from global power generation will continue to decline in the coming years.

Temporary setback

However, Europe bucked this global trend in the past year. As a result, CO2 emissions from European power generation increased, due to the higher use of gas and coal, while hydropower generation decreased because of droughts. Nuclear power production in the EU, on the other hand, decreased due to maintenance and decommissioning. In 2022, it was 17% lower than in 2021.

However, according to the IEA, this setback is only temporary as emissions from European power generation are expected to fall by an average of 10% per year until 2025. Both coal- and gas-fired generation are expected to see sharp falls, with coal declining by 10% and gas by almost 12% annually on average over the outlook period as renewables ramp up and nuclear generation recovers.

Energy crisis

The increase in wholesale electricity prices was most pronounced in Europe in 2022, where they were, on average, more than twice as high as in 2021. The exceptionally mild winter so far in 2022/23 in Europe has helped temper wholesale electricity prices, but they remain high compared with recent years.

The European Commission published its REPowerEU plan in May 2022 to reduce reliance on fossil fuels, to increase resilience to price shocks, and to accelerate clean energy deployment. Affordability will continue to be a challenge for emerging and developing economies.

Conventional power generation

The energy crisis has renewed interest in the role of nuclear power in contributing to energy security and reducing the CO2 intensity of power generation. In Europe and the United States, discussions on the future role of nuclear in the energy mix have resurfaced. At the same time, other parts of the world are already seeing an accelerated deployment of nuclear plants.

To increase the security of the electricity supply, reserve capacities of conventional power generation have been brought back in Europe for the 2022-2023 and 2023-2024 winters.

In a world where both demand and supply of electricity are becoming increasingly weather-dependent, increasing the flexibility of the power systems while ensuring the security of supply and resilience will be crucial.