Clean power generation is expected to surpass global electricity demand growth by 20% between 2023 and 2030, according to the 2024 edition of the World Energy Outlook by the International Energy Agency (IEA).

This shift is driven largely by investments in renewable energy, with renewable capacity expected to dominate the clean energy landscape during this period. Under current policies and market conditions, the annual global investment in renewables is projected to increase from $680 billion in 2023 to $850 billion by 2030.

The resulting annual average capacity additions between 2023 to 2030 would equate to more than 600 GW of solar photovoltaics (PV), around 160 GW of wind, 30 GW of hydropower, and 12 GW of other renewable energy sources will be added each year. By 2030, the global renewable energy capacity could increase by 2.3 times over its 2023 levels.

In the Stated Policies Scenario (STEPS), which reflects current policy settings, fossil fuel demand will decline from 80% of the total energy supply today to 58% by 2050.

In the Announced Pledges Scenario (APS), which models commitments to net-zero emissions, fossil fuels’ share could drop even further to 45% by mid-century. The Net Zero Emissions (NZE) Scenario, which aligns with the Paris Agreement’s 1.5°C target, sees fossil fuels’ share shrink to 30% by 2050​.

Renewables Dominate the Clean Energy Growth

According to the report, renewables are expected to account for the majority of this clean power growth, delivering substantial annual capacity additions. Solar PV is set to lead the charge with more than 600 GW of new capacity added annually, while wind power is expected to contribute about 160 GW per year.

Hydropower and other renewables, though contributing less in absolute terms, will also play a critical role in this energy transition. By 2030, the overall global renewables capacity will increase 2.3-fold, significantly reducing reliance on unabated fossil fuels.

IEA expects global renewable capacity to increase 2.7 times by 2030, surpassing government targets by nearly 25%.

Declining Reliance on Fossil Fuels

As clean power sources grow, the use of unabated fossil fuels in electricity generation is set to decline by 2030. Coal-fired electricity generation is expected to decrease by more than 10%, and oil-fired generation is set to decline by 50%, according to the IEA’s analysis. However, natural gas will see a slight increase of 5% as it continues to be a critical part of the energy mix in many countries. Nonetheless, to achieve the ambitious global renewable energy targets, such as the goal to triple renewable capacity by 2030 and achieve net-zero emissions by 2050, the transition away from fossil fuels must accelerate even further.

Advanced Economies Leading the Clean Energy Transition

According to the report, in advanced economies, clean power generation is projected to grow twice as fast as electricity demand by 2030. Wind and solar PV are anticipated to keep pace with this rising demand, supported by increasing nuclear generation. Advanced economies will also see a significant decline in electricity generated from fossil fuels, with coal and gas-fired power falling by 50% and 15%, respectively.

Emerging Markets and Developing Economies Catching Up

Emerging markets and developing economies (EMDEs) are also on track to see significant growth in clean power. By 2030, clean power generation in these regions is expected to increase by 5,800 TWh, driven primarily by solar PV, which will account for more than half of the new clean power capacity. Wind, hydropower, nuclear, and other renewable sources will also contribute to this increase. China is expected to lead this growth, accounting for nearly 70% of the increase in clean power in emerging markets. Despite these gains, fossil fuel use in EMDEs will remain relatively stable, with only slight declines in coal-fired power generation and increases in natural gas use.

Political and Geopolitical Uncertainties in Energy Markets

The reports find that the uncertain global political landscape in 2024 is influenced by elections in over 80 countries, covering half of the world’s energy demand. Energy-related issues, such as the cost of living and clean energy transitions, have been central to many campaigns. These elections could either bolster or slow the progress of clean energy policies, while uncertainty around them may deter investment, particularly in large-scale or emerging energy technologies.

According to the report, energy markets remain vulnerable to geopolitical events, with risks stemming from the ongoing war in Ukraine, Middle Eastern tensions, and disruptions in vital shipping routes like the Strait of Hormuz and the Suez Canal. Although natural gas prices stabilized somewhat in 2024, geopolitical tensions continue to pose a threat to oil and gas supplies.

In clean energy supply chains, China’s dominance in manufacturing battery cells, solar PV modules, and processing critical minerals presents concentrated risks. Markets like the United States, European Union, and India are attempting to diversify their investments in clean energy technologies. Trade measures, such as tariffs on Chinese-made solar PV, EVs, and batteries, have increased since 2020, aiming to promote a more balanced global supply chain. However, this requires careful coordination to ensure these measures don’t hinder clean energy transitions.

Electricity Demand Growth

Global electricity demand rose by more than 2.5% in 2023, driven primarily by China, India, and Southeast Asia, where electrification of industrial processes, growth in appliance ownership, and increased demand for cooling have played major roles. The IEA projects this growth to accelerate further between 2023 and 2050, with electricity demand nearly doubling in the STEPS, more than doubling in the APS and increasing 2.5 times in the NZE Scenario.

According to the report, emerging markets and developing economies are expected to account for about 70% of additional electricity demand by 2050 across all scenarios. China is poised to contribute approximately 45% of this growth by 2030 and 25% between 2030 and 2050. India is also on track to become the third-largest electricity consumer by 2050, with demand growing by over 4% per year.

In contrast, advanced economies are expected to see lower growth rates, ranging from 1.8% annually in the STEPS to 2.6% in the NZE Scenario. Despite this slower growth, advanced economies will continue to lead in the adoption of electric vehicles (EVs) and heat pumps, which are major drivers of electricity demand.

Electric Vehicles and Electrification of Industry

In advanced economies, EVs are projected to drive 40% of additional electricity demand through 2035, alongside increased demand for heat pumps, appliances, and air conditioning units. The burgeoning power demands of artificial intelligence (AI) and data centers also contribute to rising electricity needs.

In emerging markets, growth in electricity demand is primarily driven by the building sector, particularly through the electrification of appliances, industrial production, and rising demand for air conditioning. By 2035, buildings remain the largest electricity-consuming sector in both the STEPS and APS, though the industry overtakes it in the NZE Scenario due to the rapid electrification of light industries and increased use of electricity in hydrogen production for steel and chemicals.

EV sales are expected to account for over 20% of total electricity demand growth by 2050 in the STEPS, with an even higher share in the APS and NZE scenarios. Hydrogen production via electrolysis is another significant driver, accounting for 7,000 TWh of additional electricity demand by 2050 in the APS and 12,000 TWh in the NZE Scenario—equivalent to 30% of global demand growth.

Data Centers: A Growing Driver of Electricity Demand

According to the report, rapid expansion of data centers, driven by AI and other digital services, is set to become a significant contributor to global electricity demand. By early 2024, more than 11,000 data centers were registered worldwide. Despite advances in energy efficiency, increasing demand for data services and the rise of AI are pushing up electricity consumption in this sector. In 2022, data centers consumed between 240 and 340 TWh of electricity, around 1% to 1.3% of global electricity consumption.

As AI technology advances and more workloads shift to data centers, electricity demand from these facilities is expected to grow rapidly, albeit still accounting for a relatively small share of overall global demand growth by 2030. The supply chain for AI-related chips, particularly those produced by Taiwan Semiconductor, is a bottleneck, with production capacity unlikely to meet expected demand until new plants open in 2026.

Nevertheless, data centers are now among the most active purchasers of clean electricity through power purchase agreements. Companies like Amazon, Meta, Alphabet, and Microsoft are leading the way in sustainable energy use for their data center operations, underscoring the importance of clean energy in meeting the rising demands of the digital economy.

Impact of Heat Waves on Global Energy Demand

With 2023 being the warmest year on record, climate change is driving more frequent, intense, and prolonged heat waves. Recent extreme temperatures include highs of nearly 50°C in Canada (2021), over 40°C in the UK (2022), and extended heat waves in India and China in 2024.

These heat waves are leading to a sharp increase in air conditioner (AC) ownership as consumers seek relief from high temperatures and prepare for future heat events. In India, AC sales doubled in 2024 due to heat waves. The increased use and ownership of ACs, particularly during extreme heat, is driving rapid growth in electricity demand. This rise in peak demand poses risks to grid security, especially as space cooling becomes one of the fastest-growing sources of electricity consumption.

A sensitivity analysis shows that if heat waves continue to increase in frequency and intensity, electricity demand could be 500 TWh higher by 2030 and nearly 700 TWh higher by 2035 compared to the STEPS. Over 80% of this increase would come from emerging markets like India, China, and Southeast Asia, where AC ownership is lower but growing quickly. Advanced economies would see smaller increases since AC saturation is already high.

The surge in cooling demand would necessitate more dispatchable generation, primarily from fossil fuels, leading to a 2% rise in gas and coal consumption by 2030, resulting in 270 million tonnes of additional CO2 emissions.

An earlier report by the International Renewable Energy Agency said the world must achieve a minimum annual growth rate of 16.4% in renewable energy installations to triple capacity by 2030.

India

According to the report, India is poised to experience more energy demand growth than any other country over the next decade. By 2035, energy demand is expected to increase by 35%. India’s electricity generation capacity will almost triple to 1,400 GW by 2035.

Coal remains a significant part of the energy mix, with 60 GW of new coal-fired capacity projected by 2030. Despite solar PV capacity doubling during this period, coal generation will remain more than 30% higher due to lower solar capacity factors.

By 2030, 50% of India’s total power generation capacity is expected to be non-fossil fuel-based.

Under the APS, clean power generation will be nearly 20% higher by 2035 compared to current stated policies. Additionally, India is on track to have the world’s third-largest installed battery storage capacity by 2030 to support the rising share of renewables.

By 2035, India’s CO2 emissions are expected to decrease to 2.5 billion tons, representing a 25% reduction from the current trajectory in the STEPS.