What's Happening?
The International Energy Agency (IEA) has released its World Energy Outlook, highlighting a significant rise in global household electricity demand projected through 2035. This increase is driven by the
expanding use of air conditioning, household appliances, electric vehicle (EV) charging, and electric space heating. The report indicates that as electrification expands, households will become more sensitive to electricity price changes. The IEA's Stated Policies Scenario (STEPS) suggests that global average household electricity consumption could rise by about 25% by 2035. In advanced economies, demand is expected to increase by roughly 15%, while emerging markets could see a 30% rise due to higher incomes and temperatures. The report also notes a structural shift in electricity system costs, with a growing emphasis on capital-intensive investments in clean generation, transmission, distribution grids, and energy storage.
Why It's Important?
The projected increase in household electricity demand underscores the growing importance of electricity affordability as a critical issue for both households and businesses. As electricity becomes a larger share of daily energy use, price sensitivity will likely increase, impacting household budgets and potentially influencing consumer behavior. The shift towards capital-intensive investments in renewable energy and grid infrastructure highlights the need for strategic policy and financing decisions to manage costs effectively. This development could have significant implications for energy policy, economic planning, and the transition to sustainable energy systems. The report suggests that while efficiency improvements and fuel switching may help mitigate cost increases, the overall impact on household energy bills will vary by region and scenario.
What's Next?
As electricity demand continues to rise, policymakers and industry stakeholders will need to address the challenges of affordability and infrastructure investment. The focus will likely be on developing policies that support the transition to clean energy while ensuring that electricity remains affordable for consumers. This may involve incentivizing energy efficiency, expanding renewable energy capacity, and investing in grid modernization. Additionally, the potential for supply-chain constraints and carbon pricing to add cost pressures will require careful management to avoid adverse economic impacts. The IEA's report suggests that well-designed policies could stabilize or even reduce real energy costs, particularly in advanced economies.
