Air conditioning will be major driver of electricity demand, says IEA

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A huge increase in the use of air conditioning will have one of the biggest and most unpredictable impacts on the world’s electricity grids in the coming decade, the International Energy Agency has said.

Researchers at the IEA, an organisation dedicated to ensuring energy security, said a combination of rising incomes in the developing world and higher temperatures from climate change meant that power used for home air conditioning units would rise by an amount greater than the entire Middle East’s electricity use today. 

The prediction came as the IEA revised up its forecasts for electricity demand, saying in its flagship World Energy Outlook report, out on Wednesday, that usage in 2035 would be 6 per cent higher than anticipated last year.

The report said air conditioning would need an extra 697 terawatt hours of electricity by 2030, more than three times the extra demand from computer data centres. Electric vehicles, meanwhile, would require an extra 854 TWh, the IEA said.

The variability of air conditioning demand will also mean it will have the most unpredictable daily impact on grids.

“It is a blind spot for many decision makers to see how important air conditioners are as a driver of global electricity consumption,” Fatih Birol, the head of the IEA, said in an interview with the Financial Times.

“Just to put it in context, in the US and Japan, 90 per cent of households have air conditioning but it is 5 per cent of households in Nigeria, 15 per cent in Indonesia and less than 20 per cent in India. With increasing income levels, and with the increasing impact of climate change, people buy air conditioners and this is a major driver,” he added. 

The IEA said energy use for residential air conditioning was expected to rise by 280 per cent by 2050 in a “business as usual” scenario, known as Steps. It would account for 14 per cent of total energy demand in buildings by that date, up from less than 7 per cent today.

In another scenario, where governments fully meet their climate-related pledges, energy consumption by air conditioning still rises by nearly 200 per cent. 

The overwhelming majority of growth in air conditioning will occur in emerging market and developing economies, and the IEA warned that demand could be even stronger if climate change produced more frequent heatwaves.

By contrast, it said the energy consumption of data centres, while rising, would have less impact on grids. “There are more than 11,000 data centres registered worldwide and they are often spatially concentrated, so local effects on electricity markets can be substantial,” the IEA said. “However, at a global level, data centres account for a relatively small share of overall electricity demand growth to 2030.” 

The IEA said that global electricity demand was rising at an annual rate of 1,000 TWh, equivalent to adding another Japan to electricity consumption each year. It also increased its forecast for demand in 2035, in its business-as-usual scenario, by 6 per cent, or 2,200 TWh, to 37,371 TWh.

Birol said that while the energy transition was “slowing down” in some countries, it was speeding up elsewhere.

“Renewables capacity additions are 20 per cent higher this year than in 2023. I do not see a major slowdown, and this is because the transition is being driven by economics, not by climate policies.”

The IEA noted, however, that there had been almost 200 trade measures affecting clean energy technologies since 2020, compared with 40 in the preceding five-year period, as countries became more alarmed about the dominant role being played by Chinese companies in the production of goods such as solar panels and electric vehicles.

And the World Energy Outlook said there was “more near-term uncertainty” over the path of the energy transition because of the wave of democratic elections this year, including a US presidential poll. “Energy and climate issues have been prominent themes for voters that have been buffeted by high fuel and electricity prices, and by floods and heatwaves,” it said. 

Data visualisation by Keith Fray