pwr_january-2025 - 8

GLOBAL MONITOR
THE BIG PICTURE:
Power Sector Uncertainties
According to the International Energy Agency's (IEA's) latest World Energy Outlook, the global energy landscape through
2035 and beyond is fraught with uncertainties that challenge traditional forecasting models. The complex environment
could hinge on several factors, such as the pace of electrification, the deployment of renewables, and evolving market
dynamics, alongside technological developments, policy direction, the pace of infrastructure investment, economic
trends, policy changes, and geopolitical impacts. These uncertainties ripple across all fuels and energy sectors and could
reshape electricity demand, oil consumption, natural gas reliance, and coal use. The interplay of emerging technologies,
infrastructure readiness, climate impacts, and regional economic growth could add more layers of complexity, requiring
adaptive strategies and innovative solutions. Notes: AI = artificial intelligence; EV = electric vehicle; PHEV = plug-in
hybrid electric vehicle; TWh = terawatt-hours; mb/d = million barrels per day; bcm = billion cubic meters; Mtce =
million tonnes of coal equivalent; IT = information technology; kb/d = thousand barrels per day; PV = photovoltaics.
Source: IEA World Energy Outlook 2024.
-Sonal Patel is a POWER senior editor.
DEMAND CHANGES BY FUEL FOR SELECTED SENSITIVITY CASES
Electricity (TWh)
Appliance efficiency
improvements
More frequent,
intense heat waves
EV growth
Data centers and
AI growth
-1,000
EV growth
Faster
Oil-to-gas switching in
Middle East power
PHEV in electric mode
-2.3
Electricity demand
sensitivities
Renewables
deployment
Coal-to-gas switching
in industry
-100
Appliance efficiency
improvements
More frequent,
intense heat waves
EV growth
Data centers and
AI growth
-200
Faster
Coal (Mtce)
Slower
100
Lower
Faster solar PV
More
More
Less
Natural Gas (bcm)
Higher
Delayed wind
Slower
Less
Slower
Lower
Oil (mb/d)
Faster
Higher
1,000
Faster
Slower
Electricity demand faces significant uncertainties
driven by multiple factors. Slower appliance
efficiency improvements could increase demand
by 340 TWh by 2035, while more frequent and
intense heat waves, particularly in India and
Southeast Asia, could add 700 TWh due to rising
cooling needs. Faster EV adoption might drive
demand up by 1,000 TWh, requiring grid
upgrades. Data centers and AI could add 500
TWh, stressing energy systems, though IT
hardware efficiency gains may mitigate some
impacts. Demand growth could also both affect
and be influenced by fuel use-including coal,
natural gas, and renewables-depending on
regional generation mixes, infrastructure
capacity, and policy developments.
2.3
Oil demand could increase by 2 mb/d by 2035
with slower EV adoption, particularly in North
America and Europe. Faster EV growth,
especially in emerging markets, could reduce
oil demand by 1.8 mb/d. Accelerated
oil-to-gas switching in Middle Eastern power
could lower oil use by 900 kb/d by 2030, but
delays in transitions might sustain demand.
Increased electric mode usage in plug-in
hybrids could reduce oil demand by 250 kb/d.
Natural gas demand could rise by 4% by 2035,
spurred by a 130 bcm liquefied natural gas (LNG)
surplus lowering costs and encouraging industrial
and power sector uptake. Delayed renewables
deployment might add 70 bcm to gas demand,
while faster solar PV deployment could reduce it
by a similar amount. Additional cooling needs
from heat waves and industrial coal-to-gas
switching could further elevate natural gas's
pivotal role in balancing global energy systems.
Slower
Faster
Lower Higher
KEY
8
2030
2035
www.powermag.com
POWER | January 2025
Slower appliance efficiency improvements
and frequent heat waves could increase coal
demand for power generation by 200 Mtce
by 2035. Rapid EV adoption and growth in
data centers might further raise coal use
where grids rely heavily on coal. Conversely,
accelerated coal-to-gas switching in
industries and faster renewables
deployment could significantly reduce coal
dependency, highlighting the intricate links
between coal's future and advancements in
technology and policy.
200

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