Global Demand for Renewable Energy Is Set to Surge
- Global demand for electricity is set to double by 2050, driving a surge in renewable energy demand.
- The increasing use of AI, electric vehicles, and data centers is accelerating the need for renewable energy sources.
- Utilities and energy companies are facing unprecedented challenges and opportunities as they race to expand renewable energy capacity to meet growing demand.
New reports show that renewable energy demand is expected to soar in the coming years as several countries around the globe undergo a green transition. The global energy demand is expected to increase in line with population growth, industrialization, and the rise in the use of complex technologies, such as artificial intelligence (AI).
The global demand for electricity is expected to double by 2050 compared to 2020 levels according to recent assessments. This is driving countries to ramp up their renewable energy capacity to support a green transition as well as respond to the growing demand. However, the sharp increase in the use of complex technologies could spur even more growth in demand than currently anticipated.
The CEO of the U.S. energy firm NextEra Energy, John Ketchum, recently stated that the demand for renewable energy will likely triple over the next seven years in line with the growing use of AI. In the second quarter of 2024, NextEra added 3,000 MW of renewable and storage projects to its order backlog, 28 percent of which came from deals to power Google’s data centers. This marked the second-best quarter in NextEra’s history. Ketchum stated, “These results support our belief that the bulk of the growth demand will be met by a combination of renewables and battery storage.” NextEra currently has a portfolio of 7 GW of renewable energy in operation and backlog.
The company believes that the power demand for data centers, manufacturing, and the electrification of the economy will increase at a rate of around four times faster in the coming decades compared to the previous two decades. This sentiment has been echoed by several energy intelligence companies, as the global demand for electric vehicles (EVs), industrial power and data centres rises sharply. As the U.S. and other countries around the globe strive to transition away from fossil fuels in favor of renewable alternatives, there is a huge pressure to increase renewable energy capacity to meet the growing demand and ensure that the economy does not stagnate due to an undersupply of renewable power.
Rebecca Kujawa, CEO of NextEra Energy Resources, a subsidiary of NextEra Energy, explained “But there is no escaping the fact that these are very large numbers and numbers that I don’t think any utility across the industry has seen before.” Kujawa added, “From a practical standpoint, it’s going to take a couple of years for this really to materialize and utilities to be able to absorb it and serve it.”
Several sectors will contribute to the growth in renewable energy demand in the coming decades, the first of which is the electrification of transportation. Several governments worldwide have established strategies for the electrification of public and private transport, including trains, buses, trucks, and cars. This will require a huge shift away from fossil fuels to renewable electricity sources. In 2022, EVs accounted for around 2 percent of the global automobile market, a figure that is expected to rise to 50 percent by 2035, demonstrating the massive anticipated shift in energy demand for private transportation.
Global industrialization is also expected to contribute heavily to the increase in renewable energy demand as several heavy industries look to decarbonize operations. Many industries are investing in green hydrogen as a fossil fuel replacement, with the value of the green hydrogen market expected to increase in value at a CAGR of 31 percent between 2024 and 2032. By 2030, the global deployment of green hydrogen is expected to reach 150 GW, equivalent to around 63,750 tons per day, as governments worldwide put pressure on heavy industries to reduce their carbon emissions.
One of the biggest areas of growth is likely to be seen in the data centres required to power the adoption of new technologies. The increase in the use of AI services, such as Chat-GPT, is expected to rapidly drive up the global power demand. The energy consumption of data centres is expected to double by 2026 and continue growing. This is pushing many major tech companies to invest heavily in the development of green energy capacity to ensure they can produce enough clean energy to meet the growing demand.
Finally, as climate change worsens, the demand for power for cooling and heating is rising. This is paired with the growth of the middle class in many emerging economies, increasing the demand for air conditioning systems. In colder countries, many governments are encouraging the use of heat pumps over gas boilers, which will also require higher quantities of renewable energy to power them.
The global growth of several sectors and the pressure to decarbonize is expected to contribute to a sharp rise in the demand for renewable energy in the coming decades. As demand grows, governments worldwide are scurrying to expand their renewable energy capacity to support a transition away from fossil fuels. However, based on the rapid speed of the development of certain industries, such as technologies that require data centers, many countries will need to increase their green energy capacity faster if they want to ensure economic development is not halted due to a lack of a clean power supply.
By Felicity Bradstock for Oilprice.com
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