Fusion and The "Age of Electricity"

The world is entering the “Age of Electricity,” with low-emission energy sources on track to generate more than half of the world’s electricity by the end of the decade, according to the International Energy Agency’s new World Energy Outlook. The report examines how the energy transition would look in three scenarios: following current energy and climate policies, fulfilling all announced climate commitments, and achieving net zero emissions by 2050. “The energy outlook is complex, multifaceted, and defies a single view on how the future might unfold,” the report says. Electricity demand grows much faster than overall energy demand, thanks to long-existing uses, notably cooling, and newer ones, such as electric mobility and data centers. Renewables lead the expansion in electricity generation, with sufficient speed to meet all the demand increases in aggregate. There is scope to go even faster: today’s solar manufacturing capacity hovers around 1100 GW per year, potentially allowing for deployment almost 3x higher than in 2023.

Some facts and figures:

• 9.7 billion global population by 2050
• Global energy demand increased by 2% in 2023
• 80% of global energy demand in 2023 was powered by fossil fuels
• 300% growth in solar energy production expected by 2035
• $2T in clean energy invested annually
• 2x more spent on renewables vs. fossil fuels in 2023
• 10% of global power consumed by data centers in 2023
• 560 gigawatts of new renewable power created in 2024

The International Energy Agency (IEA) reaffirmed projections that demand for all fossil fuels will stop growing this decade as the world’s energy system shifts toward electricity. The organization also added a new element Wednesday, predicting that oil and gas prices will wilt during the next few years as surplus supplies build up. “We’ve witnessed the Age of Coal and the Age of Oil — and we’re now moving at speed into the Age of Electricity,” the adviser to major economies said in its annual long-term report.

According to Bloomberg, power demand is growing fastest for EVs, AI data centers, and air conditioning globally. 

Renewables

Clean energy is entering the energy system at an unprecedented rate, including more than 560 gigawatts (GW) of new renewables capacity added in 2023. Still, deployment needs to be uniform across technologies and countries. Investment in clean energy projects are approaching USD 2 trillion annually, almost double the combined amount spent on new oil, gas, and coal supply. This helps renewable power generation capacity rise from 250 GW today to nearly 10,000 GW in 2030 in the STEPS, short of the tripling target set at COP28 but more than enough, in aggregate, to cover the growth in global electricity demand and to push coal-fired generation into decline. 

China accounted for 60% of the new renewable capacity added worldwide in 2023 – and China’s solar PV generation alone is on course to exceed, by the early 2030s, the total electricity demand of the United States today. In China and elsewhere, there are open questions about how quickly and efficiently new renewable capacity can be integrated into existing power systems, and whether grid expansions and permitting times keep pace.

Demand for energy services is rising rapidly, led by emerging and developing economies. Still, the continued progress of transitions means that the global economy can continue to grow by the end of the decade without using additional amounts of oil, natural gas, or coal. This has not been the case in recent years. Despite record clean energy deployment, two-thirds of the increase in global energy demand in 2023 was met by fossil fuels, pushing energy-related CO2 emissions to another record high.

Nuclear Energy

With nuclear power gaining renewed interest in many countries, these low-emissions sources are set to generate more than half of the world’s electricity before 2030.

Data Centers

In the base case scenario, the IEA projects that data centers will account for ~10% of global electricity demand growth by 2030, roughly equal to demand growth from desalination technologies. The authors even sound an optimistic note as they urge readers to consider the positive impacts that artificial intelligence could have on the energy sector at large, writing that “the potential implications of AI for energy are broader [than just their data center electricity use] and include improved systems coordination in the power sector and shorter innovation cycles.” We can only guess whether AI's net benefits will be positive or negative from an emissions standpoint. But the report again sounded relatively cheery as it noted that “a set of low-emissions options available to meet this [data center] demand,” as cleaner electricity sources are growing much faster than data center electricity use.

Air Conditioning

By comparison, rising temperatures and incomes could create over 1,200 terawatt-hours of additional cooling demand by 2035, more than the entire Middle East’s electricity use. 

Currently, 60 cents are spent on grids and storage for every dollar spent on renewable power. By the 2040s, this reaches parity in all scenarios. Many power systems are vulnerable to increased extreme weather events and cyberattacks, putting a premium on adequate investments in resilience and digital security.