Asia to drive global energy demand over next two years

Consumption of power across the world is set to rise well into 2023 following ongoing volatility in the energy market, with growth set to be led by Asian countries and new technology, according to Fitch Solutions.

Power consumption will plateau, growing at a rate of only 2.2 per cent beyond 2023, according to the report.

The growth follows a period of significant lull in energy consumption in 2020, when the spread of Covid-19 forced factories to close, transport to halt and ushered in months of low demand.

“This was most prominent in markets with higher levels of manufacturing, mining and construction activity, as these sectors tend to be more energy-intensive,” the intelligence agency said. “Overall, global power demand growth fell by 1.81 per cent – the worst decline in 20 years.”

Growth in the power sector will be led by Asia, whose share of demand will rise to 56.7 per cent from 52.5 per cent. “We highlight that China, India, and Indonesia will all see a dramatic rise in electricity demand from a combination of strong demographic and macroeconomic fundamentals as well as rapidly developing industrial activity,” Fitch Solutions said.

“As markets accelerate their economic development to recover from the fiscal impacts of the pandemic, we expect to see a near-term surge in electricity consumption.”

The growth in power consumption is in line with economic recovery in key Asian energy consuming markets.

Emerging market and developing economies are now projected to grow 6.4 per cent this year, with China and India hitting 8 per cent and 9.5 per cent, respectively, according to the International Monetary Fund.

India, which is powering ahead with additions to its electricity generation capacities by giving the green light to new coal-fired plants could experience higher demand.

“Indian Prime Minister Narendra Modi’s Make In India initiative will encourage further investments into the country’s manufacturing and infrastructure-related sectors, which will boost power demand,” the report said.