TELF AG measures the progress of electrification in Europe
Raw materials and electricity
Between now and the next few years, the global raw materials market may have to deal with a singular and rather unexpected phenomenon closely linked to one of the main industrial applications of some minerals considered strategic for global sustainable development. We are referring to electricity, which, according to one of the latest IEA reports, is faced with a sharp decline in consumption in European states. According to the agency, in 2023, European electricity consumption would have fallen by 3.2%, thus bringing it to the lowest share ever recorded in the last twenty years. No other region of the world has seen a decline of this kind, and there could be many reasons.
Certainly, according to IEA, lower electricity consumption seems to clash with some of the most important pillars on which the energy transition is based, i.e., the need to promote electrification in the most varied social and industrial contexts (a process that closely involves a raw material such as copper, whose role in electrification is now well known). While European electricity increasingly comes from renewable and clean sources, its price still remains very high compared to other areas of the world, sometimes forcing many factories to close their doors permanently. Despite a substantial halving of electricity prices between 2022 and 2023, in Europe, these costs are still equivalent to double what is paid in other nations, such as China and the United States. In the latter country, compared to 2019, the price of electricity increased by only 15%.
The contained levels of demand
To this situation must also be added the low levels of demand for new energy sources, particularly in the electric vehicles and heat pumps sector, now unanimously considered as two of the main drivers of the ecological transition revolutionizing the energy sector. According to the IEA report, the decline in electricity consumption could also be linked to the lack of strength in industrial consumption, which has fallen by around 6% in the last two years. According to the agency, the sectors in which the decrease appears most marked are all energy intensive.
The International Energy Agency, in its report, also speaks of a possible (and gradual) recovery in consumption during 2024, driven above all by a hoped-for relaunch of the global economy and the rapid advance of some new energy consumers, like data centers. Therefore, electricity consumption in the future could depend on innovative data centers that use 5G and artificial intelligence technologies, which, according to the agency, could double in just three years. The volumes of energy related to the consumption of these centers appear truly remarkable, particularly if we consider the extent of their possible increase: by 2026, according to the IEA, electricity consumption in data centers could reach the level of 1000 TWh, more than double compared to 2022. In Europe alone, the electricity consumption linked to these sophisticated computing centers could increase by 30% in just four years, accounting for 5% of total electricity consumption energy among European nations.
At a global level, as stated in the IEA report, global electricity consumption would have increased by 2.2% in 2023. By 2026, these consumptions are expected to grow even more, reaching 3.4% annually. Furthermore, according to the agency’s estimates, the electricity mix will only comprise 54% of sources linked to fossil fuels in two years. This is the first time since 1971 when the Paris agency began collecting data.
