Global electricity demand in 2020 is projected to fall by around 2%. This is the biggest annual decline since the mid-20th century and far larger than what followed the global financial crisis, which resulted in a drop in electricity demand of 0.6% in 2009. The contraction this year is a result of t Contact online >>
Global electricity demand in 2020 is projected to fall by around 2%. This is the biggest annual decline since the mid-20th century and far larger than what followed the global financial crisis, which resulted in a drop in electricity demand of 0.6% in 2009. The contraction this year is a result of the Covid-19 pandemic and its impact on economic activity – the assumed 4.4% decline in global GDP in 2020 is significantly larger than the 0.1% reduction in 2009 – and the measures taken to prevent the further spread of the virus.
China will be the only major economy to see higher electricity demand in 2020. However, projected demand growth of around 2% in the People''s Republic of China (hereafter, "China"), which represents about 28% of global electricity consumption, is still significantly below its average since 2015 of 6.5%. After implementing strict health measures early in the year and experiencing subsequent drops in electricity demand in the first quarter, China has seen year-on-year demand growth every month since then. Although demand recovered in many economies during the Northern Hemisphere''s summer and autumn, major consumers including the United States, India, Europe, Japan, Koreaand Southeast Asia are all set to experience declines for the year as a whole.
Wholesale electricity prices have plummeted in 2020. Falling demand, lower fuel prices and the increase in renewable generation units with zero marginal costs have dragged down prices. The IEA''s wholesale electricity market price index, which tracks price movements in major advanced economies, shows an average price decline of 28% in 2020, after having already fallen by 12% in 2019.
Following the shock of 2020, we expect a modest rebound in 2021. With the recovery of the global economy in 2021, global electricity demand is expected to grow by around 3%. This rebound is rather low compared with 2010, the year following the global financial crisis, when electricity demand grew by 7.2%. The increase in demand is expected to be driven by emerging and developing economies, particularly China and India.
IEA (2020), Electricity Market Report - December 2020, IEA, Paris https://, Licence: CC BY 4.0
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An integrated EU energy market is the most cost-effective way to ensure secure, sustainable and affordable energy supplies to EU citizens.
Through common energy market rules and cross-border infrastructure, energy can be produced in one EU country and delivered to consumers in another.
Boosting competition, improving the long-term markets and allowing consumers to choose energy suppliers keeps prices in check.
The share of electricity produced by renewable energy sources, predominantly solar and wind, is expected to grow from 37% in 2020 to more than 60% by 2030. In 2022, renewables made up 41.2% of EU''s gross electricity consumption according to Eurostat.At the same time, electricity must also be produced and delivered in sufficient quantities when there is no wind or sun.
Markets need to adapt to better integrate renewable energies and attract investment in fossil-free flexible technologies, such as demand side response andenergy storage, that can complement variable energy production. They must also provide the right incentives for consumers to become more active and contribute to keeping the electricity system stable.
The EU electricity market needs to be transparent and efficiently monitored to ensure open and fair competition and protect against market abuse and manipulation. 2022 saw high and volatile energy prices and serious concerns about security of supply and EU heads of government called on the Commission to work swiftly on thestructural reform of the electricity market to help Europe secure its energy sovereignty and achieve climate neutrality.
To boost renewables, better protect consumers and enhance industrial competitiveness, the Commission proposed a reform of the current electricity market rules in March 2023, as part of theGreen Deal Industrial Plan.
Thenew electricity market design rulesconsist of the amending Directive EU/2024/1711 and the amending Regulation EU/2024/1747. They were adopted on 21 May 2024 and entered into force on 16 July 2024.
The new rules amend the following pieces of EU legislation
Electricity Directive and Electricity Regulation
TheDirective on common rules for the internal market for electricity(EU/2019/944) and theRegulation on the internal market for electricity(EU/2019/943) put the consumer at the centre of the clean energy transition, enabling active participation, with a strong framework forconsumer protection. The rules allow more flexibility to accommodate the increasing share of renewable energy in the grid and contribute to the creation of green jobs and growth.
Regulation (EC/713/2009) established the Agency for the Cooperation of Energy Regulators (ACER), and it was recast with Regulation (EU) 2019/942 as part of the Clean energy for all Europeans package.
ACER acts as an independent body to foster the integration and completion of the European internal energy market for electricity and natural gas. The agency''s tasks include, among others, the coordination of actions of national energy regulators at European level (including taking binding decisions in case national regulators cannot agree), the development of common network and market rules, the participation in regional and cross-regional initiatives, the monitoring of market activities (including supervision to combat market manipulation to the detriment of other market participants and consumers), or advice to the EU Institutions on trans-European energy infrastructure development or security of supply.
TheWholesale Energy Market Integrity and Transparency(REMIT)Regulation (EU/1227/2011) ensures that consumers and other market participants can have confidence in the integrity of electricity and natural gas markets, that prices are fair and competitive based on supply and demand, and that no profits can be drawn from market abuse.
Revised Renewable Energy Directive
The more flexible the energy system is, with generation that can rapidly turn on or off, storage that can absorb or put power onto the system, or responsive consumers who can increase or decrease their demand for power, the more stable prices can be and the more renewable energy the system can integrate.The Renewables Directive (EU/2018/2001) was already amended byDirective (EU/2023/2413) whcih entered into force on 20 November 2023.
TheRegulation on risk preparedness in the electricity sector(EU/2019/941) is also part of EU Electricity Market Design, but is not concerned by the reform. It requires EU countries to prepare plans for potential future electricity crises, putting the appropriate tools in place to prevent, prepare for and manage these situations. It also requires that EU countries - using common methods - identify all possible electricity crisis scenarios at national and regional levels and prepare risk preparedness plans based on these scenarios. Above all, this preparation requires EU countries to cooperate and coordinate in a spirit of solidarity. It also establishes a framework for more systematic monitoring of security of supply issues via theElectricity Coordination Group.
The revised rules aim to make the EU energy market more resilient and the energy bills of European consumers and companies more independent from the short-term market price of electricity. This can be achieved by using long-term contracts, such as power purchase agreements and structuring investment support with 2-way contracts for difference.
The reform will also help accelerate the deployment and integration of more renewable energy sources in the energy system, and enhance protection against market manipulation, promoting the stability and predictability of energy prices and thereby contributing to the competitiveness of EU industry.
This will be achieved by introducing a new enforcement regime with an enhanced role for the Agency for the Cooperation of Energy Regulators (ACER) in cross-border investigations, allowing it to pursue important cross-border cases with the most significant impact on the markets.
The reform will also enhance the supervision of reporting parties and data sharing between relevant authorities, increase market transparency through a liquified natural gas (LNG) price assessment and benchmark and ensure more effective enforcement towards non-EU companies, who will have to designate a representative in the EU.
Adoption of the Electricity Market reform(Directive (EU) 2024/1711andRegulation (EU) 2024/1747)
Provisional agreement on the Electricity Market Design rules
Provisional agreement on REMIT
Proposal to revise the Electricity Market Design rulesand the Regulation on Wholesale Energy Market Integrity and Transparency(REMIT)
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