The global consequences of climate change and appliance adoption for peak electricity demand

As people across the globe experience more extreme heatwaves due to climate change, demand for air conditioning is on the rise. Many countries are also decarbonising heating by encouraging the adoption of technologies like heat pumps. Electricity is therefore increasingly central to meeting critical cooling and heating needs.

In this paper, the authors estimate the global impact of changes in electric heating and cooling demand on the electricity grid in the coming decades. The analysis uses high-frequency data on electricity demand spanning more than seventy countries. Combining this with temperature data and region-specific estimates of air conditioning and electric heating adoption, the authors project changes in both average and peak electricity demand to 2050.

The authors show that the adoption and use of both air conditioning and electric heating will increase significantly worldwide by 2050. This will lead to increased average per capita electricity demand for heating and cooling in all regions, with peak demand during periods of extreme heat or cold rising nearly twice as much. Global annual electricity grid costs will increase by over $0.3 trillion per year in 2050, with the largest burden falling on low- and middle-income countries.

Key points for decision-makers

• Electricity demand for cooling and heating will increase significantly in all regions: global per capita electricity demand for heating and cooling is projected to increase substantially (13%) by the middle of the century, with all regions seeing increases due to the widespread adoption of both air conditioning and electric heating.
• Peak demand increases during temperature extremes are much larger than average effects over the year: increases in peak demand (24%) are roughly double those for average demand, highlighting how prior work that has focused on average consumption understates the grid capacity investments that climate change adaptation and mitigation will require.
• Drivers of demand growth vary significantly across regions: increased air-conditioning uptake and use drives demand growth in hot regions, while in colder regions, it is heating electrification, which offsets and generally reverses the reductions that milder winters alone would bring. It is the combination of climate change, rising incomes and electrification that explains why electric heating and cooling demand is projected to rise globally.
• Low- and middle-income countries face a heavier cost burden: measured relative to local gross domestic product (GDP), the burden of cost impacts fall disproportionately on low- and middle-income countries, who will face the largest challenge in ensuring their grids can meet rapidly rising cooling and heating needs. China and India alone account for nearly half of the global total cost impacts.
• Electricity system planning for temperature extremes will become more important: periods of extreme temperature are both when demand increases will be most acute, and when electricity infrastructure is often at greatest risk of failure. The growing role of intermittent renewable generation in electricity grids, such as solar and wind power, provides opportunities, including abundant solar energy during heatwaves. But it also presents challenges, notably during dark, still winter days in periods of severe cold.
• Impacts can be mitigated by policies supporting appliance efficiency and improved building standards: the central role of air conditioning and electric heating in driving future increases in demand for electricity highlights the importance of appliance efficiency. Other interventions to promote passive cooling, improve building insulation or plan cities more intelligently, may also help to reduce the strain placed on the electricity system.

DOI: 10.21953/researchonline.lse.ac.uk.00140636