Global Electricity Mid-Year Insights 2023

Deep dive on the five biggest power sector emitters

Electricity demand fell in some high income economies (the EU, Japan, and the US), driving their emissions down and contributing to flattening emissions at the global level. In India, demand grew moderately leading to slower growth in coal generation compared to the same period last year which in turn slowed down emissions rise. Demand also increased in China where problems with hydro necessitated higher coal consumption and led to increased emissions.

China accounted for two-thirds of global growth in wind and solar generation in the first half of 2023, but poor hydro conditions led to an increase in coal power

China is the world’s largest power producer, accounting for 31% of global generation, and it will continue to be responsible for most future global demand growth. Hence, what happens in the country’s electricity sector is critically important to the global electricity transition.

In the first half of 2023, China accounted for 67% of global growth in wind and solar generation, but poor hydro output meant that China also saw a significant increase in generation from coal.

China’s demand increased above the world average

China’s electricity demand grew 6% (+246 TWh) in the first half of 2023, a larger increase than the 2.4% growth seen in the same period last year. However, the country’s growth this year is in line with its average growth over the last decade (2012-2022) of 5.9%. As usual, China’s demand growth in the first half of this year was significantly higher than the global average of 0.4%.

Demand growth in China was mainly caused by economic growth, which is forecast to be about twice the world’s average this year, as well as heat waves over May and June resulting in increased demand from air conditioning in that period. Despite the temporary weather-related increases, the demand growth of 6% this year so far has been in line with the China Electricity Council forecast for 2023 of 6%.

China remains a global leader in new wind and solar generation

China continues to be the global leader in the build up of wind and solar, accounting for 67% of the global increase in wind and solar generation in the first half of 2023.

China’s wind generation increased 26% (+99 TWh) in the first half of 2023, compared to the same period last year, which is almost three times faster than the global average. China’s fast growth in wind generation is outpacing growth in the EU, Japan and the US where generation either grew moderately or saw small falls. This meant that 91% of global additions in wind generation in H1-2023 came from China. At the same time, China’s solar generation grew 21% (+44 TWh), higher than global solar growth of 16%. In the first half of 2023, China provided 43% of the global increase in solar generation. Combined, the two sources grew 24% (+144 TWh) in China, nearly double the global average growth of 12%.

Generation from wind and solar in China has doubled in just three years. In H1-2020, 369 TWh were produced from wind and solar. In H1-2023, this had increased to 738 TWh. Consequently the share of wind and solar generation also increased substantially, from 11% in H1-2020 to 17% of China’s electricity in the first six months of 2023. It is the first six-month period in which China has generated more than a sixth of its electricity from wind and solar.

China’s coal generation increased due to hydro fall and demand increase

Wind and solar additions covered 58% (144 TWh) of the increase in China’s electricity demand. Small increases in other clean generation, such as nuclear and bioenergy, contributed less than 10% (18 TWh) of the rise in demand. New hydropower projects were also completed, but droughts saw output from hydropower fall by 22% (-129 TWh).

This hydro deficit–alongside the rise in demand that was not met by clean power generation–created a large shortfall which was filled by coal generation, which increased 8% (+203 TWh) to a new record high.

Had hydro generation been unchanged year-on-year, China’s coal generation would have increased far more slowly, as it would not have had to make up for the large hydro deficit of 129 TWh. With the hydro deficit, China’s coal generation increased by 203 TWh (+8%) in the first half of 2023, compared to the same period last year. Without this deficit it would have risen by 74 TWh (+2.9%). This would have been enough to turn a rise in global coal generation of 47 TWh into a fall of 82 TWh.

It is still possible for China’s hydro output in 2023 to recover. Severe droughts started to have a negative effect on China’s hydro generation in the second half of 2022, and continued into the first half of 2023. Average or good hydro conditions in the second half of 2023 could therefore see a return to output significantly above the previous year’s levels.

China’s power sector emissions rise

Driven by the increase in coal generation, emissions from China’s power sector jumped 7.9% (+173 million tonnes of CO2) in the first six months of 2023. In comparison, global power sector emissions rose much more slowly (+0.2%). Most of the increase in China occurred from March to June. As of February, China’s power sector emissions had been 1.4% below levels seen in the first half of 2022. However, from March onwards, poor hydro conditions led to an increase in coal generation.

Whether further increases in China’s power sector emissions can be avoided depends on several factors. If wind and solar continue to increase at their current growth rates, their additions alone could soon be enough to meet all of China’s increase in electricity demand. It will then depend on other clean sources such as nuclear generation and volatile hydro conditions as well as the rate of economic and demand growth, when we see the first structural emission falls in China’s power sector.

United States responsible for 13% of global solar growth in the first half of 2023

The US contributed 13% of global growth in solar generation in H1-2023, despite national growth rates (+13%) lower than the global average (+16%). At the same time, wind generation in the US fell 16%, due to worse wind conditions than in the previous year. As a result of demand falling and coal-to-gas switching, US power sector emissions fell by 64 million tonnes, which helped ensure that global power sector emissions plateaued rather than increased.

Coal-to-gas switching pushed US coal generation down

US coal generation fell by 27% (-112 TWh) in the first half of 2023 compared to the same period last year. This was a result of a switch to gas generation, which increased by 8% (+61 TWh), as well as significant falls in electricity demand of 3.4% (-72 TWh) after two years of above average demand growth. The reduction in demand in the US was caused by both slower than expected economic growth as well as milder temperatures in Q1 of 2023. Both economic growth and electricity demand are expected to rise again in 2024.

US renewables stall as wind and hydro dip

Renewable electricity generation in the US fell by 3.7% (-19 TWh) in the first half of 2023, compared to a global increase of 10%. US wind generation fell by 5.6% (-13 TWh), in contrast to a global rise of 10%. US hydro generation fell by 12% (-17 TWh), similar to the global decline of 12%. Other renewables and bioenergy saw only minor changes. US solar generation grew 13% (+13 TWh), but remained below the global trend (+16%).

This year’s fall in US hydro generation follows multiple years of hydro decline or stagnation since the peak in H1-2017, with the exception of H1-2021. Compared to H1-2017, hydro generation H1-2023 was down 23%.

The reduction in US wind generation of 5.6% is surprising given the 6% increase in wind capacity in the 12 months to June 2023. However, good wind conditions in H1-2022 caused wind generation to grow by 25%. Wind generation in H1-2023 was still up 18% compared to two years prior in H1-2020.

In addition to the 6% increase in wind capacity, the EIA reported a staggering 25% increase in US solar capacity in the 12 months leading up to June 2023. Solar and wind generation look poised to increase substantially, depressing coal generation further if hydro conditions remain at current levels or improve.

Fall in US power sector emissions due to lower demand and coal to gas switch

The substantial fall in coal generation caused US power sector emissions in H1-2023 to fall 8.6% (-64 million tonnes of CO2). The fall in US emissions is equivalent to 1.1% of global power sector emissions and contributed to global sector emissions plateauing with an increase of just 0.2% (12 million tonnes of CO2) in the first half of 2023.

Due to the continued additions of renewables, power sector emissions in the US have been structurally falling for more than a decade. For the full year of 2022, power sector emissions were 17% below the level 10 years earlier in 2013. However, the falls in H1-2023, although significant, are still lower than previous falls seen in the pandemic year of H1-2020, or H1-2016 when coal consumption decreased as gas and oil increased. For the US to continue with significant emissions declines, it cannot rely on demand reductions to drive falls in fossil generation. Instead, a fast build of wind and solar is required to meet new electricity demand and drive fossil generation out of the mix.

Decline in EU fossil generation contributes to plateau of global power sector emissions

EU electricity demand continued to fall in the first half of 2023, slowing global demand growth. The EU contributed 11% of global growth in wind and solar generation in H1-2023, despite the fact that its growth rates were lower than the global average. As a result of demand falling and renewables increasing, fossil fuel generation fell dramatically. Consequently, the EU’s power sector emissions fell by 59 million tonnes (-17%), which helped ensure that global power sector emissions plateaued rather than increased.

EU electricity demand falls continue

EU electricity demand fell 4.6% (-61 TWh) in the first six months of 2023, in contrast to a global rise of 0.4%. The fall in electricity demand in H1-2023 is the continuation of a trend that started with Russia’s invasion of Ukraine in the spring of last year, with demand in the EU falling 1.4% in the first half of 2022 and 3.3% across the whole of 2022. High electricity prices due to high gas import costs as well as security of supply concerns arising from Russia’s invasion of Ukraine in early 2022 led to significant demand saving measures by European nations.

Low electricity demand in the first half of the year and further additions in wind and solar generation also led to the first recorded month–in May–in the EU where wind and solar produced more electricity than fossil fuels. With the continued build up of wind and solar, these records are set to become the norm as the EU’s electricity transition continues.

Moderate renewables growth in the EU

The EU increased its solar and wind generation moderately in the first half of 2023. Wind generation increased by 4.8% (+10 TWh), far slower than the global average growth of 10%, while solar increased by 13% (+13 TWh), also below the global increase of 16%. Nevertheless, wind and solar growth in the EU contributed 11% to the global increase in the first half of 2023, and the EU remains one of the regions with the highest share of wind and solar generation (27% in H1-2023 in contrast to global average of 14%), because the bloc deployed wind and solar much earlier than other regions. In H1-2023, there were 17 EU countries that achieved record high renewable generation. For example, renewables provided a record 50% of power in Greece in the first half of 2023, and reached 75% in Portugal and 79% in Denmark for the first time.

EU fossil generation falls to a record low

Lower demand and renewable growth led to EU fossil power falling by 17% (-86 TWh). This was only one percentage point less than the reduction seen during H1-2020 when the Covid-19 pandemic caused demand and fossil generation to fall by 18%.

The EU’s fossil generation in the first half of 2023 was the lowest since at least 2000 at 410 TWh. The fall was Europe-wide, with a decline of at least 20% in eleven countries, and more than 30% in five (Portugal, Austria, Bulgaria, Estonia, Finland) as described in detail in Ember’s latest review of the EU’s power sector transition.

EU coal generation fell the most–a massive 23% (-49 TWh)–in contrast to a global rise of 1%. Coal generation comprised less than 10% of the EU’s electricity generation for the first time ever in May, with May and June marking the two lowest coal months on record.

EU gas generation decreased by 13% (-33 TWh), in contrast to a global rise of 0.5%.

EU’s power sector emissions fall

EU power sector emissions were down 17% (-59 million tonnes of CO2) as a result of the fall in fossil generation, after both H1-2022 and H1-2021 had seen emissions rise. The fall in the EU’s emissions is equivalent to 1% of global power sector emissions and contributed to global sector emissions plateauing with an increase of just 0.2% (12 million tonnes of CO2) in the first half of 2023.

India responsible for 12% of global growth in solar in the first half of 2023

India’s solar growth was above the global average in the first half of 2023 and contributed 12% of global growth in solar generation. Consequently, India’s emissions growth slowed, as moderate demand growth and the rise in renewables helped temper fossil fuel expansion.

Moderate demand growth in India

India’s electricity demand increased 3.1% (+25 TWh) in the first half of 2023, above the global average of 0.4%. India’s demand growth so far this year is significantly below the rates seen in H1-2021 (+13%) and H1-2022 (+11%), although those growth rates have to be seen in the context of an economic recovery after the Covid-19 pandemic as the country caught up to demand growth rates seen before 2020.

India’s renewables increase, but not strong enough to stop fossil from rising

India’s growth in solar generation (+26%, +12 TWh) in the first half of 2023 was above the global average growth (+16%) and enough to meet more than half of the country’s demand increase. In H1-2023, India contributed nearly as much new solar generation as the EU, with 12% of the global additions. However, India’s solar generation grew at a slower rate compared to the same period last year where it increased by 35%. Though it is worth noting that in absolute terms both the first half of 2023 and first half of 2022 saw the same increase in generation from solar (+12 TWh). To maintain high percentage growth rates as solar expands, India needs to see larger generation additions each year.

Other clean sources performed less well. India’s wind generation increased by only 4.9% (+1.7 TWh) in the first six months of 2023, which is below the global average (+10%). Moreover, this growth rate was significantly below the increase in wind generation in India in H1-2022 (+13%, +4 TWh).

India’s generation from all renewables increased 4.8% (+7.7 TWh). The growth would have been higher if there was no fall in hydro, which decreased by 7.5% (-5.1 TWh), a slightly smaller fall than seen worldwide (-8.5%). India’s bioenergy also fell by 11% (-1.1 TWh), in contrast to a global rise of 1.7%.

India’s fossil generation rose 3.7% (+23 TWh) to meet a substantial deficit created by low hydro output, falls in nuclear generation and higher electricity exports to neighbouring countries. India’s fossil growth was much higher than the global growth of 0.1%. This was driven by a rise in coal generation which increased by 3.8% (+23 TWh) in contrast to a global rise of 1%. At the same time India’s gas generation fell by 3.4% (-0.5 TWh), which was faster than the global fall of 0.5%.

Slower emissions growth in India

India’s power sector emissions grew by 3.7% (+19 million tonnes of CO2) in the first half of 2023. This represents a significant slowing of emissions growth, less than half of the growth seen in the first half of 2022 (+9.7%, +45 million tonnes of CO2). India’s emissions growth was slower as coal generation did not have to rise aggressively to meet the growth in demand. Demand growth was lower in the first half of 2023 (+3.1%) compared to the same period last year when demand grew strongly (+11%) as the country was recovering from the Covid-19 lockdowns. Lower demand increase in the first half of this year meant a slower rise in India’s coal generation (+3.8%) compared to the same period last year (+10%), and consequently lower emissions growth.

Decline in Japan’s fossil generation contributes to plateau of global power sector emissions

Japan’s rapid decline in fossil fuels in the first half of 2023 led to a fall in power sector emissions of 25 million tonnes of CO2, contributing to a plateau in global power sector emissions. Japan’s nuclear growth was above the global average, and demand fell significantly, driving the decline in fossil fuels. However, both wind and solar remained at similar levels to last year.

Nuclear comeback and demand falls in Japan drive down fossil fuels

Japan’s nuclear generation saw a significant increase in the first half of 2023, growing 47% (+12 TWh) compared to the same period last year, as reactors were returned to service after maintenance. The growth in Japan’s nuclear generation was much higher than the global average growth of 0.7%.

In recent years, between 2020 and 2022, Japan’s nuclear fleet has been experiencing delays in reactor maintenance as the country sought to reintroduce more nuclear power to the mix after it had phased out nuclear power completely in the aftermath of the 2011 Fukushima disaster. More reactors started to come back online during 2022 after completing maintenance. As a result, in H1-2023, nuclear generation was up 47% (+12 TWh) compared to H1-2022.

At the same time, Japan’s electricity demand fell by 5.6% (-27 TWh) in H1-2023 amid efforts to reduce electricity consumption. This helped to lower global demand and consequently helped global emissions to plateau.

The additions in nuclear generation paired with the fall in electricity demand and small increases in both generation from bioenergy and hydropower output reduced Japan’s reliance on fossil fuels significantly. Fossil generation in H1-2023 was down 14% (-45 TWh) compared to the same period last year. Most of the reductions came from gas generation (-17%, -28 TWh), though coal generation (-7.4%, -10 TWh) and other fossil fuels (-22%, -6.1 TWh) also fell substantially.

Japan’s wind and solar remain muted

For the full year of 2022, Japan’s solar generation saw an increase of 11% (+10 TWh), less than half of the global increase of 25%. However, H1-2023 showed no signs of continued growth, as solar generation fell slightly by 1.9% (-1 TWh), compared to the global increase of 16%. Similarly Japan’s wind generation saw almost no change (+2.4%, +0.2 TWh) in H1-2023 compared to the same period last year, which is far below the global growth of 10%. The deployment of wind generation remains a major untapped potential for Japan to accelerate its transition away from fossil fuels and to a clean power sector.

Falls in Japan’s fossil generation lead to emissions decline

Japan’s 14% fall in fossil generation resulted in an emissions fall of 12% (-25 million tonnes of CO2) in the first half of 2023. The fall in Japan’s emissions is equivalent to 0.4% of global power sector emissions and contributed to global sector emissions plateauing with an increase of just 0.2% (12 million tonnes of CO2) in the first half of 2023.

Chapter 2:

Country and region analysis

In this chapter