According to the Electricity Market Report released by the International Energy Agency on January 14, global electricity demand will surge in 2021. Strong economic growth, colder winters, and hotter summers have driven global electricity demand to grow by more than 6%, the largest increase since the economic recovery following the 2010 financial crisis. In 2021, China’s electricity demand will also grow rapidly. The national electricity consumption of the whole society will be 8.31 trillion kWh, a year-on-year increase of 10.3%. The growth rate of China’s electricity demand is significantly higher than the global level, which is a proof that China’s economic growth rate is at the forefront of the world’s major economies.

The IEA believes that rapid growth in electricity demand is putting pressure on major global markets, pushing electricity prices to unprecedented levels and pushing electricity sector emissions to record highs. Compared with 2020, the price index of the main wholesale electricity market has almost doubled, rising by 64% from the 2016-2020 average. In Europe, the average wholesale electricity price in the fourth quarter of 2021 was more than four times the 2015-20 average. In addition to Europe, Japan and India also saw sharp increases in electricity prices.

Electricity prices in China are relatively stable. In October 2021, China’s electricity market-oriented reform took another important step. In order to establish a market-oriented electricity price mechanism that “can fall and can rise”, the National Development and Reform Commission of China issued the “Notice on Further Deepening the Market-oriented Reform of On-grid Electricity Price for Coal-fired Power Generation”. “(hereinafter referred to as the “Notice”): “The fluctuation range of the market transaction electricity price will be adjusted from no more than 10% and 15%, respectively, to no more than 20% in principle.”

Fatih Birol, Executive Director of the IEA, said: “The dramatic surge in global electricity prices in 2021 is causing hardship for households and businesses around the world. Policymakers should act to mitigate the impact on the most vulnerable and address the underlying problem. In response to this, the National Development and Reform Commission of China stated in the “Notice” that after the implementation of the reform, residents and agricultural users will purchase and use electricity as before, the method has not changed, and the electricity price level will remain unchanged. This reform, with particular emphasis on maintaining the stability of electricity prices for residents and agriculture, has no direct impact on the consumer price index (CPI).

The International Energy Agency expects electricity demand to grow by an average of 2.7% annually between 2022 and 2024, although the coronavirus pandemic and high electricity prices have created some uncertainty about that outlook. According to data released by the China Electricity Council on January 27, it is expected that China’s total electricity consumption in 2022 will increase by 5% to 6% year-on-year.