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Industrial, comercial and residential energy demand

Moving on

Whereas governments and companies are increasingly committed to decarbonisation goals, energy markets are facing to a strong volatility driven by both geopolitical tensions (conflict in Ukraine) and rising energy demand; in a context where markets are still recovering from the impacts of Covid-19. Besides, we should add two new constraints, directly or indirectly influenced by the previous ones: disruptions in the supply chain of intermediate products and the rise in the price of raw materials, which have weighed down the recovery that began after the initial impact of the pandemic.

In this context, the aim of this article is to provide a general overview of the current energy demand, analysing it from different perspectives: geographical, sectoral, and temporal (with forecasts up to 2050).

Global energy consumption

According to the ENERDATA database, in 2022 the energy consumption growth slowed down in the two main consuming countries: it increased by only 3% in China – compared to 5.2% in 2021- while it increased by only 1.8% in the USA – compared to 4.9% in 2021. The strong economic growth pulled of the energy consumption in India (7,3%), Indonesia (21%), and Saudi Arabia (8,4%), and to a lesser extent in Canada (3,8%) and Latin America (2,7% including a 2,4% in Brazil and Mexico and 4.5% in Argentina). There was also a slight increase of 3% in the Middle East and Africa – despite a drop in consumption in South Africa due to coal supply tensions and forced outages in the power sector.

Meanwhile, primary energy consumption in Europe fell by 4%, due to fears of recession following the Russian invasion of Ukraine and rising energy prices. In fact, in Ukraine it fell by 29% and in Russia by 0.4%. Energy consumption in OECD-Asia remained broadly stable and decreased slightly in Japan (-1.1%).

Figure 1. Global energy consumption growth trend. Period 2021-2022. Source: Enerdata

The most widely used energy sources worldwide continue to be fossil fuels: oil (29%), coal (27%) and natural gas (24%), that occupy the top three positions in the ranking.

Figure 2. Energy sources distribution in world consumption. Year 2021. Source: Enerdata.

Industrial energy demand

The global industrial sector uses more coal than any other fuel type, consuming 64.4 quadrillion British thermal units (Btu) in 2020 (according to EIA data). On the other hand, the use of renewables is expected to increase, as the cost of renewable energy technologies such as wind and solar power falls. By 2050, liquid fuels are expected to be the most widely used fuel type worldwide, with a consumption of about 98 quadrillion Btu.

Figure 3. Global industrial energy consumption. Source EIA.

In Spain, in 2021, by sector, the iron and steel segment recorded the highest electricity consumption, exceeding one million tonnes of oil equivalent (Mtoe). The second place went to the food, beverages, and tobacco segment, which consumed more than 969 thousand tonnes Mtoe in 2021, followed by the chemical and petrochemical sector with more than 849.3 Mtoe.

In that year, electricity consumption in the Spanish industrial sector amounted to a total of 6 Mtoe.

Figure 4. Electricity consumption in the industrial sector in Spain, year 2021. Source IDAE; MITECO.

Commercial and residential demand

As the world’s population and welfare state grows, more energy will be needed to power homes, schools, offices, shopping centres, hospitals, food centres, etc. According to a study by Exxon Mobil, both residential and commercial energy demand is expected to increase by about 15% by 2050. Driven by the growing economies of developing countries, average electricity use in the residential sector is expected to increase by more than 70% by 2050.

According to the same source, in 2050, energy demand in the residential and commercial sector in the Asia Pacific region will amount to 54 quadrillion BTU. In comparison, energy demand in the residential and commercial sector in that region amounted to 41 quadrillion BTU in 2021.

Figure 5. Residential and commercial energy demand in the Asia-Pacific region from 2000 to 2021. Estimates to 2050. Source: Exxon Mobil.

According to data published by EUROSTAT, in Europe in 2021, households accounted for 27% of final energy consumption – representing 18.6% of gross inland energy consumption in the EU. In this period, natural gas accounted for 33.5% of EU household final energy consumption, electricity for 24.6%, renewables and waste for 21.2%, oil products for 9.5% and a small proportion, 2.5%, was covered by solid fossil fuels.

Analysing the fuel type of final energy consumption in the residential sector, countries such as the Netherlands (71.2%), Italy (52.6%), Hungary (51.8%) and Luxembourg (50.1%) relied more than 50% on natural gas to meet their needs in the residential sector. Countries such as Malta (73.6%), Sweden (50.4%), Portugal (40.62%), Cyprus (44%) and Spain (42.66%) rely mainly on electricity. Croatia (46.6%), Slovenia (45%) and Estonia (40.2%) mainly use renewable energy and biofuels. Households in Ireland obtain 42.3% of their energy from petroleum products, Polish households obtain 21.9% of their energy from solid fuels.

Regiones	Combustibles fósiles sólidos (%)	Gas natural (%)	Petróleo y derivados (%)	Energía renovable y biofueles (%)	Electricidad (%)	Calor (%)
EU	2,61	33,51	9,53	21,24	24,55	8,63
Bélgica	0,46	41,9	28,48	9,7	19,29	0,17
Bulgaria	5,76	4,72	0,88	31,76	42,78	14,1
Chequia	8,09	26,47	0,61	32,09	18,87	13,87
Dinamarca	0	12,82	3,49	24,24	20,61	38,83
Alemania	0,59	42,76	13,45	15,53	20,26	7,42
Estonia	0,08	6,25	0,49	40,19	19,86	33,16
Irlanda	10,84	19,39	42,29	2,79	24,72	0
Grecia	0,08	11,67	26,67	25,13	35,61	0,84
España	0,26	24,65	16,71	15,71	42,66	0
Francia	0,06	28	9,85	24,03	34,58	3,47
Croacia	0,07	21,46	3,65	46,56	23,22	5,03
Italia	0	52,57	5,86	21,34	18	2,22
Chipre	0	0	28,28	27,71	44	0
Letonia	0,1	9,59	4,41	38,47	12,84	34,59
Lituania	2,66	13,49	3,21	31,95	17,99	30,75
Luxemburgo	0,07	50,12	27,94	5,05	16,82	0
Hungría	0,7	51,84	1,15	21,06	17,44	7,8
Malta	0	0	12,48	13,9	73,61	0
Países Bajos	0	71,2	0,35	6,01	19,33	3,1
Austria	0,2	21,31	13,39	30,22	22,75	12,14
Polonia	21,93	20,62	2,81	24,42	11,88	18,33
Portugal	0	9,52	13,02	36,81	40,62	0,03
Rumanía	0,53	36,95	3,11	37,14	13,97	8,29
Eslovenia	0	9,69	10,07	44,99	28,19	7,06
Eslovaquia	1,88	41,41	0,3	25,11	17,3	14,01
Finlandia	0	0,48	4	32,08	34,99	28,39
Suecia	0	0,38	2,56	11,79	50,42	34,85
Islandia	0	0	0,37	2,38	15,13	82,13
Noruega	0	0,03	0,11	23,27	73,43	3,16
Bosnia y Herzegovina	3,39	2,58	1,56	63,26	23,63	5,58
Montenegro	0,74	0	0,78	53,9	44,57	0
Moldavia	3,35	26,13	4,06	45,28	11,92	9,27
Macedonia Norte	0,11	0,05	1,66	36,48	53,9	7,8
Albania	0	0	22,27	22,8	54,93	0
Serbia	4,16	8,32	0,86	40,17	33,56	12,93
Turquia	13,51	51,92	1,64	12,92	20,01	0
Kosovo	0,44	0	1,87	51,83	43,85	2,01
Georgia	0	68,45	0,54	15,95	15,06	0

Figure 6. Share of fuels (%) in final energy consumption in the residential sector in Europe. Year 2021. Source Eurostat.

The main energy used by households in the EU was destined to heat their homes (64.4%). Electricity used for lighting and most household appliances accounts for 13.6% – excluding the use of electricity to power main heating, cooling or cooking systems – while the share used for heating water amounts to 14.5%. The main cooking appliances require 6% of the energy used by households, while space cooling and other end uses cover 0.5% and 1.1% respectively. Space and water heating account for 78.9% of the energy consumed by households.

Figure 7. Final energy consumption in the residential sector in Europe, by use. Year 2021. Source: Eurostat: Eurostat.

According to data published by the EIA, households in the US consumed approximately 20.92 trillion BTUs in 2021. This was a slight increase compared to the previous year. Residential sector energy consumption peaked in 2010 at 21.89 quadrillion BTUs.

Figure 8. Energy consumption in the US residential sector from 1975 to 2021. Source EIA, STATISTA.

Self-consumption in Spain

Finally, in this context, it is of particular interest to make special mention of self-consumption in our country. According to the Annual Report on Photovoltaic Self-consumption of the Association of Renewable Energy Companies (APPA Renovables), the investment made in self-consumption during 2022 in Spain amounted to 3,065 million €, with 1,707 million € corresponding to the investment made by individuals in residential installations and 1,358 million € in industrial installations. The average residential installation is 4.6 kW of power without storage with an average investment of €7,855 per installation. In the case of industrial installations, the average power was 70 kW with an average investment of €58,807 per installation. At this point it should be mentioned that there is a wide dispersion in the data analysed by APPA, ranging from small installations of 15 kW to several MW. Thanks to the NextGenerationEU funds, many projects have started to be processed and will see the light of day this year.

Figure 9. Number of renewable installations per year. Source: APPA RENOVABLES.

According to the same source, APPA Renovables, in 2022, the accumulated self-consumption installations generated a total of 4,564 GWh – including both instantaneous self-consumed energy and surpluses used by the electricity system – out of a production capacity of 5,631 GWh. For the same year and taking as a reference the average final price of Red Eléctrica, the associated charges and tolls and the commercialisation margins, a saving of 338€ per kW installed is estimated for residential self-consumption and 280€ for industrial installations.

The reality is that the real energy needs of consumers are much higher than the capacity implemented. The lack of greater presence of renewables is mainly due to the current saturation of transmission and distribution nodes and grids, which prevents them from meeting the real needs of end customers. 19% of national self-consumption generation is being wasted due to the difficulty of feeding it into the grid (especially in installations above 100 kW).

According to data published by MITECO, the potential for photovoltaic solar self-consumption in Spain is estimated to reach 7.5 gigawatts in 2025 and 14 gigawatts in 2030 – in a scenario of high renewable penetration. In a more pessimistic scenario, it is estimated to amount to 1.1 and 4.3 gigawatts in 2050 and 2030 respectively.