Welcome back to Energy Snapshot, the International Energy Agency’s monthly newsletter focused on charts and data. In this edition, we explore the role of electricity in powering energy systems and economies.

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Electricity is a pillar of economic activity around the world – and it in the years ahead, it is set to become even more important.

Because of electricity’s efficiency and productivity benefits, electricity meets almost 40% of the world’s demand for useful energy today – or the energy that’s actually needed to deliver the services people need. And it powers economic activities that account for nearly half of global GDP.

Its role is on course to grow further. In recent years, demand for electricity has risen rapidly around the world, as its use has expanded in the transport, buildings and industrial sectors. Global electricity consumption has increased faster than economic output and nearly twice as fast as overall energy demand. This is being driven by strong growth in the use of technologies that run on electricity: air conditioners, data centres, electric vehicles and machinery for advanced manufacturing.  
 
While the magnitude differs, electricity’s share of final consumption has risen across every region (though in Africa, low levels of energy access have limited its advance).

Some countries – especially those looking to reduce their reliance on fuel imports in favour of domestically produced energy – are now aiming to accelerate the use of electricity across transport, buildings and industrial production. This could mean expanding the uptake of electric cars, heat pumps and electric cookstoves, or using electricity to power more factory processes, such as those that require low- and medium-temperature heat.
 
Electrification rates across countries depend on the structure of their economies and energy systems, as well as their policy goals. That means the opportunities vary, too. In many emerging and developing economies, for example, opportunities include electrifying agricultural water pumps, expanding the use of electric two- and three-wheeler vehicles in densely populated cities, and enabling small businesses in sectors such as food and textiles to make greater use of electricity. By comparison, advanced economies and China typically have higher heating needs and larger fleets of cars. In both those areas, electric technologies can be cost-effective today.
 
At the same time, countries seeking to benefit from electrification’s potential will need to take other steps, as well. Avoiding bottlenecks in electricity systems will require scaling up investment in power generation, grids, and supply chains, alongside the implementation of smarter and more flexible technologies to match power supply and demand efficiently.
 
Evolving threats to electricity security also need to be addressed. These include concentrated supply chains for key technologies and the critical minerals that go into them; cybersecurity risks; and natural disasters and climate hazards.
 
For more on electrification, take a look at our recent special report, which provides sector-by-sector analysis of its potential. And for the latest trends in the global electricity sector, read our Electricity Mid-Year Update.