Hot spotting

Southeast Asia’s heatwave is pushing power demand to new highs in economies from Thailand to the Philippines.

Click image to zoom Tap image to zoom

As more electricity is needed to protect people from weather extremes, the pressure to increase power grids is likely to raise demand for key metals, such as copper and aluminium, in coming years.

"This is occurring amid an acceleration in the clean-energy transition. The net zero emissions targets of many countries need bigger, stronger and smarter grids than currently exist.”

The world posted an eleventh month of record-breaking heat in April, with warmer conditions engulfing Asia.

The European Union’s Copernicus Climate Change Service said that last month’s temperatures globally were 1.58oC above historical averages.

Temperatures in India have reached over 50 degrees Celsius  for the first time so far this summer; and peak electricity demand edged above 235 gigawatts, a record for May and slightly above the power ministry’s forecasts.

A similar situation is emerging in China. Forecasts indicate temperatures are going to exceed the 30-year normal in coming weeks and remain there through July (Figure 1).

Japan’s spot power price rose to a six-month high in May, as warm weather boosted demand. This looks likely to continue in coming months. Forecasts point to above-average temperatures in China, India and Japan (Figure 1).

This is occurring amid an acceleration in the clean-energy transition.

The net zero emissions targets of many countries need bigger, stronger and smarter grids than currently exist.

The International Energy Agency (IEA) projects that the world’s electricity needs will grow 20 per cent faster in the next decade than it did in the previous one. It also warns that reaching national climate goals means adding or refurbishing over 80 million kilometres of grids by 2040, the equivalent of the entire existing global grid.

China out in front

China leads the way in the build-out of its renewable energy sector. In the first quarter of 2024, it installed 67GW of new power generation capacity, of which 61GW was in wind or solar. That brings China’s cumulative power generation capacity to 3TW, of which 49 per cent is from renewable sources.

The acceleration of renewable energy deployment calls for modernising distribution grids and establishing new transmission corridors to connect renewable resources that are far from demand centres, such as cities and industrial areas.

IEA estimates that around 3,000GW of renewable power projects are waiting in grid connection queues, which is equivalent to five times the amount of solar photovoltaic and wind capacity added in 2022.

However, it is not only the sources of energy that are increasing the need for electricity. The decarbonisation of the world economy is accelerating the consumption of electricity, as consumers turn away from direct use of fossil fuel.

EV roll out

Despite a slowing in growth, the electric vehicle (EV) industry is likely to put increasing pressure on power grids across the globe. A total of 13.9m EVs were sold worldwide in 2023, up from 10.4m in 2022. That market’s rate of growth is much greater than for the global passenger car market, which grew by only 3 per cent year on year in 2023. This saw the EV market’s share of total new passenger car sales climbed to 17.8 per cent. We expect total sales to climb to 16.6m units in 2023, bringing the market share to 20 per cent.

The passenger EV market in China is expected to grow 21 per cent this year, to 9.9m units. Sales are driven by a new wave of demand-boosting pricing cuts, kicked off by several automakers, including BYD. China has already reached its target of EV sales making up 20% of all car sales by 2025.

A slowdown in growth of the EV sector in the US is likely to be a mere blip. If current policies remain in place, we expect sales to make up almost a third of new car sales by 2027, up from 10 per cent in 2023. EV sales in Europe should come in at just under 3.5m in 2024, up 10 per cent year on year. The underwhelming growth is mainly down to weaker pressure from fuel-economy targets this year. The European Union’s CO2 targets will not become more stringent until 2025, constraining EV market growth in the region until then. Still, growth could exceed expectations as an increasing amount of popular, low-cost EVs hit the market.


Decarbonising any economy is copper-intensive.

Copper and aluminium are the principal materials for the manufacture of cables and lines. Despite being three times heavier and much more expensive than aluminium, copper was, for a long time, the preferred material for electric cables/wires, because of its conductivity.

Aluminium has approximately 60 per cent of the conductivity of copper, which means much thicker wires are required to carry the same capacity. As aluminium’s conductivity-to-weight ratio is superior to copper, it is usually preferred for overhead power lines and is increasingly also used for underground and subsea transmission cables, while copper is mostly used for underground and subsea cables.

Global infrastructure development

Over the past five years, global investment in power capacity has increased nearly 40 per cent, surpassing USD$750bn in 2022. In contrast, spending on grid infrastructure has remained relatively stable, hovering around USD$300bn annually.

Power generation in China has a close correlation with copper (Figure 11), driven by the investment needed to maintain the power grid rather than investment in new capacity.

With the outlook for summer pointing to higher-than-normal temperatures, we expect year-on-year growth in power generation to reach double digits in the second half of the year. With the focus on energy security and the acceleration in the electrification of its economy, we see China’s demand for copper rising strongly over the next few years. We forecast annual growth rates of 6–8 per cent between now and the end of the decade.

Indian government policies should also benefit copper and aluminium over the medium to long term. With a goal of achieving 500GW of renewable capacity by 2030, a conservative estimate suggests 40 per cent (400–500kt) of additional copper demand will come from the solar and wind sectors by 2030.

Aluminium and copper demand growth to rise strongly

Demand for the various metals used in clean energy technologies has been rising strongly over the past few years. According to IEA data, copper demand from the sector hit 6,372kt in 2023.

This equates to 24.5 per cent of the world’s demand of 25,980kt (Figure 13). We have subsequently upgraded our forecasts for copper demand from this sector and now see total demand reaching 38.5mt by 2030, up from our previous forecast of 35.1mt. This equates to annual growth rates of 4–5 per cent over the next five years.


The electrical sector represents one of the greatest opportunities for the aluminium industry in coming years, as renewable sources are more intensive in their use of aluminium than traditional sources, and power grids need expanding.

Solar power requires over four times more aluminium per installed megawatt than wind power and about 25 times more than coal.

This should see the share of demand from the electricity sector rise to just under 20 per cent by 2030 (Figure 14). We have also raised our forecasts for demand for aluminium off the back of its increasing demand from the electricity sector. Total consumption should rise to 79.5mt by 2030, up from 77.5mt.

Investment in infrastructure will need to accelerate if power shortages are to be avoided in coming years. However, as it plays out there will be important implications for copper and aluminium - the principal materials for making this transition a reality.

Daniel Hynes is a senior commodity strategist with ANZ and Soni Kumari CAIA is a commodity strategist with ANZ.

This piece is based on the research paper ‘Metals coming into power’ published on June, 27, 2024.

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

editor's picks

29 Apr 2024

Silver mining playbook

Daniel Hynes & Soni Kumari | Senior Commodity Strategist & CAIA Commodity Strategist, ANZ

The silver market is structurally undersupplied and industrial demand is up. Will silver finally outpace gold this year?

25 Jan 2024

China’s road to EV dominance

Daniel Hynes | Senior Commodity Strategist, ANZ

Little known a decade ago, China-based BYD recently overtook Tesla as the world’s biggest electric vehicle maker. What is happening in the world of EVs?