WorldPowerMarkets:
OpportunitiesinaCrisis
By Guy Isherwood
T
hechallengefacingtheworld’selectricitysectorinthe
wakeoftheglobaleconomicandfinancialcrisisneeds TotalOECDproductionreached10,301.3TWhin2008,
no introduction. As 2009 unfolded, the outlook for
anincreaseof0.2%or19.1TWhcomparedto2007.
energy commodity prices looked grim. Neither cold winter – Electricity production from geothermal, wind, solar
temperaturesinthenorthernhemispherenorasteepfallinthe andotherrenewablesshowedthestrongestpercentage
priceofenergyprovidedmuchsupporttothedemandforoil,
growthat21.1%to239.9TWhinOECD.
naturalgas,orindeedanythingelse.Inpart,thelowprice – Electricity production from combustible fuels
elasticity of energy demand has prevented a recovery in decreased by 0.8% to 6,544.7 TWh in 2008 OECD,
consumption even after a collapse in energy prices. Energy
despitea4.9%increaseinOECDPacificto1,316.0TWh.
marketshave,andwill,remaincloselylinkedtorealeconomic – While electricity imports and exports decreased by
activitywithasignificantnear-termreboundinpricesunlikely.
4.4%and6.1%to321.8TWhand311.6TWhinOECD
Theenvironmentforpowergenerationremainschallenging
Europe, they increased by 14.8% and 14.1% to 81.6
with the 21
st
century marketplace dominated by four key
TWhand81.8TWhinOECDNorthAmerica.
themes:Climatechange,supplysecurity,resourcenationalism
and demand pressures. Although electricity demand has whentheeconomicrecoverybeginstotakeholdandglobal
continued to suffer in this environment – given its high GDPgrowthratesreturntotheir‘normal’path.
correlationtoglobaleconomicactivity–afterapeakof4.8%
growth in 2007, global estimates for electricity generation From Crisis to Opportunity
growth were a healthy 2.6% in 2008. Global electricity Thecurrenteconomiccrisisshouldbeseenasanopportunity
generation grew at an average rate of 4.2% over the most toboostthecurrentframeworkforinvestmentsinupgrading
recent business cycle as global GDP growth neared 5%, existinganddevelopingnewgeneration,restructuringgrids,
comparedto2.5%powersupplygrowthinthepriordecade andforcreatingasmart,integratedandcarbonneutralenergy
whenglobalGDPaveraged3%.Similartooilconsumption, economy.
thebulkofelectricitygenerationgrowth There are now approximately 200
inthemostrecentcyclehascomefrom
emerging markets. In its World Energy
...theIEAforecastsgrowthto
millionnewcustomersforcommercial
energyeachyear.Intheabsenceofany
Outlook 2008, Reference Scenario the
2015of3.2%,slowingto
large scale viable alternatives, this
International Energy Agency (IEA) 2%peryearin2015-2030 demand pressure will need to be
forecasts growth to 2015 of 3.2%, satisfiedbyhydrocarbons–particularly
slowingto2%peryearonaveragein2015-2030 Thisreflects oil, gas and coal – for the foreseeable future. In electricity
acontinuingshiftintheeconomiesofnon-OECDcountries generation coal remains the main fuel source around the
away from energy-intensive heavy manufacturing towards worldwithashareofover40%,followedbygas(20%),hydro
lighterindustriesandservices,aswellassaturationeffectsin (16%),nuclear(15%)andthenfueloils(5%).Coal-firedpower
theOECDandsomeemergingeconomies.ComparedtoOECD generationhasgrownsubstantiallyinthepastdecade,driven
economiestherefore,therelationshipbetweenpoweroutput bystronggrowthinnon-OECDcountries.InChina,coal-fired
and overall economic growth is even stronger in emerging powergenerationcapacityhastripledoverthepastdecade.
markets. As such, power generation provides a very good Thishascreatedenormouspressureintheglobalthermalcoal
coincidentsnapshotofthestateoftheglobaleconomy.Asthe market.AccordingtotheIEA,coal’sshareintotalgeneration
ultimatedownstreamenergycommodity,electricitydemand increasesfrom41%todayto44%in2030.Whilsttheoverall
willcontinuetosufferinthisenvironment. efficiencyofcoal-firedgenerationisprojectedtoincreasefrom
Meanwhile,manufacturingindustriesintheOECDeconomies 34%in2015to38%by2030,plantswithcarboncaptureand
have become lighter and more energy efficient. Within storage(CCS)makeonlyaminorcontributiontoelectricity
emerging markets, electricity demand growth has been production.Strongerpoliciesthereforeneedtobeputinplace
particularlystronginAsia.Since2002,Chinaalonegenerated –andtechnologyfurtheradvanced–forasignificantamount
almost half of the electricity demand growth in emerging ofCCScapacitytobecommissioned.
markets,expandingoutputataphenomenal15%perannum. ChinaandIndiaaretheemerginggiantsontheeconomic
Whilstworldpowergenerationwillgrowatanannualrate andthuspowergenerationstage,andtheconsequencesforthe
of0.7-1.0%thisyear,itshouldrecoveritsgrowthpathasand restoftheworldoftheirunfetteredgrowtharealarming.Inits
8 worldPower2009
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