European Electricity
Figure 1: Total Units Taking Limited-Life Derogation
or Opting-Out of the LCPD
products.Thisinitiativeappearssettoconsiderably
weaken residential and commercial electricity
demand, which has been relatively more immune
to the current economic downturn.
Environmental Regulations Key Driver
For New Investments
In spite of lower demand, stricter environmental
requirements represent a key driver for new
investments in generation, which will lead to more
significant changes in the fuel mix. From 2008, the
Large Combustion Plant Directive (LCPD) has
required the reduction of emissions of sulphur
dioxide (SO
2
), nitrogen oxides (NOx) and dust
Source: PIRA
(particulate matter) from power plants and other
industrial facilities containing large combustion
While the declining trend in the non-metallic and textile plants (LCPs), with thermal output above 50 MWs. According
industrieshademergedwellinadvancein2008(andmayalso to the directive, individual plants have the option of taking a
be the result of more structural trends), the retreat in the limited-life ‘derogation’, constraining their operation to 20,000
chemical and pulp/paper industries emerged later in the hours between January 1
st
2008 and December 31
st
2015,
secondhalfof2008.Decliningactivityinthechemicalsectoris resulting in an exemption from compliance with mandatory
having a more visible impact on German loads, since this Emission Limit Values (ELVs) or participation in a National
sectorabsorbsabout50TWhofGermanpowerperyear(about Emissions Reduction Plan (NERP). Taking away the limited life
21% of the Euro area chemical sector total). Power demand in derogation leads to constraining the units to operate at a
the chemical sector is also particularly strong in the French maximumofaround2,500hours/year(ifthehoursareequally
market, with plants consuming about 25 TWh/year. The distributed over the eight years). Current data shows that units
collapse in activity of the pulp and paper industries is more optingoutoftheLCPDruleswereoperatingforalargernumber
visible in the loads of the Nordic of hours during 2008, especially in the
markets.
... we expect overall loads to
UK market. Based on official data, coal
The basic metals sector, which
accounts for about 35% of the
recover to 2008 levels only by
units opting-out of the LCPD in the UK
had a 46% load factor for 2008, which
industrial power use across the Euro
the end of 2012
means that the units were operating for
area (or 230 TWh/year) is also about 4,000 hours – although this year
suffering. More recent statistics for steel output this February these units are set to operate for a lower amount of hours due
across Europe were down by about 40%, in spite of lower to a more relaxed supply/demand balance in the UK system.
global production of about 20% year-on-year. European PIRA estimates that capacity, taking this limited-life
aluminium production has been holding up with a year-on- derogation into account, totalled some 40 GWs around
year decrease of only 8% for the first two months of 2009. Europe with about 47% represented by steam coal units and
Recovery in industrial demand appears very uncertain at roughly 32% by oil units. Lignite units account for about
thisstage,andweexpectoverallloadstorecoverto2008levels 11% of the units opting out, while gas and others 6% and
only by the end of 2012. The implementation of measures for 5% respectively.
improvement in energy efficiency uses will also make this If we take a look at the details by country (Figure 1), the UK
recovery relatively slower than in prior downturns. In October stands out, with about 12 GWs, followed by France and Spain.
2008, EU energy ministers asked the European Commission to However, on a percentage basis, Portugal has about 25% of its
draftaregulationtophaseoutthesaleofallincandescentand installed capacity opting out of the LCPD. In eastern Europe,
poorly performing light bulbs by 2010. This was to be done Poland is primarily affected by the LCPD rules, with about 6.5
within the framework of the Eco-Design Directive which GWs largely represented by steam coal. Units taking the
provides performance requirements for energy intensive limited-life derogation play a much more significant role in
worldPower 2009 19
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