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EIAInternationalOutlookto2040ForeseesDecouplingofPowerDemandandEconomicGrowth

EIAInternationalOutlookto2040ForeseesDecouplingofPowerDemandand
EconomicGrowth
05/11/2016|SonalPatel
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SavetomyPOWER

Theworldsfrenziedeconomicgrowththrough2040wontbematchedbyelectricitydemandgrowth,theEnergyInformationAdministration
(EIA)saysintheInternational Energy Outlook 2016(IEO2016 (http://www.eia.gov/forecasts/ieo/electricity.cfm))releasedonMay11.
Worldnetelectricitygenerationwilljump69%by2040,theIEO2016referencecaseprojects,butthatisstillwellbelowwhatitwouldbeif
economicgrowthandelectricitydemandgrowthmaintainedthesamerelationshiptheyhadintherecentpast,theagencysbiannualforecast
says.
AccordingtotheEIA,from2005to2012,worldgrossdomesticproduct(GDP)increasedby3.7%peryearwhileworldnetelectricitygeneration
roseby3.2%peryear.TheIEO2016referencecasesuggeststhatbetween2012and2040,whileworldGDPwillsproutby3.3%peryear,butworld
netelectricitygenerationwillgrowonlyabout1.9%peryear.
Thelowereddemandgrowthprojectionshingeonactionsthatmanycountriesmaytaketoimproveefficiency.Mostmembersofthe
OrganisationforEconomicCooperationandDevelopment(OECD)arealsopursuingpoliciesandrulesthatcouldforcegeneratorstocurbtheir
carbondioxideemissions.
TheIEO2016reflectsnewlyintroducedcleanenergypolicies,includingChinastargettoget15%ofitselectricityfromrenewables
(http://www.powermag.com/u-s-and-china-agree-to-increase-nationwide-carbon-reduction-targets/)by2020,theEuropeanUnions2030Energy
Framework(http://www.powermag.com/european-parliament-backs-binding-targets-for-climate-energy-shuns-commissions-proposal/)
objectives,andIndiasambitiouswindandsolarinitiatives(http://www.powermag.com/despite-challenges-india-banks-on-renewable-energy/?
printmode=1).Itdoesnot,however,includetheeffectoftheAugust2015finalizedCleanPowerPlan(http://www.powermag.com/epa-issuesfinal-clean-power-plan/?printmode=1)(thougheffectsoftheproposedruleareconsidered).
AShadowonCoalGeneration,aSpotlightonNaturalGas,Renewables,Nuclear
Amongitsnotablefindings[SLIDESHOW](http://www.powermag.com/slideshow-highlights-from-the-eias-international-energy-outlook-2016/)is
thatcoalsshareofworldgeneration,whichhastypicallyhoveredbetween37%and40%sincethe1980s,willdropfrom40%in2012to29%in
2040evenasworldcoal-firedgenerationincreasesby25%through2040.TheseechofindingsbytheInternationalEnergyAgencyinits

November2015releasedWorldEnergyOutlook(WEO-2015)(http://www.powermag.com/iea-worlds-power-mix-seeing-unprecedentedtransformation/),whichprojectsthatcoalssharewilldropfrom41%in2013to30%in2040.

(http://cdn.powermag.com/wpcontent/uploads/2016/05/IEA2016-Worldgeneration.jpg)
World electricity generation by fuel (2012 to 2040). Source: EIA/IEO2016

Anddespitecurrentlowoilprices,theuseofpetroleumandotherliquidfuelsforpowergenerationisalsoexpectedtofall.TheEIAprojectedthat
oilpriceswillbehigherinthelongterm,andgenerationfromliquidfuelswillfallfrom5%in2012to2%in2040.
Comparatively,theIEO2016foreseesatremendousexpansionforboththesharesofrenewablesandnaturalgasgeneration.Renewablesshare
isexpectedtogrowfrom22%in2012to29%in2040mostlyfromhydropower,butalsosubstantiallyfromnonhydropowerrenewables.The
shareofnonhydropowerrenewablesisprojectedtoshootupfrom5%in2012to14%in2040intheIEO2016referencecase.Indeveloping
countries,solarsforecastgrowthatanaverage15.7%peryearovertheperiodisexpectedtoovershadowwinds7.7%andgeothermals8.6%
peryeargrowth.IntheOECDregion,wind,solar,andgeothermalgenerationispredictedtogrowatcomparableratesofabout4.5%peryear.

(http://cdn.powermag.com/wpcontent/uploads/2016/05/IEA2016Worldrenewablegeneration.jpg)
World net electricity generation from renewable power by fuel (2012 to 2040).
Source: EIA/IEO2016

Thenaturalgasshareofworldgenerationisalsoforeseensurgingfrom22%in2012to28%in2040.However,theEIAnoted,ifothernations
withshalegasresources(notably,China)areabletoreplicatetheU.S.successinexploitingshalegasproduction,theoutlookforworldnatural
gas-firedelectricitygenerationcouldbemuchdifferentfromthatrepresentedintheIEO2016Referencecase.

(http://cdn.powermag.com/wpcontent/uploads/2016/05/IEA2016-NonOECDpowermixcopy.jpg)
Non-OECD Asia electricity generation fuel mix by region (2012 to 2040).Source:
EIA/IEO2016

Meanwhile,averageannualgrowthratesfornuclearelectricitygenerationfrom2012to2040inthereferencecaseinclude9.6%inChina,7.9%in
India,and2.9%intheothernon-OECDAsiaeconomies.Chinahasthelargestprojectedincreaseinnuclearcapacity,adding139GWfrom2012to
2040,followedby36GWinIndiaand8GWintheremainingnon-OECDAsiancountries.IntheMiddleEast,nuclearcapacityisexpectedto
increasefromlessthan1GWin2012to22GWin2030.
AVariableWorld
TheEIAnotesthatcomparisonsbetweencountriescanbecumbersomebecausepatternsofgeneratorusemeasuredbyannualcapacity
factors,ortheratioofgenerationtocapacityvarysignificantly.Aninterestinganalysisitconductedofgeneratingplantutilizationfrom2008
through2012,forexample,showswidevariabilityamongfueltypesandamongworldregions.
Variabilityiscausedbyawiderangeoffactors,includingdifferencesindailyloadpatterns,operatingcosts(drivenmainlybyfuelcosts),planned
outagestomeetregulatoryandmaintenancerequirements,anddifferencesintheefficienciesofgeneratingtechnologies.Annualcapacity
factorsalsocanbeaffectedbypartial-yeargenerationeffectsiftheunitwasinstalledwithinthepastyear.

(http://cdn.powermag.com/wpcontent/uploads/2016/05/IEA2016WorldCapacityPercent1.jpg)
Average annual capacity factors for electricity generators by IEO region and energy
source (2008 to 2012) Source: EIA/IEO2016

IntheU.S.,forexample,thefive-yearaveragesolarcapacityfactoris15%.Incomparison,solarcapacityfactorsinothercountriesandregions
areconsiderablylower:SolargeneratorsinCanadahaveafive-yearaveragecapacityfactorof6%;non-OECDEuropeandEurasia5%;andthe
MiddleEast8%.And,inmanyregionsoftheworld,includingtheU.S.,theaveragecapacityfactorofwindgeneratingfacilitiesfrom2008through

2012wasabout30%;however,theaveragecapacityfactorforwindfacilitiesinChinaduringthesameperiodwas18%,primarilybecauseof
partial-yeargenerationeffectscausedbyrapidcapacityexpansion,theEIAsaid.
Capacityfactorsfornuclearplantsaretheleastvariable.ButwhilethebaselineaverageU.S.annualcapacityfactorfornucleargeneratorsfrom
2008through2012was90%,inothercountriesandregions,nuclearcapacityfactorsaverage73%,asaresultofdifferentoperatingpoliciesand
regulatoryrequirements.
Growingenvironmentalconcernsaboutcoalgeneration,aswellascompetitionfromnaturalgasfiredandrenewablegeneration,hasalsoledto
lowercapacityfactorsforcoal-firedpowerplantsinsomecountries.Forexample,SouthKoreasfleetofcoal-firedpowerplantshadanaverage
capacityfactorof82%from2008through2012,whiletheaveragefornaturalgasfiredplantsandpetroleum-firedplantswasabout40%.Coalfiredunitshadsignificantlyhighercapacityfactorsbecauseofsignificantimprovementsinefficiency(in2010,70%ofSouthKoreastotalcoalfiredgenerationcamefromhighlyefficientsupercriticalunits),theEIAsaid.
IntheU.S.,bycomparison,capacityfactorsaveraged66%from2008through2012,mostlybecauseduringthatperiod,halfofthenationsfleet
wasatleast40yearsold.Inaddition,theinstallationandoperationofpollution-controlequipmentrequiredbyarangeofregulatorypolicieson
emissionsledtorapidincreasesinoperatingcoststhatdiscouragedtheuseofcoalforpowergeneration,evenasaveragecoalpricesremained
consistentlylowfrom2008through2012,theEIAsaid.
Chinareportedanaveragecapacityfactorof51%foritscoal-firedfleetfrom2008through2012,whichtheEIAexplainedwascausedbytheuse
ofcoal-firedunitstosatisfypeakdemandrequirements,arapidbuildupofnewcoal-firedcapacity,andalargeincreaseinhydroelectric
generatingcapacityduringthatperiod.OECDEuropeslow54%capacityfactorforcoalgeneratorscanbeexplainedbyacombinationoflower
electricitydemandandgrowthofrenewablecapacity,itsaid.

Sonal Patel, associate editor(@POWERmagazine, @sonalcpatel)

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