Chapter 5 - Electricity
| World electricity generation nearly doubles in the IEO2008 reference case
from 2005 to 2030.
In 2030, generation in the non-OECD countries is projected
to exceed
generation in the OECD countries by 46 percent. |
Over the next 25 years, the world will become increasingly dependent on
electricity to meet its energy needs. Electricity is expected to remain
the fastest-growing form of end-use energy worldwide through 2030, as it
has been over the past several decades. Nearly one-half of the projected
increase in energy consumption worldwide from 2005 to 2030 is attributed
to electricity generation in the IEO2008 reference case. Since 1990, growth
in net generation has outpaced the growth in total energy consumption (2.9
percent per year and 1.9 percent per year, respectively), and generation
is expected to increase at an average annual rate of 2.6 percent through
2030 as the growth in demand for electricity continues to outpace growth
in total energy use (Figure 52).
World net electricity generation nearly doubles in the reference case,
from 17.3 trillion kilowatthours in 2005 to 24.4 trillion kilowatthours
in 2015 and 33.3 trillion kilowatthours in 2030 (Table 10). In general,
growth in the OECD countries, where electricity markets are well established
and consuming patterns are mature, is slower than in the non-OECD countries,
where a large amount of demand remains unsatisfied. The International Energy
Agency has estimated that nearly 32 percent of the population in the developing non-OECD countries (excluding
non-OECD Europe and Eurasia) do not yet have access to electricity—a total
of about 1.6 billion people [1]. With the strong economic growth projected
for the developing non-OECD nations, substantial increases in electricity
generation will be needed to meet demand in the residential, commercial,
and industrial sectors.
Although the non-OECD nations consumed 24 percent less electricity than
the OECD nations in 2005, total non-OECD electricity generation in 2030
is projected to exceed OECD generation by 46 percent (Figure 53). In the
developing countries, strong economic growth translates to growing demand
for electricity. Increases in per capita income lead to improved standards
of living, rising consumer demand for lighting and appliances, and growing
requirements for electricity in the industrial sector. As a result, total
non-OECD electricity generation increases by an average of 4.0 percent
per year in the reference case, as compared with a projected average annual
growth rate in OECD electricity generation of 1.3 percent from 2005 to
2030.
Electricity Supply by Energy Source
The mix of primary fuels used to generate electricity has changed a great
deal over the past two decades on a worldwide basis. Coal has continued
to be the fuel most widely used for electricity generation, although generation
from nuclear power increased rapidly from the 1970s through the 1980s,
and natural-gas-fired generation grew rapidly in the 1980s and 1990s. The
use of oil for electricity generation has been declining since the mid-1970s,
when the oil embargo by Arab producers in 1973-1974 and the Iranian Revolution
in 1979 produced oil price shocks.
High world oil prices—which have moved upward in every year since 2003—in
combination with concerns about the environmental consequences of greenhouse
gas emissions are raising renewed interest in nuclear power and renewable
energy sources as alternatives to the use of coal and natural gas for electric
power generation. Projections of future coal use are particularly sensitive
to assumptions about future policies that might be adopted to mitigate
greenhouse gas emissions.
Coal
In the IEO2008 reference case, while natural gas is the fastest-growing
energy source for electricity generation worldwide, coal continues to provide
the largest share, by a wide margin, of the energy used for electric power
production (Figure 54). In 2005, coal-fired generation accounted for 41
percent of world electricity supply; in 2030, its share is projected to
be 46 percent. Sustained high prices for oil and natural gas make coal-fired
generation more attractive economically, particularly in nations that are
rich in coal resources, which include China, India, and the United States.
The 3.1-percent projected annual growth rate for coal-fired electricity
generation worldwide is exceeded only by the 3.7-percent growth rate projected
for natural-gas-fired generation.
The outlook for coal-fired generation could be altered substantially by
international agreements to reduce greenhouse gas emissions. The electric
power sector offers some of the most cost-effective opportunities for reducing
carbon dioxide emissions in many countries. Coal is both the world’s most
widely used source of energy for power generation and also the most carbon-intensive
energy source. If a cost, either implicit or explicit, were applied to
emitters of carbon dioxide, there are several alternative no- or low-emission
technologies that currently are commercially proven or under development,
which could be used to replace some coal-fired generation. Implementing
the technologies would not require expensive, large-scale changes in the
power distribution infrastructure or in electricity-using equipment.
It could be more difficult, however, to achieve similar results in the
end-use sectors. In the transportation sector, for instance, large-scale
reduction of carbon dioxide emissions probably would require extensive
changes in the motor vehicle fleet, fueling stations, and fuel distribution
systems, at tremendous expense. In contrast, substitution of nuclear power
and renewables for fossil fuels in the electric power sector would be a
comparatively inexpensive way to reduce emissions, as would improving the
efficiency of electric appliances.
Natural Gas
Although natural gas is the fastest-growing energy source for electric
power generation in the IEO2008 reference case projection—increasing from
3.4 trillion kilowatthours in 2005 to 8.4 trillion kilowatthours in 2030—
the total amount of electricity generated from natural gas continues to
be only about one-half the total for coal, even in 2030. Natural-gas-fired
combined-cycle capacity is an attractive choice for new power plants because
of its fuel efficiency, operating flexibility (it can be brought on line
in minutes rather than the hours it takes for coal-fired and some other
generating capacity), relatively short planning and construction times
(months instead of the years that nuclear power plants typically require),
and capital costs that are lower than those for other technologies.
Liquid Fuels and Other Petroleum
With world oil prices projected to stay relatively high, reaching $113
per barrel (in nominal dollars) at the end of the IEO2008 projection in
2030, liquids are the only energy source for power generation that is projected
to decline on a worldwide basis. As oil prices remain high, nations are
expected to reduce or eliminate their use of oil for generation—opting
instead for more economical sources of electricity, including coal. Worldwide,
generation fueled by liquids is projected to decline by an average of 0.9
percent per year from 2005 to 2030; and in the OECD nations, it is projected
to decline by 2.4 percent per year. Only the non-OECD Middle East region,
with its ample oil reserves and a current 36-percent share of total electricity
generation fueled by oil, is projected to continue relying heavily on oil
to meet its electricity needs.
Nuclear Power
Electricity generation from nuclear power is projected to increase from
about 2.6 trillion kilowatthours in 2005 to 3.8 trillion kilowatthours
in 2030, as concerns about rising fossil fuel prices, energy security,
and greenhouse gas emissions support the development of new nuclear generation
capacity. High prices for fossil fuels allow nuclear power to become economically
competitive with generation from coal, natural gas, and liquids despite
the relatively high capital and maintenance costs associated with nuclear
power plants. Moreover, higher capacity utilization rates have been reported
for many existing nuclear facilities, and it is anticipated that most of
the older nuclear power plants in the OECD countries and non-OECD Eurasia
will be granted extensions to their operating lives. Still, there is considerable
uncertainty associated with nuclear power.
Around the world, nuclear generation is attracting new interest as countries
look to increase the diversity of their energy supplies, improve energy
security, and provide a low-carbon alternative to fossil fuels. For instance,
each of the world’s three largest coal-consuming nations (China, the United
States, and India) is projected to expand nuclear capacity significantly
over the next 25 years (see "Mid-Term Prospects for Nuclear Electricity Generation in China, India, and the United States"). The nuclear power profile
was raised further at the December 2007, United Nations Climate Change
Conference in Bali, when International Energy Agency Director Nobuo Tanaka
suggested that nuclear power would have to be part of the solution to “stabilize
and reduce man-made emissions in the foreseeable future” [2].
Issues that could slow the expansion of nuclear power in the future include
plant safety, radioactive waste disposal, and concerns that weapons-grade
uranium may be produced from centrifuges installed to enrich uranium for
civilian nuclear power programs. These issues continue to raise public
concerns in many countries and may hinder the development of new nuclear
power reactors. Nevertheless, the IEO2008 reference case incorporates the
improved prospects for world nuclear power. The IEO2008 projection for
nuclear electricity generation in 2025 is 31 percent higher than the projection
published in IEO2003 only 5 years ago.
On a regional basis, the IEO2008 reference case projects the strongest
growth in nuclear power for the countries of non-OECD Asia. For example,
in China, electricity generation from nuclear power is projected to grow
at an average annual rate of 8.8 percent from 2005 to 2030, and in India
it is projected to increase by an average of 9.4 percent per year. Outside
Asia, the largest increase in installed nuclear capacity among the non-OECD
nations is projected for Russia, where nuclear power generation increases
by an average of 3.2 percent per year. In contrast, OECD Europe is expected
to see a decline in nuclear power generation as some national governments,
including those of Germany and Belgium, still have plans in place to phase
out nuclear programs entirely (Figure 55).
To address the uncertainty inherent in projections of nuclear power growth
in the long term, a two-step approach was used to formulate the outlook
for nuclear power in IEO2008. In the mid-term (through 2015), projections
are based primarily on the current activities of the nuclear power industry
and national governments. Because of the long permitting and construction
lead times associated with nuclear power plants, there is general agreement
among analysts about the nuclear projects that are likely to become operational
in the mid-term. After 2015, the projections are based on a combination
of announced plans or goals at the country and regional levels and consideration
of other issues facing the development of nuclear power, including economics,
geopolitical issues, technology advances, and environmental policies. The
availability of potential uranium resources was also considered as part
of the IEO2008 modeling effort. Reserves appear to be more than sufficient
to meet the expected growth in nuclear capacity worldwide (see "Uranium Supplies Are Sufficient to Power Reactors Worldwide Through 2030").
Hydroelectricity and Other Renewables
In the IEO2008 reference case, electricity generation from hydroelectric
and other renewable energy resources is projected to increase at an average
annual rate of 1.8 percent from 2005 to 2030. High prices for oil and natural
gas, which are expected to persist in the reference case, also encourage
expanded use of renewable fuels. Renewable energy sources are attractive
for environmental reasons, especially in countries where reducing greenhouse
gas emissions is of particular concern. Government policies and incentives
to increase the use of renewable energy sources for electricity generation
are expected to encourage the development of renewable energy even when
it cannot compete economically with fossil fuels. Nonetheless, the renewable
share of world electricity generation falls slightly in the projection,
from 18 percent in 2005 to 15 percent in 2030, as growth in the consumption
of both coal and natural gas in the electricity generation sector worldwide
exceeds the growth in renewable sources of generation. The capital costs
of new power plants using renewable fuels remain relatively high in comparison
with those for plants fired with coal or natural gas.
There is wide variation in the expectations for renewable energy use among
the non-OECD countries. In the developing non-OECD nations of Asia and
Central and South America, mid- to large-scale hydroelectric power plants
are likely to dominate increases in renewable energy use over the projection
period. China, India, and Brazil all have plans to expand hydroelectric
capacity to help meet growing electricity demand. In contrast, hydroelectricity
is not likely to expand strongly in the Middle East, where few countries
have the natural resources needed to power hydroelectric facilities.
Among the OECD nations, hydroelectricity is fairly well established, and
there are few plans to install major hydroelectric power projects in the
future (with the exception of Canada and Turkey). Most of the growth in
renewable electricity in the OECD countries is instead likely to come from
nonhydroelectric renewable energy sources, especially wind and biomass.
A number of OECD countries have incentives in place to increase the use
of nonhydroelectric renewables for power generation, particularly to help
stem the growth of greenhouse gas emissions produced by fossil fuel use
and to promote energy independence. In the IEO2008 reference case, OECD
renewable generation grows by 1.6 percent per year from 2005 to 2030, second
only to the growth rate for natural-gas-fired generation.
The IEO2008 projections for hydroelectricity and other renewable energy
resources include only marketed renewables. Non-marketed (noncommercial)
biofuels from plant and animal sources are an important source of energy,
particularly in non-OECD economies, and the International Energy Agency
has estimated that some 2.5 billion people in developing countries depend
on traditional biomass as their main fuel for cooking [3]. Non-marketed
fuels and dispersed renewables (renewable energy consumed on the site of
production, such as energy from solar panels used to heat water) are not
included in the projections, however, because comprehensive data on their
use are not available.
Regional Outlook
In the IEO2008 reference case, the highest projected growth rates for electricity
generation are for the non-OECD nations, where strong economic growth and
rising personal incomes drive the projected growth in demand for electric
power. In the OECD countries, where electric power infrastructures are
relatively mature, national populations generally are expected to grow
slowly or decline, and GDP growth is expected to be slower than in the
developing nations, the increases in demand for electricity are projected
to be much slower than those in the non-OECD countries. For example, electricity
demand in China is projected to grow by an annual average of 5.4 percent
from 2005 to 2030, which is more than five times the rate projected for
the United States (Figure 56).
OECD Economies
North America
In 2005, electricity generation in North America totaled 4.9 trillion kilowatthours
and accounted for 28 percent of the world’s total generation. That share
is projected to decline over the course of the projection period, as the non-OECD
nations experience fast-paced growth in electric power demand. In 2030,
North America accounts for only 20 percent of the world’s electric power
generation.
The United States is the largest consumer of electricity in North America
and is projected to remain in that position through 2030 (Figure 57). U.S.
electricity generation—including both generation by electric power producers
and on-site generation—is projected to increase slowly, at an average annual
rate of 1.0 percent. Canada, like the United States, has a mature electricity
market, and its generation is projected to increase by 1.5 percent per
year from 2005 to 2030. Mexico’s electricity generation grows at a faster
rate—averaging 3.3 percent per year through 2030—reflecting the relatively
undeveloped state of the country’s electric power infrastructure.
There are large differences in the mix of energy sources used to generate
electricity in the three countries that make up OECD North America, and
those differences are likely to become more pronounced in the future (Figure
58). In the United States, coal is the leading source of energy for power
generation, accounting for 50 percent of the 2005 total; but in Canada,
renewable energy sources (predominantly hydroelectricity) provided 60 percent
of the nation’s electricity generation in 2005. Most of Mexico’s electricity
generation currently is fueled by petroleum-based liquids and natural gas,
which together accounted for 61 percent of its total electricity generation
in 2005. In the reference case projections for 2030, U.S. reliance on coal
is even greater than it is today; Canada’s hydropower resources (along
with some generation from wind capacity scheduled to be built) continue
to provide nearly 60 percent of its electricity; and the natural gas share
of Mexico’s total electricity generation increases from 35 percent in 2005
to 71 percent in 2030.
In the United States, much of the growth in electricity generation is projected
to be from coal-fired generation and renewables, rather than natural gas.
The U.S. natural gas share of electricity generation (including generation
in the end-use sectors) remains between 20 percent and 21 percent through
2017, then falls to 14 percent in 2030. The coal share of generation, in
contrast, remains just below 50 percent until 2018, then increases to 54
percent in 2030. The rise in U.S. coal-fired generation in the IEO2008
reference case is explained by a combination of coal prices that remain
substantially lower than natural gas prices throughout the projection and
the absence of legislation restricting the growth of carbon dioxide emissions.
Recent EIA analysis suggests that the enactment of such legislation would
lead to significant changes in the projected U.S. generation mix.14
Generation from renewable energy sources in the United States increases
in the reference case from 0.4 trillion kilowatthours in 2005 to 0.7 trillion
kilowatthours in 2030, with much of the growth attributable to nonhydroelectric
renewable generation. The use of wind, solar, geothermal, and biomass increases
largely as a result of State renewable portfolio standard (RPS) programs,
which require that specific and generally increasing shares of electricity
sales be supplied by renewable resources. Given that the consumer costs
of the RPS programs would increase significantly if Federal production
tax credits expired, past projections gave more weight to the probability
that generators would exercise so-called “escape clauses” and opt out of
the programs. IEO2008 assumes that, in the absence of a clear indication
to the contrary, State RPS goals will be met and result in substantial
additional growth of generation from wind, biomass, and geothermal resources.
The United States is expected to add 14.6 gigawatts of net nuclear installed
capacity between 2005 and 2030. The increase includes 16.6 gigawatts of
newly built nuclear facilities and 2.7 gigawatts of uprates at existing
nuclear power plants. The additional nuclear power capacity is offset,
in part, by the retirement of 4.5 gigawatts of capacity at older nuclear
power plants.
In Canada, generation from natural gas is projected to increase, while
coal-fired generation remains flat and oil-fired generation declines. The
Province of Ontario had announced plans to close all its coal-fired plants
by the end of 2007 because of health and environmental concerns, but that
date has since been pushed back to 2014. In 2007, the Ontario Power Authority—responsible
for ensuring an adequate supply of electric power— filed a 20-year, $60
billion plan (U.S. dollars) for the Province’s electricity system, including
the phaseout of coal-fired capacity [4]. In the reference case, those retirements
are offset by increases elsewhere in the country—notably, Alberta and Nova
Scotia. As a result, Canada’s coal-fired generation remains flat through
2030, at about 0.1 trillion kilowatthours. Increases in Canada’s total
electricity generation are fueled instead by natural gas (increasing by
4.2 percent per year), nuclear power (1.7 percent per year), and hydroelectricity
and other renewables (1.4 percent per year).
Hydroelectricity remains a key source of electricity for Canada. In 2005,
the hydroelectric share of total generation in Canada was 59 percent. In
addition, several large- and small-scale hydroelectric facilities currently
are either planned or under construction in Canada. Hydro-Québec has announced
plans to construct a 768-megawatt powerhouse near Eastman and a smaller
120-megawatt facility at Sarcelle in Québec, both of which are expected
to be fully commissioned by 2012 [5]. Other planned hydroelectric projects
include the 2,260-megawatt Lower Churchill River project in Newfoundland
and Labrador, the 1,550-megawatt Romaine River project in Québec, and the
200-megawatt Wuskwatim project in Manitoba [6]. The IEO2008 reference case
does not anticipate that all planned projects will be constructed, but
given Canada’s historical experience with hydropower and the commitments
for construction, new hydroelectric capacity accounts for more than one-half
of the 29,600 megawatts of additional renewable capacity projected to be
added in Canada between 2005 and 2030.
Although hydropower plays a major role in Canada’s renewable electricity
generation, the country also has plans to expand wind-powered generating
capacity in the future. In 2007, 386 megawatts of installed wind capacity
was added, bringing the total to 1,846 megawatts and giving Canada the
world’s eleventh-largest national installed wind capacity [7]. In January
2007, Natural Resources Canada announced its new “ecoENERGY for Renewable
Power” program as a follow-up to its Wind Power Production Incentive (WPPI).15 The new program will allow an additional 3,000 megawatts of wind power
to be installed by 2011 [8].
In addition to the incentive programs of Canada’s federal government, several
provincial governments have instituted their own incentives to support
the construction of new wind capacity. Ontario’s Renewable Energy Standard
Offer Program has helped support robust growth in wind installations over
the past several years, and installed wind capacity in the province has
risen from 0.6 megawatts in 1995 to more than 490 megawatts in 2006 and
hit the 500-megawatt milestone in January 2008 [9]. The Standard Offer
Program pays all small renewable energy generators (with installed capacity
less than 10 megawatts) 11.0 cents (Canadian) per kilowatthour of electricity
delivered to local electricity distributors [10] and 42.0 cents per kilowatthour
for electricity from solar photovoltaic projects. Contracts between Ontario
Power Authority and the small renewable generators last for a term of 20
years, and beginning in 2007 a portion of the rate paid to generators was
to be indexed annually for inflation. Support from Canada’s federal and
provincial governments—along with sustained higher world oil prices—is
expected to support the projected increase in the country’s use of wind
power for electricity generation.
Most of the projected increase in Mexico’s electricity generation is fueled
by natural gas. At 0.4 trillion kilowatthours, natural-gas-fired generation
in 2030 is 5 times the 2005 level. The resulting growth in Mexico’s demand
for natural gas strongly outpaces its production, leaving the country dependent
on pipeline imports from the United States and LNG from other countries.
Currently, Mexico has one LNG import terminal operating and a second under
construction, in part to fuel the expected growth in electricity demand.
Its first LNG facility, Altamira, became operational in 2006 and the second,
Costa Azul, is under construction and expected to be on line by the end
of 2008 [11].
Mexico’s electricity generation is projected to increase by an average
of 3.3 percent annually from 2005 to 2030—double the rate for Canada and
triple the rate for the United States—and its government has recognized
the need for electricity infrastructure to keep pace with growth in demand.
In early 2008, the government announced plans to invest around $3.1 billion
in electricity infrastructure in 2008 under the 2007-2012 National Infrastructure
Programme [12]. As part of a major plan to increase power generation, the
state-owned Comisión Federal de Electricidad (CFE) expects to begin construction in 2009 on
a 652-megawatt natural-gas-fired combined-cycle power plant, Norte II in
Chihuahua, with a completion target of 2011 [13]. The CFE has announced
plans to add more than 26 gigawatts of new installed electric power capacity
by 2017.
OECD Europe
Electricity generation in the nations of OECD Europe increases by an average
of 1.4 percent per year in the IEO2008 reference case, from 3.3 trillion
kilowatthours in 2005 to 4.0 trillion kilowatthours in 2015 and 4.7 trillion
kilowatthours in 2030. Because most of the OECD Europe countries have relatively
stable populations and mature electricity markets, most of the growth in
electricity demand is projected to come from those with more robust population
growth (including Turkey, Ireland, and Spain) and from the newest OECD
members (including the Czech Republic, Hungary, and Poland), whose economic
growth rates exceed the OECD average through the projection period.
Natural gas is expected to be by far the fastest-growing fuel for electricity
generation in OECD Europe, increasing at an average rate of 3.9 percent
per year from 2005 to 2030. Use of liquids and other petroleum for generation
is projected to decline steadily in the face of rising world oil prices
(Figure 59).
OECD Europe’s total nuclear capacity declines from 133 gigawatts in 2005
to 114 gigawatts in 2020 in the reference case, followed by a modest net
increase to 118 gigawatts in 2030. Belgium and Germany, with
substantial nuclear programs, have policies in effect to reduce their use
of nuclear power in the future; however, it is unclear whether the planned
nuclear plant closures will actually take place, given that nuclear power
plants produce no carbon dioxide emissions. As a result, the reference
case projects more license extensions and fewer retirements of operating
nuclear power plants than were expected in earlier assessments, as well
as some new builds (about 18 gigawatts of new nuclear capacity) in France,
Finland, and possibly other countries of OECD Europe.
Coal accounts for nearly one-third of OECD Europe’s net generation today,
but concerns about carbon dioxide emissions and global warming could reduce
that share in the future. On the other hand, in countries that rely heavily
on coal for their electricity supplies (including Germany, where coal provides
about 55 percent of total generation, and Poland, where it provides 95
percent) it will be difficult to reduce coal use substantially and, at
the same time, carry out plans to dismantle nuclear power programs [14].
As a result, the IEO2008 reference case projects that coal-fired electricity
generation in OECD Europe will grow at the relatively slow average rate
of 0.3 percent per year from 2005 to 2030.
Renewable energy is OECD Europe’s second fastest-growing source for electricity
generation in the reference case. The use of renewables (primarily nonhydropower)
for electricity generation is projected to grow by 1.3 percent per year
through 2030. Although most of the economically feasible hydroelectric
resources in Europe already have been developed, the countries of OECD
Europe have installed substantial amounts of alternative renewable energy
capacity—consisting mainly of wind turbines—over the past several years.
At present, 7 of the world’s 10 largest markets for wind-powered electricity
generation are in Europe,16 and the 27-member European Union accounted
for 60 percent of the world’s total installed wind capacity at the end
of 2007 [15]. With many European countries setting new goals to increase
nonhydropower renewable electricity generation, the role of wind power
in meeting OECD Europe’s electricity demand is likely to grow in the future.
OECD Asia
Total electricity generation in OECD Asia is projected to increase by 1.2
percent per year on average, from 1.7 trillion kilowatthours in 2005 to
2.2 trillion kilowatthours in 2030. Japan accounts for the largest share
of electricity generation in the region today and continues to do so in
the mid-term projection, despite its having the slowest-growing electricity
market in the region. Japan’s electricity generation increases at a 0.6-percent
average annual rate in the IEO2008 reference case, as compared with projected rates of 1.4 percent per year in Australia/New Zealand and 2.3
percent per year in South Korea (Figure 60). Japan’s electricity markets
are well established, and its aging population and relatively slow projected
economic growth in the mid-term translate into slow growth in demand for
electric power. In contrast, both Australia/New Zealand and South Korea
are expected to have more robust income and population growth, leading
to more rapid growth in demand for electricity.
The fuel mix for electricity generation varies widely among the three economies
that make up the OECD Asia region. In Japan, natural gas, coal, and nuclear
power make up the bulk of the current electric power mix, with natural
gas and nuclear accounting for about 53 percent of total generation and
coal another 30 percent. The remaining portion is split between renewables
and petroleum-based liquids. In 2030, Japan is projected to rely on natural
gas, nuclear power, and coal for nearly 90 percent of its electric power
supply, with coal’s share declining to 23 percent as both natural gas and
nuclear power displace its use.
Australia and New Zealand, with their rich coal resources, rely on coal
for nearly three-fourths of their combined electricity generation. The
remainder is supplied by natural gas and renewable energy sources— largely
hydroelectricity. The Australia/New Zealand region uses negligible amounts
of oil for electricity generation and no nuclear power, and that is not
expected to change over the projection period. Natural-gas-fired generation
is expected to grow strongly in the region, at 3.1 percent per year between
2005 and 2030, and that growth will reduce the coal share to 68 percent
at the end of the projection.
In South Korea, coal and nuclear power currently provide 41 percent and
38 percent of total electricity generation, respectively. Natural-gas-fired
generation grows quickly in the reference case projection, helping to diversify
the country’s fuel mix. As a result, South Korea’s natural gas share of
generation reaches 22 percent in 2030, up from 15 percent in 2005. Coal
and nuclear power continue to provide most of the country’s electricity
generation, however, with each providing between 36 and 37 percent of total
electricity in 2030.
Non-OECD Economies
Non-OECD Europe and Eurasia
Total electricity generation in non-OECD Europe and Eurasia grows at an
average rate of 2.6 percent per year in the IEO2008 reference case, from
1.5 trillion kilowatthours in 2005 to 2.1 trillion kilowatthours in 2015
and 2.8 trillion kilowatthours in 2030. Russia, with the largest economy
in non-OECD Europe and Eurasia, accounted for 60 percent of the region’s
total generation in 2005 and is expected to retain that share throughout
the projection (Figure 61).
As a whole, non-OECD Europe and Eurasia has ample resources of natural
gas. Consequently, much of its future electricity supply is expected to
be provided from natural-gas-fired power plants. Natural gas is the region’s
fastest-growing source of electric power in the IEO2008 reference case,
increasing by 3.5 percent per year from 2005 to 2030. Coal-fired and nuclear
power plants also are important regional sources of electricity generation,
with projected annual increases averaging 2.7 percent and 2.5 percent,
respectively, over the same period. Renewable generation, largely from
hydropower facilities, increases more slowly, at an average rate of 1.1
percent per year, largely as a result of repairs and expansions at existing
sites. Liquids play only a minor role in the electric power markets of
non-OECD Europe and Eurasia, and given the expectation that world oil prices
will remain relatively high, the role of liquids and other petroleum in
the electricity sector remains small.
For Russia, the two fastest-growing energy sources for electric power in
the mid-term projection are natural gas and nuclear power. Both are expected
to grow by an average of 3.2 percent per year from 2005 to 2030. With its
extensive natural gas reserves, Russia currently generates nearly 40 percent
of its electricity from natural gas, and the share increases to 46 percent
in 2030.
Russia’s government also has announced ambitious plans to increase the
country’s nuclear power capacity in order to lessen the reliance of its
power sector on natural gas and preserve what is becoming one of its most
valuable export commodities. Although only 3 gigawatts of new nuclear generating
capacity has become operational in Russia since 1991, there are plans in
place to raise the nuclear share of total generation from about 15 percent
currently to 25 percent by 2030 [16].
In 2007, Russia announced its intention to construct 26 new nuclear power
facilities [17]. The government also is in the midst of liberalizing its
electricity markets, with complete price liberalization to be phased in
by 2011 [18]. Russia believes that it must attract private investment in
the electric power sector, which could be facilitated by privatization
of its generating business. In the short run, however, privatization may
slow nuclear expansion plans, given the high capital costs associated with
nuclear power plant construction.
The IEO2008 reference case takes a more conservative view of the rate at
which new nuclear power plants will come on line in Russia, and the outlook
includes some delay in meeting the current construction schedule. A net
total of 4 gigawatts of nuclear generating capacity is added to Russia’s
existing 23 gigawatts by 2015 and another 14 gigawatts by 2030.
Non-OECD Asia
Non-OECD Asia—led by China and India—has the fastest projected growth in
electric power generation worldwide, averaging 4.9 percent per year from
2005 to 2030 in the reference case. The nations of non-OECD Asia are expected
to see continued robust economic growth, with corresponding increases in
demand for electricity in the building sector, as well as for industrial
sector uses. Total electricity generation in non-OECD Asia doubles over
the first decade of the projection, from 3.9 trillion kilowatthours in
2005 to 7.8 trillion kilowatthours in 2015, with the region expected to
see income growth averaging 7.4 percent per year. The rate of GDP expansion
is expected to moderate in the later years of the projection, and the growth
in electricity demand slows in concert with income growth. In 2030, total
net generation in non-OECD Asia is 12.9 trillion kilowatthours in the reference
case.
Coal accounts for two-thirds of the electricity generation in non-OECD
Asia (Figure 62)—dominated by generation in China and India. Both countries
already rely heavily on coal to produce electric power. In 2005, coal’s
share of generation was an estimated 77 percent in China and 74 percent
in India. Despite efforts to diversify the fuel mix away from coal, it
is likely that both countries will continue to use coal as the main fuel
for electricity generation. In the IEO2008 reference case, the coal share
of electricity generation declines to 65 percent in 2030 in India but continues
rising to 84 percent in China.
In both China and India, meeting future demand for electricity will present
challenges. In China, a coal shortage and price spike that began in fall
2007 and continued into 2008 caused 6 gigawatts of coal-fired generating
capacity to be taken out of service in southern China [19]. An additional
70 gigawatts of coal-fired capacity was idled in February 2008, when severe
winter weather disrupted coal deliveries from China’s northern mines to
coastal demand centers, removing a substantial amount of the country’s
440 gigawatts of capacity from service. India also faces supply issues.
Coal inventories at the country’s utilities have been so low in 2008 that
the government has ordered a two-thirds increase in coal imports to assure
adequate power supply. Moreover, the coal supply problems in China and
India have been exacerbated by coal production problems in Australia and
South Africa, cutting available imports [20].
Throughout non-OECD Asia, consumption of liquids and other petroleum for
electricity generation is projected to decline, as relatively high world
oil prices make other fuels more attractive economically. Although the
liquids share of electricity generation in non-OECD Asia is projected to
fall from 4 percent in 2005 to less than 1 percent in 2030, some oil-fired
generation is expected to continue to be needed. Many rural areas currently
do not have access to transmission lines, and until transmission infrastructure
can be put in place, noncommercial energy sources are expected to be replaced
with electricity from diesel-fired generators.
Non-OECD Asia leads the world in installing new nuclear capacity in the
IEO2008 reference case, accounting for 55 percent of the projected net
increment in nuclear capacity worldwide. China is projected to add 45 gigawatts
of nuclear capacity by 2030, India 17 gigawatts, and the other countries
of non-OECD Asia a combined 6 gigawatts. Strong growth of nuclear capacity
in China and India will have only a modest impact on fuel diversification
in their electric power sectors, however, with thermal generation continuing
to dominate in both countries. In China, the nuclear share of total electricity
generation is projected to rise from 2 percent in 2005 to 5 percent in 2030,
and in India it is projected to rise from 2 percent to 8 percent. Several
other countries in the region are also expected to begin nuclear power
programs. In the reference case, Vietnam, Indonesia, and Pakistan are projected
to have some nuclear power capacity installed by 2030.
Although electricity generation from renewable energy sources in non-OECD
Asia is projected to grow at an average annual rate of 2.4 percent, the
renewable share of total generation declines—from 16 percent in 2005 to
9 percent in 2030—as the shares of fossil fuels and nuclear power increase
more rapidly. Mid- to large-scale hydroelectric facilities provide much
of the incremental growth in non-OECD Asia’s renewable energy consumption.
Several countries have hydropower facilities either planned or under construction:
Vietnam is planning a number of hydropower projects on its Vu Gai-Thu Bon
River, beginning with the 156-megawatt Song Bung 4 project, which is scheduled
for completion by 2011 [21]. Malaysia expects to complete the 2,400-megawatt
Bakun Dam project by 2011, although the project has had a number of delays
and setbacks in the past [22].
In India, Himachal Pradesh has plans to commercialize a substantial portion
of the state’s reported 21,000 megawatts of hydroelectric power potential,
adding 5,744 megawatts of hydroelectric capacity before 2015 to the existing
6,300 megawatts [23]. Also, the 2,000-megawatt lower Subansiri facility
under construction in Arunachal Pradesh is expected to be completed by
2012 [24]. India’s federal government is attempting to incentivize the
development of hydropower across the nation. Legislation has been proposed
to allow private hydroelectric power developers to be eligible over a 5-year
period for a tariff that would guarantee a fixed return on investment,
as well as allowing generators to improve their returns by selling up to
40 percent of their electricity on the spot market.
China also has a number of large-scale hydroelectric projects under construction,
including the 18,200-megawatt Three Gorges Dam project slated for completion
at the end of 2008. The China Yangtze River Three Gorges Project Development
Corporation already has announced it plans to increase its total installed
capacity to 22,400 megawatts. In addition, work continues on the 12,600-megawatt
Xiluodu project on the Jisha River (scheduled for completion in 2020 as
part of a 14-facility hydropower development plan) and the country’s third-largest
hydroelectric facility, the 6,300 megawatt Longtan project on the Hongshui
River [25]. China also has the world’s tallest dam (at nearly 985 feet)
currently under construction, as part of the 3,600-megawatt Jinping I project
on the Yalong River, which is scheduled for completion in 2014 as part
of a plan by the Ertan Hydropower Development Company to construct 21 facilities
with 34,620 megawatts of hydroelectric capacity on the Yalong [26]. The
China Power Investment Corporation began construction on the first of a
proposed 13-dam hydroelectric power system on the Yellow River in 2007,
with an ultimate total installed capacity of 8,000 megawatts. The first
part of the system, the 360-megawatt Banduo project, is scheduled to become
operational by 2011 [27].
Although hydroelectric projects dominate the renewable energy mix in non-OECD
Asia, there are also plans to increase the use of nonhydroelectric renewable
energy sources, especially wind. In China, for example, the National Development
and Reform Commission has announced its goal to install 10,000 megawatts
of wind power capacity by 2010 [28]. The country is well on the way to
meet the goal, having installed 3,400 megawatts of new wind capacity in
2007 alone, which brought total installed wind capacity to 6,000 megawatts
[29]. India’s wind capacity has increased steadily over the years, to 8,000
megawatts in 2007. Taiwan also added 100 megawatts of new wind capacity
in 2007, bringing its total installed capacity to 282 megawatts.
Middle East
Electric power generation in the Middle East region is projected to grow
by 2.6 percent per year, from 0.6 trillion kilowatthours in 2005 to 1.1
trillion kilowatthours in 2030. The region’s young and fast-growing population
and a strong rise in projected national income are expected to result in
a rapid increase in demand for electric power. In Iran, for instance, electricity
demand has been increasing by about 7 percent annually in recent years,
and the demand for energy to fuel the increase in electric power generation
has pressured the country’s supply infrastructure. At the beginning of
2008, unusually cold winter weather increased the demand for natural gas,
both for power generation and for residential and commercial uses [30].
The sharp increase in natural gas demand has, since 2006, resulted in large
natural gas shortages at Iran’s power plants during the winter, and many
have switched to burning fuel oil and diesel to meet the power demand.
Despite short-term supply issues in some Middle Eastern countries, natural
gas is expected to remain the region’s largest source of energy for electricity
generation throughout the projection (Figure 63). In 2005, natural-gas-fired
generation accounted for 56 percent of the Middle East region’s total power
supply. In 2030, the natural gas share is projected to be 65 percent, as
the petroleum share of generation falls over the projection period. Petroleum
is a valuable export commodity for many nations of the Middle East, and
there is increasing interest in the use of domestic natural gas for electricity
generation in order to make more oil assets available for export.
The Middle East is the only region in the world where petroleum liquids
are expected to continue accounting for a sizable portion of the fuel mix
for electricity generation. The Middle East region as a whole relied on oil-fired
capacity to meet 36 percent of its total generation needs in 2005, and
petroleum liquids are projected to continue providing 29 percent of the
total in 2030. The rich petroleum resources in the Middle East are expected
to allow nations of the region to continue using oil for electricity generation,
even as high world oil prices result in the displacement of oil in other
regions. Oil-fired generation in the Middle East is projected to increase
by an average of 1.6 percent per year from 2005 to 2030.
Other energy sources make only minor contributions to the Middle East region’s
electricity supply. Israel is the only country in the region that uses
significant amounts of coal to generate electric power [31], and Iran is
the only one projected to add nuclear capacity, with the completion of
its Bushehr 1 reactor expected by 2015. Finally, because there is little
incentive for countries in the Middle East to increase their use of renewable
energy sources, renewables are projected to account for a modest 3 percent
of the region’s total electricity generation throughout the 2005 to 2030
period.
Africa
Demand for electricity in Africa grows at an average annual rate of 3.1
percent in the IEO2008 reference case. Thermal generation accounted for
most of the region’s total electricity supply in 2005 and is expected to
be in the same position through 2030. Coal-fired power plants, which were
the region’s largest source of electricity in 2005, accounting for 47 percent
of total generation, are projected to provide a 32-percent share in 2030,
as natural-gas-fired generation expands strongly from 22 percent of the
total in 2005 to 50 percent in 2030 (Figure 64).
At present, South Africa’s two nuclear reactors are the only ones operating
in the region, accounting for about 2 percent of Africa’s total electricity
generation. Reports suggest that construction of a new Pebble Bed Modular
Reactor may begin in South Africa in 2009, with an anticipated completion
date of 2013; however, the project has had various setbacks since it was
originally initiated in 1993, and it is uncertain whether the schedule will
be met [32]. In addition, Egypt’s government has announced plans to add
a nuclear power project, with first tenders offered in early 2008 [33].
In the reference case, 1,000 megawatts of new nuclear capacity (net) is
projected to become operational in Africa over the 2005 to 2030 period,
and the nuclear share of the region’s total generation remains at 2 percent
through the end of the period.
South Africa is Africa’s largest electricity generator, producing nearly
43 percent of the region’s total electric power in 2005. The country has
been an important regional supplier, exporting electricity to neighbors,
including Zimbabwe and Swaziland [34]. Electricity demand in South Africa
has increased strongly in recent years, and the state-owned public utility
Eskom has been unable to expand installed capacity to keep up with increasing
domestic demand [35]. As a result, South Africa experienced a number of
power cuts in 2008 that even resulted in the closure of some mining operations,
because companies could not guarantee the safety of workers without a secure
power supply. Eskom has plans to increase capacity by adding 40,000 megawatts
of new installed electric power capacity by 2025, but short-term supply
problems are likely to continue to affect the country and other parts of
southern Africa for the foreseeable future.
Generation from hydroelectric resources and other marketed renewable energy
sources is expected to grow slowly in Africa. As they have in the past,
nonmarketed renewables are expected to continue providing energy to Africa’s
rural areas; however, it is often difficult for African nations to find
funding or international support for larger commercial projects. Still,
plans for several hydroelectric projects in the region have been advanced
recently, and they may help boost supplies of marketed renewable energy
in the mid-term. Several (although not all) of the announced projects are
expected to be completed by 2030, allowing the region’s consumption of
marketed renewable energy to grow by 2.0 percent per year from 2005 to
2030. Several small- to-mid-sized hydroelectric facilities are planned
for the region, including a 60-megawatt power station on Tanzania’s Kagera
River, with construction scheduled to begin in 2009 after financing has
been secured [36].
Central and South America
Electricity generation in Central and South America increases steadily
in the IEO2008 reference case, from 0.9 trillion kilowatthours in 2005
to 1.3 trillion kilowatthours in 2015 and 1.7 trillion kilowatthours in
2030. The nations of Central and South America are expected to experience
strong economic growth through 2030, increasing the demand for electrification.
The extent to which electricity consumption will be allowed to expand in
the future depends on investment in the power sector and improvements in
natural gas supply, including both pipeline and LNG supplies.
The electricity markets of some of the larger regional economies have become
strained in recent years. With economic growth exceeding historical trends
in Brazil and Argentina, among others, demand for electricity has grown
sharply. For example, in Brazil, Central and South America’s largest economy,
GDP has been increasing on average by 4.3 percent per year since 2004,
and at the same time electricity demand has risen by an annual average
of 5.0 percent [37]. The robust increase in economic expansion has fueled
strong demand for electricity in the region, testing the limits of the
infrastructure. Brazil has had a difficult time securing natural gas supplies.
Bolivia has suspended supplies to a 400-megawatt power plant in Cuiaba,
and supplies from Argentina have been suspended as a result of Argentina’s
own natural gas production problems [38].
Brazil has made moves to relieve pressures on its electricity markets with
plans to import LNG to reduce reliance on neighboring countries for natural
gas supplies and to increase hydroelectric generating capacity [39]. Plans
to increase Brazil’s hydroelectric power generation include two plants
on the Rio Madeira in Rondonia: the 3,150-megawatt Santo Antonio and the
3,326-megawatt Jirau hydroelectric facilities. The two plants, with completion
dates scheduled for the 2012 to 2015 period, are expected to help Brazil
meet electricity demand in the mid-term [40]. In the IEO2008 reference
case, renewable electricity supply grows by 2.8 percent per year from 2005
to 2030, led by hydroelectric generation as well as a modest increase in
generation from other renewable energy sources; however, with natural-gas-fired
generation expanding more rapidly, the renewable share of total generation
falls from 86 percent in 2005 to 77 percent in 2030 (Figure 65). Natural-gas-fired
generation is projected to grow by 7.3 percent per year in Brazil, with
the expectation that infrastructure will be improved and supplies from
both pipeline and LNG imports secured in the mid-term. The natural gas
share of Brazil’s total generation increases from 7 percent in 2005 to
17 percent in 2030.
Until recently, Argentina was a major regional supplier of natural gas.
In 2003, the government instituted price controls on natural gas to alleviate
the impacts of an economic downturn. An unintended result of the price
caps was a dramatic downturn in investment in new natural gas projects.
Although the Argentine economy has performed strongly over the past several
years, natural gas production and natural-gas-fired generation have not
kept pace with the growing demand for electricity. In 2007, Argentina reduced
natural gas exports to Chile in the face of rising domestic demand and
stagnant production [41]. Chile, in turn, has begun construction on an
LNG regasification facility at Mejillones, which is scheduled for completion
in 2010.
The problems with regional natural gas supplies have been exacerbated by
drought conditions that have reduced the ability of nations in Central
and South America to meet demand for electric power. Chile’s electricity
markets, in particular, have been hard-hit by Argentina’s supply problems.
In addition to coping with reduced supplies, Chile has had very low water
levels at its hydroelectric facilities as a result of drought conditions.
The Chilean government is pressing consumers to reduce power use by 5 percent
but has also announced concerns that—even with such a reduction—electricity
rationing may be necessary in the short run [42].
Several countries in the region are looking at near-term solutions to meeting
electricity demand. Both Argentina and Brazil, for instance, are turning
to coal, fuel oil, and diesel generation as emergency alternative sources
of power [43]. The IEO2008 projection includes the expectation that coal-fired
generation will rise in Central and South America as a result of sustained
high prices for oil and natural gas prices. Coal-fired generation increases
in Central and South America by 2.6 percent per year on average from 2005
to 2030, but the coal share of generation remains at a modest 6 percent
through the end of the projection period.
Notes and Sources
References
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