EIA International Outlook to 2040 Foresees Decoupling of Power Demand and Economic Growth

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EIA International Outlook to 2040 Foresees Decoupling of Power Demand andEconomic Growth05/11/2016 | Sonal Patel

The worlds frenzied economic growth through 2040 wont be matched by electricity demand growth, the Energy Information Administration

EIA) says in theInternational Energy Outlook 2016(IEO2016 (http://www.eia.gov/forecasts/ieo/electricity.cfm))released on May 11.

World net electricity generation willjump 69% by 2040,theIEO2016reference case projects, but that is still well below what it would be if

economic growth and electricity demand growth maintained the same relationship they had in the recent past, the agencys biannual forecaays.

According to the EIA, from 2005 to 2012, world gross domestic product (GDP) increased by 3.7% per year while world net electricity generatio

ose by 3.2% per year. TheIEO2016reference case suggests that between 2012 and 2040, while world GDP will sprout by 3.3% per year, but w

net electricity generation will grow only about 1.9% per year.

The lowered demand growth projections hinge on actions that many countries may take to improve efficiency. Most members of the

Organisation for Economic Cooperation and Development (OECD) are also pursuing policies and rules that could force generators to curb th

arbon dioxide emissions.

The IEO2016 reflects newly introduced clean energy policies, including Chinas target to get 15% of its electricity from renewableshttp://www.powermag.com/u-s-and-china-agree-to-increase-nationwide-carbon-reduction-targets/) by 2020, the European Unions 2030 En

ramework (http://www.powermag.com/european-parliament-backs-binding-targets-for-climate-energy-shuns-commissions-proposal/)

objectives, and Indias ambitious wind and solar initiatives (http://www.powermag.com/despite-challenges-india-banks-on-renewable-energ

printmode=1). It does not, however, include the effect of the August 2015finalized Clean Power Plan (http://www.powermag.com/epa-issues

inal-clean-power-plan/?printmode=1) (though effects of the proposed rule are considered).

A Shadow on Coal Generation, a Spotlight on Natural Gas, Renewables, Nuclear

Among its notable findings [SLIDESHOW] (http://www.powermag.com/slideshow-highlights-from-the-eias-international-energy-outlook-201

hat coals share of world generation, which has typically hovered between 37% and 40% since the 1980s, will drop from 40% in 2012 to 29% in

040even as world coal-fired generation increases by 25% through 2040. These echo findings by the International Energy Agency in its
http://www.powermag.com/despite-challenges-india-banks-on-renewable-energy/?printmode=1http://www.powermag.com/u-s-and-china-agree-to-increase-nationwide-carbon-reduction-targets/http://www.powermag.com/u-s-and-china-agree-to-increase-nationwide-carbon-reduction-targets/http://www.powermag.com/iea-worlds-power-mix-seeing-unprecedented-transformation/http://adclick.g.doubleclick.net/pcs/click?xai=AKAOjstXcrmDyrtdKW2kp8oqTGLPsB8D4QuWyrBvWTk9ch0wnQ8F6jol-f3F9bvTC9wJ-PLRi2frXEekvKZM24ZDoTR7MHiu1kclyNn3aXlWLO8VQhk8pBEc6ALcbKCezyb_kOaZ724_LoPW6Jf_tivVpj366SqMjPCUDEXq-w4LONzR_ZHlUqHlUfZsPLTnABe5s0PYfGrUCQ2cJghgQiIDMA&sai=AMfl-YQspXjnHq60w9U6pEzNAJAnnvgTycxRcUZARnUL2lmF-lsEDxdt3-hsPxak-4IFfGdfO_RBKvmoow&sig=Cg0ArKJSzNENgy4hF2KyEAE&urlfix=1&adurl=http://www2.emersonprocess.com/en-US/brands/ovation/products/simulation_solutions/Pages/index.aspxhttp://www.powermag.com/http://www.powermag.com/http://www.powermag.com/iea-worlds-power-mix-seeing-unprecedented-transformation/http://www.powermag.com/slideshow-highlights-from-the-eias-international-energy-outlook-2016/http://www.powermag.com/epa-issues-final-clean-power-plan/?printmode=1http://www.powermag.com/despite-challenges-india-banks-on-renewable-energy/?printmode=1http://www.powermag.com/european-parliament-backs-binding-targets-for-climate-energy-shuns-commissions-proposal/http://www.powermag.com/u-s-and-china-agree-to-increase-nationwide-carbon-reduction-targets/http://www.eia.gov/forecasts/ieo/electricity.cfmhttp://void%280%29/http://www.powermag.com/category/business/http://www.powermag.com/http://adclick.g.doubleclick.net/pcs/click?xai=AKAOjstXcrmDyrtdKW2kp8oqTGLPsB8D4QuWyrBvWTk9ch0wnQ8F6jol-f3F9bvTC9wJ-PLRi2frXEekvKZM24ZDoTR7MHiu1kclyNn3aXlWLO8VQhk8pBEc6ALcbKCezyb_kOaZ724_LoPW6Jf_tivVpj366SqMjPCUDEXq-w4LONzR_ZHlUqHlUfZsPLTnABe5s0PYfGrUCQ2cJghgQiIDMA&sai=AMfl-YQspXjnHq60w9U6pEzNAJAnnvgTycxRcUZARnUL2lmF-lsEDxdt3-hsPxak-4IFfGdfO_RBKvmoow&sig=Cg0ArKJSzNENgy4hF2KyEAE&urlfix=1&adurl=http://www2.emersonprocess.com/en-US/brands/ovation/products/simulation_solutions/Pages/index.aspxhttp://store.powermag.com/?limit=24http://www.electricpowerexpo.com/http://www.powermag.com/


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November 2015released World Energy Outlook (WEO-2015) (http://www.powermag.com/iea-worlds-power-mix-seeing-unprecedented-

ransformation/), which projects that coals share will drop from 41% in 2013 to 30% in 2040.

http://cdn.powermag.com/wp-

content/uploads/2016/05/IEA2016-Worldgeneration.jpg)

World electricity generation by fuel (2012 to 2040). Source: EIA/IEO2016

And despite current low oil prices, the use of petroleum and other liquid fuels for power generation is also expected to fall. The EIA projected

oil prices will be higher in the long term, and generation from liquid fuels will fall from 5% in 2012 to 2% in 2040.

Comparatively, the IEO2016 foresees a tremendous expansion for both the shares of renewables and natural gas generation. Renewables sh

s expected to grow from 22% in 2012 to 29% in 2040mostly from hydropower, but also substantially from nonhydropower renewables. The

hare of nonhydropower renewables is projected to shoot up from 5% in 2012 to 14% in 2040 in the IEO2016 reference case. In developing

ountries, solars forecast growthat an average 15.7% per year over the periodis expected to overshadow winds 7.7% and geothermals

per year growth. In the OECD region, wind, solar, and geothermal generation is predicted to grow at comparable rates of about 4.5% per yea


content/uploads/2016/05/IEA2016-

Worldrenewablegeneration.jpg)

World net electricity generation from renewable power by fuel (2012 to 2040).

ource: EIA/IEO2016

The natural gas share of world generation is also foreseen surging from 22% in 2012 to 28% in 2040. However, the EIA noted, if other nation

with shale gas resources (notably, China) are able to replicate the U.S. success in exploiting shale gas production, the outlook for world natur

gas-fired electricity generation could be much different from that represented in the IEO2016 Reference case.
http://cdn.powermag.com/wp-content/uploads/2016/05/IEA2016-Worldrenewablegeneration.jpghttp://cdn.powermag.com/wp-content/uploads/2016/05/IEA2016-Worldgeneration.jpghttp://www.powermag.com/iea-worlds-power-mix-seeing-unprecedented-transformation/


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content/uploads/2016/05/IEA2016-NonOECDpowermix-

copy.jpg)

Non-OECD Asia electricity generation fuel mix by region (2012 to 2040).Source:

IA/IEO2016

Meanwhile, average annual growth rates for nuclear electricity generation from 2012 to 2040 in the reference case include 9.6% in China, 7.9%

ndia, and 2.9% in the other non-OECD Asia economies. China has the largest projected increase in nuclear capacity, adding 139 GW from 201

040, followed by 36 GW in India and 8 GW in the remaining non-OECD Asian countries. In the Middle East, nuclear capacity is expected toncrease from less than 1 GW in 2012 to 22 GW in 2030.

A Variable World

The EIA notes that comparisons between countries can be cumbersome because patterns of generator usemeasured by annual capacity

actors, or the ratio of generation to capacityvary significantly. An interesting analysis it conducted of generating plant utilization from 2008

hrough 2012, for example, shows wide variability among fuel types and among world regions.

Variability is caused by a wide range of factors, including differences in daily load patterns, operating costs (driven mainly by fuel costs), plan

outages to meet regulatory and maintenance requirements, and differences in the efficiencies of generating technologies. Annual capacity

actors also can be affected by partial-year generation effects if the unit was installed within the past year.


content/uploads/2016/05/IEA2016-

WorldCapacityPercent1.jpg)

verage annual capacity factors for electricity generators by IEO region and energy

ource (2008 to 2012) Source: EIA/IEO2016

n the U.S., for example, the five-year average solar capacity factor is 15%. In comparison, solar capacity factors in other countries and region

re considerably lower: Solar generators in Canada have a five-year average capacity factor of 6%; non-OECD Europe and Eurasia 5%; and the

Middle East 8%. And, in many regions of the world, including the U.S., the average capacity factor of wind generating facilities from 2008 thro
http://cdn.powermag.com/wp-content/uploads/2016/05/IEA2016-WorldCapacityPercent1.jpghttp://cdn.powermag.com/wp-content/uploads/2016/05/IEA2016-NonOECDpowermix-copy.jpg


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Even though it may dominate forecasts, natural gasfired generation faces a

troubled expansion in

012 was about 30%; however, the average capacity factor for wind facilities in China during the same period was 18%, primarily because of

partial-year generation effects caused by rapid capacity expansion, the EIA said.

Capacity factors for nuclear plants are the least variable. But while the baseline average U.S. annual capacity factor for nuclear generators fro

008 through 2012 was 90%, in other countries and regions, nuclear capacity factors average 73%, as a result of different operating policies a

egulatory requirements.

Growing environmental concerns about coal generation, as well as competition from natural gasfired and renewable generation, has also le

ower capacity factors for coal-fired power plants in some countries. For example, South Koreas fleet of coal-fired power plants had an avera

apacity factor of 82% from 2008 through 2012, while the average for natural gasfired plants and petroleum-fired plants was about 40%. Coa

ired units had significantly higher capacity factors because of significant improvements in efficiency (in 2010, 70% of South Koreas total coal

ired generation came from highly efficient supercritical units), the EIA said.

n the U.S., by comparison, capacity factors averaged 66% from 2008 through 2012, mostly because during that period, half of the nations fle

was at least 40 years old. In addition, the installation and operation of pollution-control equipment required by a range of regulatory policie

emissions led to rapid increases in operating costs that discouraged the use of coal for power generation, even as average coal prices remain

onsistently low from 2008 through 2012, the EIA said.

China reported an average capacity factor of 51% for its coal-fired fleet from 2008 through 2012, which the EIA explained was caused by the u

of coal-fired units to satisfy peak demand requirements, a rapid buildup of new coal-fired capacity, and a large increase in hydroelectric

generating capacity during that period. OECD Europes low 54% capacity factor for coal generators can be explained by a combination of low

electricity demand and growth of renewable capacity, it said.

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

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EIA International Outlook to 2040 Foresees Decoupling of Power Demand and Economic Growth