Between the Poles

Innovative electric power for a sustainable future

We are not on track to constrain global temperature rise to 2°C let alone 1.5°C.  Therefore we need some innovative technologies to get us back on track.  At the Geography2050: Powering our Future Planet conference at Columbia University in New York, several presentations described innovative, potentially disruptive technologies that could dramatically change how electric power is generated and transmitted.

Wireless power transmission

General Rick Deveraux of Viziv Technologies described a way of transmitting electric power wirelessly using a technology called a Zenneck surface wave that orovides a direct wireless connection from a generator to a load. It supports much higher field strengths than conventional Hertzian waves and follows the Earth's curvature. Viziv is currently working in a global demonstration project that involves building a fiberglass transmission tower and field intensity monitoring stations around the globe. An advantage of this technology is that it could deliver power to people who are currently off grid. Testing of this configuration starts within 30 days and actual power delivery next year.

On demand emissionless power generation

Christofer Mowry of General Fusion, described how nuclear fusion can provide energy dense, low environmental impact, manufacturable, and dispatchable power generation. In other words a fusion installation requires very little land and can be placed near the sources of load avoiding long haul transmission lines. There are no emissions and very little waste. It does not require fuels that are constrained by supply like fission does. It can supply large volumes of power on demand. The amount of investment in fusion has increased dramatically since about 2007.

Cell phones not requiring recharging

Frank Prautzsch of Velocity Technology Partners described what is potentially a disruptive technology that could affect everyone carrying a cell phone. Thermionic energy conversion (TEC) provides a way of generating power from ambient thermal energy using nano technology. Developed by Birmingham Technologies the Nano-Boxx consists of two metal plates composed of different metals that are placed less than 10 nanometers apart with a nanofluid in between. An electric current is generated when electrons from one plate vaporize and collect on the other plate. The device that was shown was the size of a postage stamp. By stacking them the device can scale from milliwatts to megawatts. 8 to 9 of these will power a cell phone, 800-900 a satellite. It can produce power for about eleven years without charging. To date it has been tested by using it to power an LG Nexus cell phone for the past few years. It is cheaper to produce than a lithium ion battery, has 40% more energy density, and has no emissions.

Powering the world for a million years

Kevan Weaver of the Idaho National Laboratory outlined the results of their calculations that advanced reactors would enable depleted uranium stockpiles and known reserves of uranium to supply 80% of the world's electric power demand for about 2000 years with no carbon emissions. If you add the uranium in the oceans there is enough to provide a source of power for a million years. China and India are investing heavily in fission power generation.  Micro-reactors and small modular reactors can provide safe power to data centers, remote locations that are off-grid, and locations where fossil and other fuels are expensive. The latest reactors (generation III and III+) are much safer than the first and second generation reactors like those at Fukushima, primarily because they do not require an external source of power to cool them in the case of an emergency shutdown.

Clinton and Trump on energy policy

Electric Choice has created a compilation of Clinton and Trump's announced positions on energy and related policies.  Some of the highlights:

Hillary Clinton

Nuclear Power: Clinton is an advocate for advanced nuclear power and the expansion of successful initiatives such as, ARPA-e.

Renewable Energy: Become a leader in the fight against climate change via installation of solar panels and the production of enough clean energy to power every home in the United States (within 10 years).  Her clean energy plan is focused on generating new economic investment opportunities that will help to create paying jobs nationwide.

Energy Waste: Reduce energy waste by a third to make manufacturing in the United States cleaner and more efficient.  Specifically mentions

• Improving building codes and standards
• Energy transparency
• Continued support of appliance energy standards and labels

Energy Infrastructure: Upgrade the United States energy infrastructure by modernizing the pipeline system, increasing rail safety and enhancing grid security.  Create a new Presidential Threat Assessment and Response Team to help state, local officials, and the energy industry to handle cyber security threats using new improved technologies.

Donald Trump

Coal: Trump plans to revive the coal mining industry by helping to get coal miners back to work.

Oil & Gas: Has previously stated his support for fracking as a way to end America’s dependence on imported oil.

Nuclear Power: Strongly in favor of nuclear energy, but the United States needs to put the proper procedures in place to ensure its continued safety.

Energy Infrastructure: Plans to rebuild America’s infrastructure on time and on budget, but has not yet defined a plan for how this will improve the United States energy industry infrastructure.

One third of U.S. electricity generation in 2015 from non-emitting sources

According to the Energy Information Administration (EIA) since 2005 renewables have risen from 8% of total electricity generation in the U.S. to 13% in 2015.  In 2015 non-emitting sources, renewables and nuclear, provided a record 33% of overall U.S. electricity production. Roughly another third was generated by natural gas and a third by coal.

In March 2015, the United States submitted its Intended Nationally Determined Contribution (INDC) for GHG emissions reduction to the United Nations Framework Convention on Climate Change targetting emissions reduction of 26% to 28% below 2005 levels by 2025.  Electricity generation is the largest source of emissions in the U.S.  In 2015 according to the EIA carbon dioxide (CO2) emissions from electricity generation totaled 1,925 million tonnes, 21% below their 2005 level so the INDC goals appear achievable, at least for electric power.

The reduction in emissions is due to two factors, increased non-emitting energy sources with most of the increase attributable to wind and solar, and the replacement of coal with natural gas. 

There are two reasons why energy produced with natural gas is less carbon intensive than coal.  Coal plants consume more energy than a combined-cycle natural gas plant to produce the same amount of electricity.  Secondly, coal's carbon content per unit of energy is nearly twice that of natural gas. The bottom line is that to generate the same amount of electricity,  natural gas emits 40% of the carbon dioxide that would be emitted from a coal-fired unit.

Dramatic drop in levelized cost of renewable electric power generation technologies

The "levelized cost", which is the present value of the total cost of building and operating a generating plant over its financial life, aims at making the costs of different generation technologies comparable.  The US Energy Information Administration (EIA) has developed a standard way of estimating levelized costs.  The most recent estimates of the average values of levelized costs for generating technologies are for generating facilities brought online in 2020 as represented in the National Energy Modeling System (NEMS) for the Annual Energy Outlook 2015 (AEO2015) Reference case.

The levelized cost represents the per-kWh cost (in real dollars) of building and operating a generating plant over an assumed financial life and duty cycle. Key inputs to calculating levelized costs include overnight capital costs, fuel costs, fixed and variable operations and maintenance (O&M) costs, financing costs, transmission costs, and an assumed utilization rate (capacity factor) for each plant type.  Plants typically built for peaking have a much lower capacity factor or utilization rate than a baseload plant.  Renewable energy generation also typically has a a lower capacity factor because wind and sun are intermittent.  

The LCOE values shown for each utility-scale generation technology are calculated based on a 30-year cost recovery period, using a real after tax weighted average cost of capital of 6.1%.  In the AEO2015 reference case, 3 percentage points are added to the cost of capital when evaluating investments in greenhouse gas (GHG) intensive technologies like coal-fired power and coal-to-liquids (CTL) plants without carbon control and sequestration (CCS). In LCOE terms, the impact of the cost of capital adder is similar to that of an emissions fee of $15 per metric ton of carbon dioxide (CO2) when investing in a new coal plant without CCS, which is representative of the costs used by utilities and regulators in their resource planning. As a result, the LCOE values for coal-fired plants without CCS are higher than would otherwise be expected.        

U.S. average levelized cost of electricity (LCOE) for plants entering service in 2020

(2013 $/MWh)

Dispatchable	Total system LCOE
Conventional coal	95.1
Natural Gas - Combined cycle	75.2
Natural Gas - Combustion turbine	141.5
Advanced nuclear	95.2
Geothermal	47.8
Biomass	100.5

 

Nondispatchable	Total system LCOE
Wind	73.6
Offshore wind	196.9
Solar PV	125.3
Solar thermal	239.7
Hydroelectric	83.5

Comparing the levelized costs for dfferent generation technologies shows that natural gas-fired combined cycle and wind are the cheapest way to generate power in many parts of the country (without access to geothermal energy), recognizing that the levelized cost of coal includes the potential future cost of carbon emissions. 

There is considerable variation in different regions of the U.S. especially in the case of renewable energy sources.  The EIA has calculated levelized costs for 22 regions across the U.S.

Nondispatchable	Min	Ave	Max
Wind	65.6	73.6	81.6
Offshore wind	169.5	196.9	269.8
Solar PV	97.8	125.3	193.3
Solar thermal	174.4	239.7	382.5
Hydroelectric	69.3	83.5	107.2

The interesting conclusions are that wind has achieved parity with natural gas in many parts of the country and solar PV has achieved grid parity in some parts of the country(within the assumptions of levelized costs).  This represents a significant drop in the cost of non-hydro renewable energy over the past 5 years. 

Technology	2016	2018	2020
Conventional coal	100.4	100.1	95.1
Natural gas - Combined cycle	83.1	67.1	75.2
Wind	149.3	86.6	73.6
Solar PV	396.1	144.3	125.3
Hydroelectric	119.9	90.3	83.5

When I blogged about levelized costs at the beginning of 2011, the cost of solar PV per MWh was significantly more expensive than any other generation technology.  Even in 2013 solar PV was still almost 50% more expensive than conventional coal.  But now in some parts of the U.S. it is as cheap as conventional coal, though not as cheap as natural gas combined cycle. 

Climate justice: India commits to reducing emissions intensity by a third by 2030

India has just released its commitments (INDC) to reducing emissions prior to the Paris COP meeting.  India houses 30% of the world's poor (363 million people) and 24% of the global population without access to electricity (304 million).  The challenge for India is tackling climate change while at the same time improving the standard of living of its third of a billion poor.

On a per capita basis India is barely on the same chart as the U.S. and Canada.  Depending on what is included in the calculation, India is the world's third or sixth largest emitter.  On a per capita basis India is 137th.  Per capita emissions in the US in 2011 were 4.5 tonnes of carbon, while India's were 0.45 tonnes, 1/10 of U.S per capita emissions. 

On a per capita basis electric power usage is also extremely low in India.  Indian per capita electricity consumption reached 1010 kilowatt-hour (kWh) in 2014-15.  In comparison, China has a per capita consumption of 4,000 kWh and developed nations average about 15,000 kWh per capita.

India is taking climate change seriously.  A year or two ago India announced a voluntary goal of reducing the emissions intensity of its GDP by 20–25% by 2020 compared to 2005 levels.  Despite having no obligations per the Convention (UN Framework Convention on Climate Change), a number of policy measures were initiated to achieve this goal. India's emission intensity per unit of GDP has decreased by 12% between 2005 and 2010. The United Nations Environment Program (UNEP) in its Emission Gap Report 2014 recognized India as one of the countries on course to achieving its voluntary goal.  The energy intensity of the economy has decreased from 18.16 goe (grams of oil equivalent) per Rupee of GDP in 2005 to 15.02 goe per Rupee GDP in 2012, a decline of 2.5% per annum.

In its just released Intended Nationally Determined Contribution (INDC) for the period 2021 to 2030, India has committed to reducing the emissions intensity of its GDP by 33 to 35 percent by 2030 from 2005 levels.  Even more impressively, it has committed to achieving 40 % cumulative electric power installed capacity from non-fossil fuel based energy resources (renewables and nuclear) by 2030.  It also committed to creating an additional carbon sink of 2.5 to 3 billion tonnes of CO2 equivalent through additional forest and tree cover by 2030.

A detailed estimate of the cost of India's climate change program has not yet been finalized, but it is recognized that significant international resources will be required to achieve its goals. The amount will depend on the gap between the actual cost of the implementation of India's commitment in the INDC and what can be allocated from India's domestic sources. A preliminary estimate suggests that at least US$ 2.5 trillion (at 2014-15 prices) will be required for meeting India's climate change actions between now and 2030.

One of the things India is doing to help achieve both emissions reduction and improving the standard of living of its poorest citizens is developing 100 smart cities (under the Smart Cities Mission).  These next generation cities will provide core infrastructure and a decent quality of life to its citizens by building a clean and sustainable environment. Smart solutions like recycling and reuse of waste, use of renewables, protection of sensitive natural environment will be incorporated to make these cities climate resilient.

The Atal Mission for Rejuvenation and Urban Transformation (AMRUT) is a new urban renewal mission launched by the Government of India for 500 cities with the objective of ensuring basic infrastructure services such as water supply, sewerage, storm water drains, transport and development of green spaces and parks by adopting climate resilient and energy efficient policies and regulations.

The Indian Government has recently launched the Clean India Mission with the objective of making the country clean and litter free by applying modern solid waste management in about 4041 towns covering a population of 306 million. It includes constructing 10.4 million household toilets and half a million community and public toilets.

Dedicated Freight Corridors (DFCs) are being introduced across India. The first two corridors are the 1520 km long Mumbai-Delhi (Western Dedicated Freight Corridor) and the 1856 km long Ludhiana-Dankuni (Eastern Dedicated Freight Corridor). The projects are expected to reduce emissions by about 457 million ton CO2 over a 30 year period.

Delhi Metro is India’s first municipal rail project to earn carbon credits. Delhi Metro has already installed 9 solar power generation facilities and plans to increase their number.

India has recently formulated a Green Highways (Plantation & Maintenance) Policy to develop 140,000 km long “tree-line” with plantation along both sides of national highways.

In India forest and tree cover has increased in recent years as a result of national policies for the conservation and sustainable management of forests.  Forests and tree cover has increased from 23.4% in 2005 to 24% of India's geographical area in 2013.  The Indian Government's long term goal is to bring 33% of its geographical area under forest cover.  India has improved the carbon stock in its forest by about 5%, from 6,621.5 million tonnes in 2005 to 6,941 million tonnes in 2013.

Nuclear power is making a slow comeback

According to the International Energy Agency (IEA) the Fukushima Daiichi accident led to a 10% decline in nuclear electricity production from 2010 to 2012.

• Permanent shutdown of eight reactors in Germany
• Temporary shutdown of 50 of Japan’s operable reactors - it now looks likely that some reactors will be restarted beginning with the Sendai plant
• Phaseout of Switzerland's and Belgium's reactors

But despite Fukushima, 72 new reactors were under construction at the end of 2013, mostly in China, India and Russia.  Belarus, United Arab Emirates, Turkey, Viet Nam, Bangladesh, Jordan, Poland and Saudi Arabia have projects under development.  The United States is building its first new reactors in 30 years in Georgia and South Carolina.  The United Kingdom and Finland have announced plans to build new reactors.  South Korea has decided to build two more reactors to add to the 23 already operating in that country.

Nearly half of the reactors under construction use Generation III technology, generally believed to be much safer than previous types of reactors. China has announced that it will build only Generation III reactors.  A Westinghouse AP1000 pressurized water reactor is scheduled to come online in Sanmen, China in late 2014.

However, the rate of development of new nuclear capacity is much less than what was projected pre-Fukushima.  In the context of emissions reduction the IEA projects that installed nuclear capacity in 2025 will be 7% to 25% below what it estimates is required to reduce carbon emissions sufficiently to keep climate warming under 2° C.

Fukushima is not the only factor that has slowed the development of nuclear power capacity.  The levelized cost of electricity (LCOE), which allows comparison of the cost of different fuel sources for power generation, shows that from a cost perspective solar PV ($130/MWh) and wind ($80/MWh) have become comparable to nuclear power generation ($96/MWh).  As smart grid technology developes and becomes more capable of integrating distributed intermittent sources, wind and solar PV will continue to become increasingly attractive alternatives to nuclear power.

IEA projects investment of $48 to $53 trillion in energy through 2035

Currently investment in energy is about $1.6 trillion per year.  Most of today’s investment spending, well over $1 trillion per year, is spent on extracting, transporting, and refining fossil fuels or building coal and gas-fired power plants. Renewables, together with biofuels and nuclear power, account for around 15% of annual investment flows. Investment in power transmission and distribution networks account for another 15%.  Annual spending on energy efficiency is about $130 billion today.

The International Energy Agency (IEA) projects that more than $48 trillion in cumulative investment will be required from now through 2035 just to meet the world's increasing energy demand. More than half of the energy-supply investment is needed just to keep production at today’s levels, to make up for declining oil and gas fields and to replace aging power plants and other equipment.

Around $40 trillion is required in energy supply  
$23 trillion is in fossil fuel extraction, transport and oil refining
$10 trillion is in power generation
- renewables ($6 trillion)
- nuclear ($1 trillion)
$7 trillion in transmission and distribution.

and $8 trillion is required in energy efficiency.

$7.2 trillion in the transport and buildings sectors.

The current annual investment of $1.6 trillion per year needs to increase to about $2 trillion.  Annual spending on energy efficiency needs to rise from $130 billion today to more than $550 billion by 2035. These goals will require attracting private investors and capital.  But this investment will not come close to reaching the climate stabilization target of 2 °C.

Achieving 450 ppm CO2 or 2 °C

The IEA estimates that $53 trillion in cumulative investment in energy supply and efficiency is required by 2035 to get the world onto a 2 °C emissions path. This will require a much greater investment estimated at $14 trillion in efficiency to lower 2035 energy consumption by almost 15%. Energy supply investment remains at $40 trillion, but  investment shifts from away from fossil fuels to the power sector. The investment in low-carbon energy supply will need to increase to almost $900 billion and spending on energy efficiency will have to exceed $1 trillion per year by 2035.

Water scarcity driving investment in renewables with low water consumption

Energy and water are valuable resources that strongly correlate with economic development.  Water and energy are also highly interdependent.  In the United States about half of water withdrawals are used for power generation.  Water is also used in the extraction, transport and processing of fossil fuels; and, increasingly, in irrigation to grow crops like corn used to produce biofuels.

Energy is required by the systems that collect, transport, distribute and treat water.  About 25 percent of United States' electricity goes to moving and treating water, according to a 2005 California Energy Commission report.

According to the IEA, globally agriculture is the principal user of water, accounting for 70% of water use, followed by industry (including mining and power generation) at 19% and municipal networks, which provide water for public and private users, at 11%.

Global water withdrawals for energy production in 2010 were estimated at 583 billion cubic metres (bcm), about 15% of the world’s total water withdrawals. Most of this is for cooling where the water is returned but typically at a higher temperature.  Water consumption where water is withdrawn but not returned accounted for 66 bcm.

Risks

The vulnerability of the energy sector to water constraints depends on geography and type of power  production.  Regions where water is scarce face serious risks, but with climate change regions currently with adequate water resources can face constraints related to droughts, heat waves, and regulations. Countries with a high proportion of their generating capacity in thermal plants with once-through cooling (using freshwater) and hydropower are especially susceptible to water shoratges.

Less water-intensive power generation technologies

Water is growing in importance as a criterion for assessing the physical, economic and environmental viability of energy projects.  Water withdrawals per unit of electricity generated are highest for fossil fuel thermal generating plants  - coal-,gas- and oil-fired plants operating on a steam-cycle and nuclear power plants with once-through cooling.  If cooling towers are used, water withdrawais are 20-8 times less, but water consumption is higher because of greater evaporation. Combined-cycle gas turbines (CCGTs) generate less waste heat per unit of electricity produced because they have higher thermal efficiency, and therefore require less cooling.  Both their water withdrawal and consumption are the lowest among fossil-fuel thermal power plants.

Water requirements for renewable electricity generating technologies range from negligible to comparable with thermal generation using wet tower cooling. Non-thermal renewables, such as wind and solar photovoltaic (PV) use very small amounts of water, which makes them well-suited for a future that will be both more carbon- and water-constrained. In addition to lower water use for direct  electricity generation, these renewable technologies have little or no water use associated with the production of fuel inputs in contrast to biofuels. They also have negligible impact on water quality compared to thermal plants (fossil-fuel or nuclear) that discharge large volumes of heated cooling water into the environment. Geothermal and concentrating solar power (CSP) technologies have water needs that range widely, depending on the particular generating technology and cooling system employed.

Base case

IEA New Policies Scenario: This scenario includes policy commitments and plans that have been announced by countries, including national pledges to reduce greenhouse-gas emissions and plans to phase out fossil-energy subsidies, even if the measures to implement these commitments have yet to be identified or announced. This broadly serves as the IEA baseline scenario.

The IEA projects that under this scenario, by 2035 withdrawals are projected to increase by about 20%.  In this scenario consumption increases much more dramatically, by about 85% driven by a shift towards higher efficiency power plants with more advanced cooling systems and by expanding biofuels production.

Low-carbon scenario

450 Scenario: This scenario sets out an energy pathway consistent with the goal of limiting the global increase in temperature to 2°C by limiting the concentration of greenhouse gases to around 450 parts per million of CO2.

Energy efficiency, wind and solar PV contribute to a low-carbon energy future without intensifying water demands significantly. Compared with 2010, withdrawals in this Scenario rise by only 4% in 2035, though consumption doubles due to much higher biofuels production.  This scenario would tend to increase solar PV and wind power generation, compared to water intensive low-carbon technologies such as nuclear power, power plants fitted with carbon capture and storage equipment and concentrating solar power requiring water cooling.  Dry cooling is also starting to be used with concentrating solar power generation.  Construction of the first utility-scale concentrating solar power plants (CSP) in Africa has been announced.  The plants minimize water use by employing dry cooling technology.

Comparing the cost of alternative electric power generation technologies

The "levelized cost", which is the present value of the total cost of building and operating a generating plant over its financial life, aims at making the costs of different generation technologies comparable.  The US Energy Information Administration (EIA) has developed a standard way of estimating levelized costs.  The most recent estimates of the comparative costs of different ways of generating electricity have been developed by the EIA for the Annual Energy Outlook 2013 (AEO2013) Early Release Reference case.

The levelized cost represents the per-kWh cost (in real dollars) of building and operating a generating plant over an assumed financial life and duty cycle. Key inputs to calculating levelized costs include overnight capital costs, fuel costs, fixed and variable operations and maintenance (O&M) costs, financing costs, transmission costs, and an assumed utilization rate (capacity factor) for each plant type.  Plants typically built for peaking have a much lower capacity factor or utilization rate than a baseload plant.  Renewable energy generation also typically has a a lower capacity factor because wind and sun are intermittent.

The levelized cost shown for each utility-scale generation technology is based on a 30-year cost recovery period starting in 2018, using a real after tax weighted average cost of capital (WACC) of 6.6 percent.

The levelized costs are the true economic cost and do not include state or federal incentives such as tax credits.  In the AEO2013 reference case a 3 % increase in the cost of capital is added when evaluating investments in greenhouse gas (GHG) intensive technologies like coal-fired power and coal-to-liquids (CTL) plants without carbon control and sequestration (CCS). The impact of the 3% increase is similar to that of an emissions fee of $15 per metric tonne of carbon dioxide (CO2) when investing in a new coal plant without CCS, similar to the costs used by utilities and regulators in their resource planning.  It represents an estimate of the carbon allowances these plants may have to purchase to offset their emissions.  The impact is that the levelized capital costs of coal-fired plants without CCS are higher than would otherwise be expected.

Costs vary regionally.  Levelized costs have been calculated for 22 regions across the U.S.  The graph shows minimum, average and maximum regional costs for the U.S.

Comparing the levelized costs for dfferent generation technologies and different regions shows that natural gas-fired combined cycle is the cheapest way to generate power in many parts of the country, recognizing that the levelized cost of coal includes the potential future cost of carbon emissions. 

The other interesting conclusion is that in some parts of the country solar PV has already achieved grid parity (within the assumptions of levelized costs).  This repesents a signfiicant drop in the cost of solar PV.  When I blogged about levelized costs was at the beginning of 2011.  At that time the cost of solar PV per MWh was significantly more than any other generation technology.

IEA projects that global energy demand will increase by a third by 2035, emissions by 20%

The International Energy Agency (IEA) has just released its annual World Energy Outlook 2013 with projections of energy demand and production through 2035.

Energy demand and supply

Energy demand is projected to increase by a third, driven primarily by emerging economies, China, India and the Middle East.  According to the most likely scenario, China is the primary driver for increased demand through 2020, when India becomes the primary driver. 

China is becoming the largest oil-importing country.  India is projected to become the largest importer of coal by the early 2020s. The IEA projects that the United States will meet all of its domestic energy demand from domestic sources by 2035.

Greenhouse gas emissions

Two-thirds of global of the world's greenhouse-gas emissions come from the energy sector.   The IEA projects that energy-related CO2 emissions will increase by 20% by 2035.  The IEA estimates that this will lead to a long-term average temperature increase of 3.6°C.

Energy efficiency

Energy efficiency is getting a lot of attention these days.  Measures aimed at improving the efficiency of buildings have been introduced in Europe and Japan .  In addition North America has been focusing on improving the energy efficiency of cars and other vehicles.   But the IEA still projects that  two-thirds of the economic potential of energy efficiency will remain untapped.  Government action is required to break down barriers to investment in energy efficiency including phasing out fossil-fuel subsidies, which the IEA estimates has risen globally to $544 billion in 2012.

Renewables for electric power

The IEA projects that renewables will account for nearly half of the increase in global power generation to 2035.  Wind and solar photovoltaics (PV) are projected to be responsible for nearly half of the expansion in renewables.

The largest absolute increase in renewable energy generation is projected to occur in China.  The IEA sees that in some markets (I have blogged extensively about solarPV becoming disruptive the U.S.), the rising share of renewable energy, especially solar PV, is creating business model challenges for the power industry, raising issues about about funding adequate investment and long-term reliability of supply.

The IEA projects that renewables will exceed 30% of the world's energy mix, moving ahead of natural gas in the next few years and competing with coal as the leading fuel for power generation by 2035.

The IEA projects that nuclear power generation will increase by two-thirds, with new plants being built primarily by China, Korea, India and Russia. 

The IEA also sees that capture and storage (CCS) technology could accelerate the decline in the CO2 emissions intensity of the power sector, but uncertainties about the commercial viability of CCS limits IEA projections of CCS deployment to only around 1% of the world's fossil fuel-fired power plants by 2035.

Coal

According to the IEA, coal continues to be a cheaper option than gas for generating electricity in many regions, but the IEA expects that government interventions to improve efficiency, curtail local air pollution and mitigate climate change will be the critical in determining the future of coal.  China has outlined plans to cap the share of coal in total energy use.

In the IEA most likely scenario, global coal demand increases by 17% to 2035.  The IEA projects that coal demand will decline in OECD countries and expand by one-third in non-OECD countries, primarily in India, China and Southeast Asia.  In China coal demand is expected to peak around 20205.   India, Indonesia, China and Australia are expected to be responsible for most of the increase in production.

Natural Gas

Growth in natural gas demand is expected to be largest emerging markets, especially China, where the IEA projects that natural gas demand will quadruple by 2035, and in the Middle East.  North America will continue to see a shift from coal to unconventional (shale) gas.  The IEA even sees some of the unconventional gas finding its way to international markets as LNG.

The IEA sees the decline in output from currently producing fields as being a major driver for investment through 2035.  The IEA projects that 790 billion barrels of total production will be required to meet demand through 2035.  Of this over half will be required to offset declines in production from existing fields.  For conventional fields the IEA estimates that output declines about 6% per year.  For unconventional fields the annual decline is much faster.   The IEA says that most unconventional plays are heavily dependent on continuous drilling to sustain output.

Energy prices and international competitiveness

The IEA report documents the large differences in the price of natural gas and electricity in different parts of the world.  For energy intensive products, this will tend to production and export from countries where gas and power costs are low, such as the United States and emerging economies.  The IEA projects that regional differences in natural gas prices will decline from the very high levels we are seeing today but large differences are projected to continue through to 2035.  Significant differences in the price of electricity will also continue.  Based on this, the IEA projects declining export of energy-intensive products from the E.U. and Japan and increases from emerging economies and the U.S.