Energizing the future

With the United Nations Climate Change Conference fast approaching, all eyes are now firmly focused on energy policy. The need to balance the security of America’s energy future with the growing need for more efficient, sustainable and environmentally friendly energy sources has never been greater.

“Western Europe generates about 22 percent of the total world demand for hydroelectricity”

A more diverse energy supply - one consisting of fossil fuels, as well as biofuels, wind, solar and nuclear - has been heralded as the answer to both energy security and environmental issues. But whatever energy path we decide to follow, the fact remains that demand will soon outstrip supply. We need to make the most of traditional fossil fuels while investing in cutting edge research to develop sustainable sources. Another national priority is the need to reduce our dependence on foreign sources of energy, such as imported oil.

The North American power sector now finds itself at a crossroads. The impact of the financial recession and a vastly greener agenda from the new administration are enhancing the downward trend in generating plant development costs, uncovering opportunities in some fuel sources and sounding alarm bells for others.

According to the Energy Information Administration's (EIA) Annual Energy Outlook 2009, electricity demand is set to increase by 26 percent from 2007 to 2030, or by an average of 1.0 percent per year. Estimates also show that coal will continue to provide the largest share of energy for US electricity generation, with only a modest decrease from 49 percent in 2007 to 47 percent in 2030. As of June 2009, 36 new coal plants are permitted, under construction or near construction in the US, with 47 more announced.

Concerns about greenhouse gas emissions are predicted to have little effect on construction of new capacity fuelled by natural gas, the generation of which is set to increase to 21 percent in 2027, before dropping to 20 percent in 2030 - about the same level as in 2007.

Predictions

EIA's outlook also sees the generation from nuclear power increasing by 13 percent from 2007 to 2030, as additional units and upgrades at existing units will increase overall capacity and generation. The nuclear share of total generation will decrease, however, from 19 percent in 2007 to 18 percent in 2030.

Renewable generation on the other hand is predicted to increase by more than 100 percent from 2007 to 2030, by which time it will account for 14 percent of total generation. 

As electricity demand grows and 30 GW of existing capacity is retired, 259 GW of new generating capacity will be needed between 2007 and 2030. If we are to believe EIA's predictions then the majority of this new capacity will be in the form of renewable generation and coal-fired power plants.

However, it is difficult to attach too much weight to these predictions, particularly regarding the development of new coal-fired power plants. A recent report by the National Energy Technology Laboratory (NETL) entitled Tracking New Coal-Fired Power Plants, states that experience has shown that public announcements of new coal-fired power plant development do not provide an accurate representation of actual new operating power plants. It is not unusual for projects that have been announced to then be cancelled before or during the permitting stage.

Figures from NETL state that actual plant capacity, commissioned since 2000, has been far less than new capacity announced; the year 2002 report of announcements reflected a schedule of over 36,000 MW to be installed by 2007, whereas only 4500MW (12 percent) were achieved.

According to the Earth Policy Institute, since the beginning of 2007, 95 proposed coal-fired power plants have been cancelled or postponed in the United States - 59 in 2007, 24 in 2008, and at least 12 in the first three months of 2009. This covers nearly half of the 200 or so US coal-fired power plants that have been proposed for construction since 2000.

Delays

There are many reasons why delays and cancellations occur. Firstly the cost of building a new power plant is astronomical. According to Cambridge Energy Research Associates (CERA) the costs of building new power plants have more than doubled since 2000. The latest IHS CERA Power Capital Costs Index (PCCI) shows that the cost of new power plant construction in North America has risen 130 percent from 2000 to 2008. During this period, cost increases could be partly explained by rising prices for commodities such as steel, nickel and copper, as well as supply issues and longer deliver times.

Issues arose due to the lack of skilled engineers in the workforce as older workers retired and were not replaced. This resulted in shortages in plant design teams and delays to construction scheduled. This further increased the likelihood of cancellations, which are more prevalent as prospects of fulfilling all projects in the queue become impractical.   

The NETL points out that delays and cancellations have also been attributed to regulatory uncertainty regarding climate change. There are hopes that the Copenhagen Climate Change Conference in December will help clear up some concerns surrounding environmental regulations, but this is by no means certain. Since the US went into recession, the cost of developing power plants has declined somewhat, so many of the obstacles that stood in the way of new construction have now been, creating new opportunities for increases in capacity.

International outlook

Across the ocean, construction is due to start in 2012 on two new nuclear reactors at Sizewell on the UK's Suffolk coast. Following the acquisition of British Energy, French power giant EDF Energy plans to build to reactors generating 1600 MW, which together with another plant in Somerset, could supply 13 percent of the country's electricity.

The region's business leaders are keen to ensure that local companies benefit from the employment and other opportunities offered by the multibillion-pound development. Work on the existing Sizewell B power station, which was commissioned and built between 1987 and 1995, involved 2000 suppliers, half of which were from East Anglia.

At a conference organised by the Nuclear Industry Association (NIA) at Newmarket in late October, EDF bosses and industry chiefs said a broad range of work will be available. Keith Parker, Chief Executive of the NIA, commented that: "The development of new nuclear power stations could have a huge impact on the region.EDF has announced its intention to build at Sizewell. These reactors at their peak of construction are going to be employing 3000 to 4000 people.

"There are opportunities not only for high-tech engineers but also construction companies and civil engineering and there are knock-on impacts for smaller companies within the area, including transport companies and caterers. The potential is enormous, and that's just during construction. Once it is built the power station will operate for 60 years employing 300 to 400 people at each reactor, offering well-rewarded, well-qualified jobs. It will have a big impact on the local economy."

The UK is not the only European country to see new nuclear construction. As of September 2009 there is a total of 196 nuclear power plant units with an installed electric net capacity of 169,711 MW in operation in Europe and 17 units with 14,710 MW were under construction in six countries. In 2008, France held the top position in terms of electricity generated by nuclear energy, with a share of 76.2 percent,  followed by Lithuania with 72.9 percent, the Slovakian Republic with 54.4 percent, Belgium with 53.8 percent and Sweden with 42 percent.

Coal power generation is also on the increase in Europe. In 2008, Italy's major electricity producer, Enel, announced that it would convert its massive power plant from oil to coal and increase the percentage of its power generated by coal to 50 percent. Italy's total reliance on coal is predicted to rise from 14 percent to 33 percent over the next five years. European countries are expected to put into operation about 50 coal-fired plants over the same period, which are expected to be in use for the next five decades.

Renewables

Consumption of hydroelectricity and other renewable energy sources combined is expected to be between 37 and 47 quadrillion BTU in 2010. Renewable energy sources are projected to account for nine percent of the total world energy consumption in 2010. Hydroelectricity, while remaining a minor factor in terms of world energy consumption, is important regionally.

The consumption of renewables in the US is expected to grow more slowly than the rest of the world, at two percent per year over the period 1990-2010, with most of this growth coming from renewable sources other than hydroelectricity.

In Canada, nearly two-thirds of the homes in the province of Quebec are run entirely on electricity, most of which is supplied by hydropower. The provincial utility, Hydro Quebec, is the second largest provider of electricity in Canada, with a generating capacity of 27 GW.

Western Europe generates about 22 percent of the total world demand for hydroelectricity, although most practical hydroelectric resources have already been exploited there, and little further development is expected. France, Norway and Sweden account for more than half of the total hydroelectricity consumption in the region. Demand for renewable energy in Western Europe is expected to grow to 7.6 quadrillion BTU by 2015, an increase of more than 1.8 percent per year.