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2 0 0 9
2009
G L O B A L
P O W E R
R E V I E W
A snapshot of the world’s top electricity markets
Contents
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2009
A snapshot of the world’s top electricity markets
Contents
2
6
Country Focus
Introduction
Guest editorial
Lars G. Josefsson, president of Eurelectric, the association representing the
European power sector, and CEO of Vattenfall
americas
12
16
18
20
22
24
Argentina
Brazil
Canada
Chile
Peru
USA
asia-pacific
30
34
36
38
40
42
45
48
50
Australia
China
India
Indonesia
Malaysia
Pakistan
Philippines
Thailand
Vietnam
54
57
60
62
64
66
70
72
74
76
Czech Republic
France
Germany
Italy
Poland
Russia
Spain
Sweden
Turkey
UK
europe
middle east-africa
80
82
84
86
88
90
Angola
Egypt
Kuwait
Saudi Arabia
South Africa
United Arab Emirates
PennWell Global Power Review 2009
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Senior Editor
Heather Johnstone
Deputy Editor
Tim Probert
Associate Editor
Nigel Blackaby
Advertisement Sales Manager
Anthony Orfeo, anthonyo@pennwell.com
Advertisement Sales Manager
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Digital Sales Manager
Leo Wolfert, leow@pennwell.com
Studio/Production Manager
Karl Weber
Sub-editor
David Grove
Design
Jem Soar
Production
Becky Crews
Group Publisher
David McConnell
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Introduction
Welcome to the 2009 edition of the PennWell
in 2030 is lower than projected in last year’s World
Corporation’s Global Power Review, an essential
Energy Outlook, primarily because of the expectation
information source on the world’s major electricity
of slower economic growth.
markets, providing readers with the most up-todate market data.
In this year’s publication, which is the seventh edition,
we focus on 31 electricity sectors across the Americas
The majority of the forecast growth in demand is
anticipated to come from non-OECD countries. Growth
is projected to increase by 146 per cent between 2006
and 2030, with demand growing fastest in Asia.
(both North and South America), the Asia-Pacific region,
China’s electricity demand has been growing at an
Europe and the Middle East and Africa region. One
annual double-digit rate since 2000 (representing an
country that makes its debut this year is Angola.
average rate of 14 per cent). This rate is expected to
Located on the western coast of southern Africa,
slow over time, dropping to 7.6 per cent a year up to
Heather Johnstone
Senior Editor
Angola has the third largest GDP (on a purchasing
power parity basis) in sub-Saharan Africa, after South
Africa and Nigeria. The country’s economic growth
over the last ten years has been fuelled by oil, and it
“Although the world demand for electricity is
projected to double between 2006 and 2030, the
is now the third biggest producer in Africa. However,
with the recent fall in the value of oil its economic
level in 2030 is forecast to be lower because of the
growth is likely to slow.
Angola’s electricity sector is at the beginning of a
expectation of slower economic growth”
lengthy process of reconstruction and modernization
after 27 years of civil war that devastated the country’s
2015, mirroring what is happening with its economic
infrastructure. Last year, MINEA (the Ministry of Energy
growth, averaging 4.6 per cent a year between 2006-
and Water), with financial support from the US Trade
2030.
and Development Agency, requested tenders from
The election of President Barack Obama at the
US companies to conduct a study looking at the
end of last year looks set to have a profound effect
rehabilitation of its electricity distribution network
on the energy landscape of the fossil fuel dependent
(currently it is only a minority of citizens that have access
USA – some would argue a revolution. The new
to electricity) and the development of hydropower
administration clearly sees energy as playing a key role
projects – currently hydropower accounts for 63 per
in helping to get the US economy out of recession.
cent of Angola’s total installed capacity.
As part of his ‘economic stimulus’ package,
Although it cannot be described as a ‘key electricity
$150 billion has been earmarked for a raft of clean
market’ as it is only beginning the reconstruction and
energy technologies, ranging from next generation
development of its electricity system, Angola may well
biofuels
become a major power player in the African continent
commercial-sized renewables and deployment of clean
in the future.
coal technologies, with the expectation of creating
In the latest edition of the International Energy
and
commercial
plug-in
vehicles
to
thousands of new jobs.
Agency’s (IEA’s) World Energy Outlook 2008, global
The new administration is likely to have an impact
electricity demand is forecast to grow at an annual rate
on the global energy sector too, especially with the
of 3.2 per cent between 2006 and 2015, falling to an
promise to cut US greenhouse gas emissions to 80
average of 2 per cent between 2015 and 2030.
per cent of 1990 levels 2050. Further, in the run up
According to the IEA, this projected slowdown in
to last year’s elections Obama made it clear that he
demand reflects a shift in economies of non-OECD
was keen for the United States to re-engage with the
countries away from heavy manufacturing, which is
international community in the fight against climate
highly energy intensive, towards less energy-intensive
change – a complete reversal from his predecessor.
industries and services, as well efficiency improvements
The timing of this change in attitude could not be
and saturation effects in OECD countries and some
better with the United Nations Climate Change meeting
emerging economies.
being held this year, where world leaders will be tasked
Although the world demand for electricity is
with framing the successor to the Kyoto Protocol. The
projected to almost double between 2006 and 2030,
absence of the USA, as well as other energy giants such
increasing from 15 665 TWh to 28 140 TWh. The level
as China and India, would be unthinkable.
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Deputy Editor
Nigel Blackaby
Associate Editor
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We creaea
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ate
a the energy that makes us grow
Building a new future on our great past
www.ansaldoenergia.it
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Functioning markets and
political leadership needed for
a sustainable energy future
Lars G. Josefsson is CEO of Vattenfall and President of EURELECTRIC, the association representing the European power sector
As the European electricity industry enters a new investment cycle - almost
goals and mechanisms will work together. The challenge will be to implement a
the entire power-generation fleet will need to be replaced by 2030 - we
consistent, market-based framework which ensures that the GHG and RES targets
have a unique opportunity to get on the path to a secure, carbon-neutral
can be met at affordable cost to the economy.
electricity system. Available synergies with key sectors such as transport and
First, the policymakers must work out the practicalities of the third phase of the
buildings offer further opportunities to move Europe towards a more ener-
emissions trading system (ETS). EURELECTRIC accepts the logic that allowances to
gy-efficient, carbon-neutral economy by mid-century and brake the accelera-
emit GHGs should be auctioned, not free of charge, provided all sectors are treated
tion of climate change. EURELECTRIC believes a market-approach is the right
equally under ETS rules. We regret this level playing-field could not be achieved
way to deliver on these goals but political leadership is required to create
when the legislators finalised the new Directive - free allowances will continue in
the right structure and incentives for companies and their customers.
special cases - but we welcome the intention to make auctioning the rule for all
The way energy supply and use are organised will be a key factor in the effort to
soon. The way it is handled will be crucial. To be consistent with the integration of
stay below the crucial 2°C threshold for global warming. A secure, carbon-neutral
electricity markets, a common auctioning platform should be set up for the whole
electricity supply, delivered through a competitive market, will be a major part of the
of Europe.
solution to the energy-climate challenge. This will require clear thinking, determined
action and close cooperation among the various actors.
The flexibility mechanisms in the new RES Directive, which allow member states
to develop joint projects and support schemes in pursuit of their national targets,
In the European Union, Parliament and Council of Ministers are still trying to
will promote European integration. However, we would have liked to see real oppor-
agree a third “package” of energy market legislation. EURELECTRIC believes the
tunities for companies to trade RES-power, as they are better suited to commerce
main requirement is to drive forward regional integration as a step on the way to
than governments. Our estimates show free trade in RES-power could bring annual
a single European electricity market. It will be crucial to encourage and incentivise
savings to the European economy of $21bn by 2020. If this valuable flexibility is
transmission operators to integrate their activities at regional level. The system of
to be harnessed, policymakers must quickly clarify the practicalities of setting up
governance must also take a regional perspective, which means the new Agency
joint RES projects and ensure companies are involved. The Directive should also be
under whose umbrella national regulators will cooperate must be given adequate
implemented in a way that will assist member states wishing to establish common
powers. Moreover, if the regional model is to drive market development, market
RES-certificate systems as joint support schemes.
stakeholders must be closely associated in the process of drawing up codes and rules
In addition, the provisions facilitating RES-access to the grid must be imple-
that will govern the regional markets. The legislative bodies will need wisdom and
mented in a way which, while promoting energy security and low-carbon supply,
a spirit of compromise if they are to overcome their differences and forge a good
does not work counter to the competitive market.
agreement before the upcoming European elections bring a halt to parliamentary
Of course Europe cannot go it alone on climate change. The global challenge
activity. It is in no-one’s interests to delay the legislation until the next Parliament
requires a global approach. Part of the framework should be a robust carbon price
convenes.
based on an international emissions trading system. As a basis we urge the parties
Meanwhile, it is important not to lose sight of the single most important task of
electricity companies - ensuring secure supply to customers. This can only happen
meeting in Copenhagen in December to forge a solid international climate action
accord to succeed the Kyoto Protocol.
if market prices are allowed to fully reflect underlying cost, if all power generation
Meanwhile, some thirty electricity CEOs from the EU, USA, Canada, Japan and
options are available to investors and if we diversify external raw energy supply
Australia meeting in Atlanta, USA last October set up an International Electricity
sources and routes. The recent Russia-Ukraine gas dispute highlighted the dangers
Partnership, which will seek to work with policymakers and stakeholders worldwide
of undiversified supply and reminded us that energy security cannot be taken for
on a roadmap designed to drive forward development and deployment of commer-
granted. We welcome the ideas set out by the European Commission in the Second
cial technologies that will reduce carbon emissions.
Strategic Energy Review, especially suggestions for developing the networks. Grid
There are also major opportunities in other sectors to replace less energy-effi-
infrastructure is a vital area for attention if we are to create a functioning integrated
cient or more carbon-intensive processes by carbon-neutral power. Energy-efficient
European energy market.
lighting, heat pumps for spatial heating/cooling and electric or plug-in hybrid cars all
One important way of protecting energy security is to maintain a diverse mix of
provide a means to reduce GHG emissions. The EURELECTRIC task force on electric
fuels and technologies. The EURELECTRIC Role of Electricity project shows how the
vehicles is liaising with power companies and car manufacturers to ensure a widely
triple challenge of ensuring secure supply while reducing greenhouse gas (GHG)
accepted standard for re-charging infrastructure.
emissions and promoting economic competitiveness can be met through a broad
Europe’s electricity companies are working with customers, legislators and regu-
mix deploying all zero- or low-carbon technology options - carbon capture and stor-
lators towards a competitive, secure and low-carbon energy supply. But policymak-
age (CCS) and a continuing role for nuclear power alongside renewable energies
ers must set the right framework. Decisions regarding the ETS, RES-deployment,
(RES) – plus energy-efficient electro-technologies in key sectors.
CCS-financing, new nuclear and coal power plants, infrastructure authorisation and
The recently-finalised package of energy-climate legislation, with its targets to
regional market integration will be crucial. Informing the public on energy issues and
reduce GHG emissions and its provisions on RES and CCS, will provide some clarity
incentivising consumers to choose energy-efficient and low-carbon options is also a
for companies to invest in low-carbon power technology. However some important
vital government task. Leadership and cooperation are both needed, and we must
details have been left to later decisions and it remains to be seen how the various
all work together to get it right.
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How do we make no difference?
New technologies help make the entire energy business more
environmentally compatible than ever before.
The need for environmentally compatible technology, especially in the field of energy, has never been greater. But the
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conversion system, for example, helps ensure for a more constant power output from wind turbines. And our trendsetting
CHP (combined heat and power) technology has made efficiency rates up to 95 percent a reality.
www.siemens.com/energy
___________________
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americas
AMERICAS
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Argentina
AMERICAS
Despite recent economic growth and increasing demand for energy,
Argentina’s economic crisis of 2001 is still undermining confidence in the
country, which continues to struggle to attract investment.
Argentina is the second largest country in Latin
The Argentine energy sector is
America by landmass, and it has the third largest
among the most open in Latin America
economy. The country is divided into 23 provinces
to private investment, and it has the third
and an autonomous city, Buenos Aires, which is
largest reserves of natural gas on the
also its national capital. Vast indigenous resources
continent, behind Bolivia and Venezuela.
and a diverse industrial sector support the
The country is rich in indigenous natural
Argentine economy, but these resources are not
resources,
always exploited efficiently.
American Energy’s discovery in 2008
as
highlighted
by
After a crisis in 2001, Argentina’s economy
of 100 million barrels of oil-equivalent
reserves located in the southern part of
on the macro-economic surface. However, economic
the country. Argentina is also the third
indicators have been deteriorating recently to a point
largest oil producer in Latin America
where inflation, for example, has reached 25 per
after Venezuela and Brazil.
sluggishness.
In this economic climate, President Cristina
Although Chevron and Petrobras are
active in oil production and Total
2.50%
19.70%
is
77.80%
markets are dominated by Repsol-YPF. Formerly state-
by giving mixed signals to the international community,
owned, Repsol-YPF was privatized in 1991 to raise funds
most of whom still do not trust Argentina’s ability
for the government as the economic crisis gripped the
to meet its debts on time. In September 2008, the
country. Public opposition to the privatization centred on
president promised to repay $6.7 billion to the Paris
the company’s status as a national symbol and because
Club creditors, who have been waiting for such a
some claimed the whole process lacked transparency. As
response since Argentina defaulted on payments in
the economy began to recover, the government created
2001. This was a crucial first step towards rebuilding
a new state-owned oil and gas company, Enarsa,
confidence and attracting new foreign investment,
which was supposed to reassert control over some of
but soon after the president nationalized the private
Argentina’s natural resources. But, in practice, it has
pension system. The international community quickly
done little more than initiate some exploration projects
concluded that Argentina was again short of cash to
with other market participants.
vanished once more.
Energy Overview
Oil
Natural gas
Coal
involved in the natural gas field, both
Fernandez de Kirchner has exacerbated the situation
meet its obligations, and confidence in the economy
Source: Secretary of Energy
Pan
appeared to be performing reasonably well, at least
cent, while the economy has shown worrying signs of
Hydrocarbon market share, 2007
Electricity Market
The past six years have been a challenging period for
the electricity sector in Argentina. Economic growth
Argentina has been avoiding an energy crisis for
after the 2001 collapse resumed at levels higher than
several years, but some analysts seem to believe it will
8 per cent per year and energy demand followed, with
happen sooner rather than later. The country’s energy
growth at around 5.5 per cent. But higher demand and
problems began in the 2001 economic meltdown,
economic growth failed to encourage new investment
which forced the government to freeze energy tariffs.
in the sector, so supply increases were limited and
Since then, investment in the energy sector has been
the government was forced to implement measures
nonexistent. On top of this, Bolivia, the largest holder
geared towards energy conservation and efficiency.
of natural gas in Latin America, was also experiencing
Despite this, during 2007 the government approved a
a crisis of confidence, after the government took
project to construct two new combined cycle natural
control of the hydrocarbon industry. Investment in
gas fired power plants in a co-operative effort with
Bolivia’s hydrocarbon industry fell considerably, which
the private sector. Both power plants have a capacity
affected its ability to meet growing demand for natural
of 800 MW.
gas supplies to Argentina, which in turn reduced its
By the end of 2007, total installed capacity in
natural gas exports to Chile. Since 2008, the Argentine
Argentina was 26 GW. This was a 1 per cent increase
government has been negotiating with its main energy
compared with 2006, a year in which total installed
trading partners, Brazil and Bolivia, to secure natural
capacity decreased by 2 per cent. Thermo plants are
gas supplies.
the country’s largest source of power, providing more
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than half its total capacity at 13.7 GW, followed by
of total installed capacity or 25 072
hydroelectricity with 11.2 GW and nuclear with around
MW in 2007, and MEMSP, which
1 GW. None of these sources have suffered significant
had 818 MW of installed capacity
variations in their installed capacity since 2001. The
in 2007.
Total electrical capacity growth
7000
under
administration of Cammesa, which
5000
4 per cent compared with the previous year, reaching
reports to the ministry of energy
108 467 GWh. Hydrogenation reversed an upward
but is owned by the companies
trend in its market share by decreasing 12 per
connected to the power grid.
Infrastructure Investment
cent compared with a year earlier.
Investment in the energy sector
1000
Economic growth has increased
generated during 2007. Despite that, its mid-year
energy demand in the past few
share was only 50 per cent. Natural gas remained the
years, while investment in the sector
dominant fuel powering thermo plants, accounting for
has stalled.
78 per cent of total fuel used to power electricity power
The
Total electricity generation
cent of total fuels used to power thermo plants.
from Spain and Iecsa from Argentina.
Other fuel sources, such as coal and oil, increased
The two plants are scheduled to
their share, due to increased demand for natural gas in
begin commercial operations in two
residential areas, as a result of a cold winter, reducing
years and require investment of $880
the gas available for power generation in industrial
million. Construction will begin in
markets.
April 2009. Both plants will add a
months during the first half of the year.
Electricity imports increased by 208 per cent
60000
50000
40000
30000
20000
10000
combined capacity of 840 MW to the
Argentine electricity system.
0
construction is
scheduled to begin on a 478 MW
hydroelectric power plant, Chihuido
compared with the previous year, going from 1125
I, on the Neuquén river. The investment required
GWh to 3458 GWh. At the same time, electricity
for the project is estimated at $1 billion. A second
exports decreased by 73 per cent, shrinking from 2671
hydroelectric power plant, Chihuido II, may also be
GWh in 2006 to 712 GWh in 2007.
built in the future.
Inflation affecting the economy also had an impact
Local
authorities
in
Mendoza
are
calling
on the electricity sector. Prices in real terms increased
for companies to bid for the construction of two
by 11 per cent during 2007, while nominally the
hydroelectric power plants, Blanco and Blanco II, with
increase was 18 per cent.
a total installed capacity of 324 MW and 117 MW
Argentine economic growth of 8.7 per cent meant
energy demand increased by 6.6 per cent in 2007.
2005
by two private companies: Isolux
2004
new thermo plants that will be built
was reduced from 2006, when it accounted for 83 per
2003
approved the construction of two
9 per cent year-on-year, its overall share in the market
2002
plants in 2007. Although natural gas use increased by
During 2009,
Source: INDEC
recently
MW
government
2005
per cent, accounting for 64 per cent of all the energy
0
2004
is urgently needed in Argentina.
2003
Meanwhile, thermo generation increased by 14
shut the station down for almost two and a half
3000
2000
hydropower increased its share of the market by 13 per
Nuclear energy production decreased, due to
4000
2002
come
2001
markets
MW
6000
Electricity generated during 2007 increased by
scheduled maintenance of Central Embalse, which
Source: INDEC
8000
Both the MEM and MEMSP
the
cent during the year compared with 2006. In 2005,
F
2001
when it reached almost 14 GW in 2005.
B
Argentina
AMERICAS
only significant peak growth was in thermo generation,
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respectively.
Consumption stood at 99 074 GWh and was met by
Future Trends
supply at 107 190 GWh.
Investment in the energy sector will not happen
The electricity sector was privatized in the 1990s
without the collaboration of the international private
and reorganized in the three main business areas:
sector. But economic and political conditions have been
generation, transmission and distribution. Each private
a consistent obstacle to attracting private companies
company is permitted to operate in no more than one
and financing. However, Argentina has shown that it
of these areas. Although there are several government
is prepared to use fiscal incentives to attract players to
institutions in charge of supervising the sector, it is the
its energy sector to at least sustain the energy needs
energy agency, Enre, that acts as the regulator.
of the country.
There are two major markets where energy is
Energy interconnection with Mercosur, and
traded in Argentina, based on a free-market model:
especially with Brazil, is a top priority for the current
MEM, the largest in the country with over 90 per cent
government.
14
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from our product and service competencies.
++('*%#!&*+(+%'#.) /'*%#*#-)*3,&+*# '*$+"#!/..,2!+)
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Brazil
AMERICAS
Brazil has turned to hydrocarbons to fill potential shortfalls in generation, after
poor rainfall provoked an energy crisis in 2001 and exposed the dangers of
relying on hydropower for the majority of the country’s power needs.
reserves in Latin America behind
to manufacturing and financial services.
Venezuela.
Most
importantly,
As with all its regional counterparts, Brazil is
Brazil discovered a large offshore
manoeuvring to reduce the impact of the international
oil field in 2007 that could turn
economic crisis on its interests. The effects have already
the country from a net oil importer
been felt on its international trade balance, currency,
to a net exporter. Oil reserves
stocks and overall economy, although inflation is no
were estimated to be 12.2 billion
longer an issue, for once.
barrels at the beginning of 2008.
Petrobras,
a
1500000
1000000
500000
0
state-owned
long-term effects on its economy. With the USA being
company, dominates the oil and
hit hard and its government in transition, Brazil has a
natural gas sectors in Brazil. Although both markets
unique opportunity to take advantage of international
are open to foreign investment, few companies can
turmoil to become a leading force in the region. With
compete with Petrobras, which controls over 90 per
the steep decline in the price of oil, the Venezuelan
cent of these markets.
president, Hugo Chavez, stands to see his influence
Brazil is also developing the ethanol industry, using
inside and outside his country decline, leaving no
sugarcane as its feedstock, to increase its energy
strong rival to Brazilian regional hegemony.
matrix. Brazil is the second largest ethanol producer in
the world, behind the USA.
Brazil is an energy hungry country, and forecasts
Electricity Market
predict that this trend will continue to increase as its
Total installed capacity in Brazil increased by 4.1 GW
industries expand and more regions of the country
in 2007, according to the national electricity regulator,
are electrified. Recent economic prosperity has fuelled
Aneel. This includes 2.9 GW from new hydroelectric
energy consumption during the past decade, turning
power plants, 0.4 GW from thermo plants, 0.3 GW
Brazil into the third largest energy consumer on the
from small hydroelectric facilities and 0.1 GW of wind
American continents, behind the USA and Canada.
power. Total installed domestic capacity was 101 GW,
while electricity imports added another 8 GW.
483
estimated at 348 billion m3.
accounts for 77.4 per cent of
TWh.
35000
Hydroelectricity
Brazil could be self-sufficient with its estimated
total electricity generated during
natural gas reserves if it was capable of developing
2007, an increase of 7.2 per
the transport infrastructure to transport natural gas
cent, according to the latest
to major industrial areas. Recent pricing conflicts
figures released by the Brazilian
with the Bolivian government have encouraged Brazil
government.
to reconsider its natural gas strategy, perhaps by
However, the largest rise in
importing natural gas from Argentina instead in the
2007 was in biomass generation,
short term.
which increased
its share of
A strong rainy season is also helping Brazil to
total production by 21 per cent
reduce its reliance on natural gas imports. Its hydro-
to 3.7 per cent at the end of
electricity plants are now becoming a dominant source
2007, becoming the second
30000
25000
20000
15000
10000
5000
0
16
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2007
with the previous year to reach
America, despite having domestic reserves of its own
Source: Ministério de Minas e Energia, Ben 2008
2006
gas from Bolivia, the largest natural gas holder in Latin
Coal reserves
2005
5 per cent in 2007 compared
2004
Electricity supply increased by
infrastructure. This means it currently imports natural
2003
of them are currently unexploited, due to a lack of
Thousand tonnes
Although Brazil has many natural resources, a lot
2002
Energy Overview
2001
Brazil is concerned with the uncertainty over the
2000000
2007
Brazil holds the second largest oil
Oil (thousands of m3)
Natural gas (millions of m3)
2006
The Brazilian economy is very diverse, with activities
ranging from labour-intensive ones such as agriculture
2500000
2005
prices. Estimates suggest that
2004
priority to avoid high international
capital, Brasilia, is located.
2003
recently made oil production a top
states and a federal district where the nations
Source: Ministério de Minas e Energia, Ben 2008
2002
product (GDP). The country is a federation of 26
Hydrocarbon reserves
2001
The Brazilian government has
2000
of electricity generation.
all measures: land, population and gross domestic
2000
Brazil is the largest country in Latin America by
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PennWell Global Power Review 2009
Installed capacity by source
2007
Source: Ministério de Minas e Energia, Ben 2008
247
21324
largest energy provider by source.
justifiably proud of its hydroelectricity infrastructure,
Meanwhile, coal, nuclear and
since it provides cheap electricity to its citizens without
natural gas power generation
depending on fuel imports. However, after poor
decreased their share of electricity
rainfall sparked an energy crisis in 2001, thermal
production in 2007 by 6 per cent,
projects became a preferred option to compensate for
10.1 per cent and 15.2 per cent
Brazil’s over-dependence on hydro resources. As soon
respectively.
as the rain resumed and dammed reservoirs refilled,
Although
nuclear
energy
decreased in its share of total
76821
Thermo
Hydro
Nuclear
Wind
hydroelectricity once again became the country’s most
important source of power.
electricity production in 2007, it
In 2008, Aneel approved five new hydroelectric
could increase its share of the
power plants totalling 793 MW of installed capacity.
production matrix significantly in
These are currently waiting to receive environmental
the future.
impact approval. Aneel is also examining 26 possible
Brazil has two nuclear facilities
new hydroelectric projects with a total of 5382 MW
run by Electronuclear, a subsidiary
of installed capacity. An additional 47 projects, with a
of Eletrobras, with a combined
combined installed capacity of 7011 MW, have already
total installed capacity of 1980 MW. A third unit
started viability studies, which should be submitted to
has been under construction for years, but in 2007,
Aneel during 2009.
Electronuclear finally received permission to complete
Some local industry associations are demanding an
it. This will add 1350 MW of additional nuclear
increase in the use of coal for electricity generation.
capacity to the Brazilian national grid. A fourth unit is
There are three coal plants being built in Brazil that,
also planned by Electronuclear.
once finished, will have a combined installed capacity
Although Brazilian wind generation is still in its
of 1400 MW, doubling current coal capacity. There
infancy, its production capacity more than doubled,
are 14 other coal power plants being studied with a
from 236 GWh in 2006 to 559 GWh, in 2007.
combined installed capacity of 6959 MW.
There are large coal reserves and coal-powered
Brazil is also studying the number of plants that
plants in the south of Brazil. The plants have a total
need upgrading or refurbishment and those that need
installed capacity of 1415 MW.
to be decommissioned.
Industry used the most energy of any sector in
In terms of renewables, Proinfa, the government
2007, consuming 46.7 per cent of the total used.
programme to foster non-conventional renewable
The commercial sector is second, with 22.4 per cent,
sources, is also following an expansion plan. For 2009,
followed by residential users, who consumed 22.1 per
1208 MW of new installed capacity is scheduled to
cent of the total.
start operations, 771 MW of which will come from
The Brazilian electricity market is open to private
wind energy, while 427 MW will be provided by small
investment, although it is largely dominated by the
hydro plants and 10 MW from biomass. Proinfa is
public sector. Eletrobras, controlled by the federal
predicted to reach is target of having 3000 MW of
government, is the largest industry player, with a
non-conventional renewable sources in the country
40 per cent market share of generation capacity.
by 2010.
Meanwhile, the largest private company in terms of
generation capacity is Tractebel Energia, controlled by
Future Trends
GDF Suez, with 7 per cent of market share.
Brazil will continue to depend on hydroelectric
Several public bodies contribute to the electricity
resources and new fuel sources, such as ethanol from
market functions. The highest authority in the
sugar cane. Other renewable sources are also on the
country is the Ministry of Energy and Mines. Under
agenda, along with an increase in coal use and nuclear
the umbrella of the ministry, Aneel is the electricity
power generation.
regulator, ensuring that generation, transmission and
Natural gas is losing favour in Brazil, which remains
distribution comply with current laws and regulations.
sceptical about the chances of a satisfactory political
Under Aneel’s supervision, the operator of the national
agreement with its main source of gas, Bolivia,
electricity system (ONS) co-ordinates generation and
especially when it expects a year of favourable rainfall
transmission.
to power its hydro plants.
Infrastructure Investment
a programme of rural electrification, begun in 2004.
Hydroelectricity has traditionally dominated the Brazilian
The programme, a joint effort from the Ministry of
electricity market, although much of its potential has
Mines and Energy and Eletrobras, has already installed
yet to be exploited. The Brazilian government is
electricity in 1211 homes in four different states.
The Brazilian government has also been expanding
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Canada
AMERICAS
The global economic crisis could upset Canada’s well-laid plans to safeguard
its valuable energy export business by leading the way in environmentally
sound power generation and further investing in renewable energy.
Canada is the second largest country by
of natural gas, fuelling
geographical area in the world. The only land
quarter of all its energy
border it shares is to the south, with its main
consumption, the country
trading partner, the USA. Canada is a federation
also provides the US with
divided into ten provinces and three territories.
17 per cent of its natural
It is a democracy with a constitutional monarchy,
gas imports. Exports from
where both French and English are official
Canada to the US were
languages. The economy has been strong for
estimated to be running at
more than a decade, and the country’s standard
294.5 million m3 per day
of living is considered among the highest in
in 2007.
Natural gas
Hydro
Nuclear
Coal
coal
to expand and the fiscal deficit to grow. As in many
lion short tonnes. Coal plays
other countries, the impact of the crisis is still being
an important role in the
debated. Analysts do not yet agree on the extent to
energy sector, especially
which the country will be damaged.
in electricity generation.
Renewable
Total: 5100
What seems clear is that its fate is closely tied to
Although coal’s contribution is expected to decrease
the fate of its main trading partner, the USA, where
over time, it will still play an important role for years
the short-term prospects are anything but promising.
to come.
The Canadian government can be expected to emulate
Despite its high use of hydrocarbon fuels, Canada is
the US by easing taxes on corporations and consumers.
striving to develop more renewable sources of energy,
However, many analysts consider these measures to be
such as hydro electricity and wind power.
insufficient to stimulate the economy.
Energy Overview
The Canadian electricity sector has one main objective:
the environment. The government is pursuing clean
surplus dedicated to supplying the USA with oil,
energy programmes to reduce greenhouse gas
natural gas and electricity. Because of the energy ties
emissions, but it also wants to make sure that energy
between the Canada and the USA, both countries
is provided in an efficient manner. In 2007, the
are members of the North American Energy Working
government announced the investment of C$230
Group, which is responsible for ensuring that energy
million ($179 million) for research and development
trade between the two countries runs as smoothly as
into new technologies, such as clean-coal and carbon
possible.
sequestration, and also for measures to reduce the
Canadian oil reserves are the second largest in the
environmental impact of oil sand extraction. The
world after Saudi Arabia. However, they are located in
electricity sector is specifically promoting the use of
oil sands in Alberta, and the oil is consequently more
cleaner ways of producing electricity, with a strong
expensive to extract.
emphasis on wind power.
Even so, Canada’s oil production is the third highest
Total installed capacity in the country was 124 GW
in the American continent after the USA and Mexico.
at the end of 2007, according to the latest figures
The country is heavily reliant on oil, but it is still able to
provided by Canada’s National Energy Board (NEB).
supply around 18 per cent of US oil imports. Although
During 2007, new capacity came from new natural
several pipelines already connect the two countries,
gas-fired power plants and wind farms.
to the US to increase.
TWh
Electricity Market
Canada is a net energy producer, with its energy
further ones are planned to allow Canadian oil exports
2500
estimated to be 7251 mil-
2000
reserves are also extensive,
1500
Canada expects a rough 2009 in economic terms.
The economy is projected to contract, unemployment
1000
country’s
5000
The
Source: National Energy Board
Petroleum
0
the world.
Domestic energy production by
a energy source (TWh)
Wind generation increased in capacity to reach
2246 MW during 2008. There is currently enough
The latest Canadian government projections
wind power to supply electricity to 671 000 homes,
indicate that the country has 1.64 trillion m3 of natural
according to the Canadian Wind Energy Association.
gas reserves, with the Alberta region being one of the
By province, Ontario provides the highest amount of
largest sources. Even though Canada is a heavy consumer
wind energy in the country with an installed capacity
18
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Canada
AMERICAS
Crude oil and equivalent production by province
Source: National Energy Board
Alberta
Northwest territories
Nova Scotia
Manitoba
Newfoundland
Infrastructure Investment
Quebec with 531 MW,
The Canadian government’s main agenda is the
Alberta with 524 MW,
provision of assured electricity supplies at reasonable
Saskatchewan with 171
prices, while being friendly to the environment.
MW, Manitoba with 103
This is evident in energy conservation and efficiency
MW, Prince Edward Island
initiatives implemented by the provinces over the past
with 72 MW, and Nova
few years, which have had a positive impact on future
Scotia with 61 MW. The
energy trends.
Canadian
Ontario
British Columbia
0
10 20 30 40 50 60 70 80
%
Source: National Enegery Board (NEB)
19%
38%
18%
Conventional
Synthetic crude oil
Heavy crude oil
Bitumen
25%
Wind
Energy
Investment in new large hydroelectric plants is
all
accelerating. Construction of a C$5 billion ($3.9
provinces to have at least
billion) 900 MW hydroelectric project in Quebec began
one wind farm by the end
in January 2007 and is due for completion in 2009. A
of 2009.
new 200 MW hydroelectric power plant in Manitoba is
Association
Saskatchewan
Electricity production by type (TWh)
of 781 MW, followed by
expects
Hydroelectricity domi-
due to be completed by 2012.
nates Canadian electricity
Despite reduced production in 2007, Canada will
generation. Production dur-
see new nuclear power plants come online in the
ing 2007 was able to meet
next few years. Energy Alberta is planning to finalize
demand,
though
a 2200 MW nuclear facility by 2017, and Bruce Power
there were unexpected
is also preparing to construct a 4000 MW nuclear
extreme weather events
plant. Other provinces are also evaluating their nuclear
and some outages. Total
programmes, which could see the expansion of existing
potential capacity reached
power plants or the construction of new ones.
even
599.7 TWh, the highest
Renewable sources of electricity, especially wind
in the past five years.
power, are still on course to play a key role in Canada’s
Hydroelectricity was able
electricity matrix. Several projects are due to start
to increase its share of
commercial operations in the near future. In the
production, due to favour-
Gaspé region, eight wind farms with a total capacity
able weather conditions,
of 990 MW are scheduled to enter operation by
and its total production
2012. Two are already functioning, the most recent
for 2007 was 361.8 Twh,
of which, L’Anse-à-Valleau facility, became operational
10.7 TWh higher than the
in November 2007 with a total installed capacity of
previous year.
Nuclear energy experienced an unexpected increase
in its energy production share in 2006, but returned to
2005 levels in 2007, with 87.9 TWh produced.
100.5 MW. Hydro-Quebec also received 66 bids from
30 different companies in 2005 for the construction of
wind farms generating 7724 MW.
Canada could become a dominant force in wind
This loss was compensated for by an increase in
energy in the future if all its development plans are
thermo generation of 8.5 TWh in 2007 compared with
completed by 2020 as scheduled. By the end of 2008,
the previous year to take total thermo production to
Canada was the 12th country in the world to have
150.1 TWh.
installed 2000 MW of wind power capacity.
While Canada is committed to environmentalism,
it is still pursuing coal power, especially using cleaner
Future Trends
technologies that reduce pollution. Despite this,
Canada has enough energy supplies to satisfy demand
SaskPower has scrapped plans to construct a 300 MW
in the short term, but energy prices are uncertain,
coal-fired plant, which the company will replace with
according to the NEB. Price volatility has remained
conventional natural gas plants and wind energy.
outside Canadian control and continues to fluctuate in
The over-supply of generation allows Canada to
the world economic crisis.
be a net electricity exporter. All of which goes to
The country faces two key events in future: the west
its southern neighbour, the USA. In 2007, exports
of Canada will have a tighter generation mix, due to
increased by 40.8 per cent, or 50.1 TWh. Export
an increase in demand over the past few years, while
revenues increase 28 per cent, while both imports of
production in the east will reduce as a consequence to
electricity and the revenue paid for them shrank in
the economic slowdown.
2007 compared with a year earlier.
In the coming years, wind energy will keep growing
Canada needs to improve its transmission lines,
as Canada prepares to become a leading force behind
and a new upgrade plan was prepared in 2007.
renewable energy sources. But there has been renewed
However, the plan faces delays as it comes under
interest in nuclear energy, and new facilities are on
public scrutiny.
the agenda.
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Chile
AMERICAS
Chile is trying to reshape its energy structure after years of problems caused
by Argentinean natural gas export restrictions. The country’s ability to
promote new investment in the energy sector is helping with the transition.
– and glaciers in the southern areas. Although
the state oil company, may have
it is not the most powerful country in Latin
suffered losses of $500 million in
America, its still provides the best quality of life
2008 from buying oil derivatives to
for its population, which produces the highest
replace natural gas. Higher prices
gross domestic product (GDP) per capita in
for oil in the first half of 2008
the region.
exacerbated Enap’s financial troubles.
2000000
1000000
0
In recent times, its main economic issue has been
The Chilean government knows it can no longer
to sustain energy demand and supply in equilibrium, a
rely on its neighbours for fuel supplies, and it seeks
difficult task considering Chile has scarce indigenous
to diversify its energy generation by exploiting its
natural resources.
domestic hydropower resources and, potentially, by
Although Chile is the most stable and prosperous
introducing nuclear plants. Renewable sources of
economy in the Latin America region, it has not
energy, completely ignored in past debates about
been immune to the international financial crisis. In
the future of Chile’s energy sector, are now centre
November 2008, the economy only grew 0.1 per cent,
stage, with large projects being studied along with the
according to figures released by the government.
leading countries in the field, such as Germany, Spain
Chile’s Central Bank forecasts growth of between
or Canada.
2 per cent and 3 per cent in 2009, while in 2008 the
Although Chile is trying to avoid relying on Argentine
economy grew by 5.1 per cent. Unemployment is also
natural gas imports, it is seeking new suppliers from
forecasted to increase in the coming months. Despite
around the world, following the construction of
the decrease in business loans and the contraction
regasification terminals for liquefied natural gas (LNG).
in copper exports, one of Chile’s primary economic
A new LNG plant is scheduled to begin operations in
engines, the country could sustain growth and avoid
the second half of 2009, supplying 10 million m3 per
entering an economic recession, but this will not be
day of natural gas. This will considerably reduce Chile’s
easy if economic metrics worsen in the near future.
exposure to the vagaries of Argentine gas supply.
The financial crisis is also providing
and Chile’s currency lost value, as the international
respite for the energy sector, with
community predicted that Latin American commodities
the government predicting that
in general would suffer from a demand shortage due
energy demand will contract for the
to the global economic crisis.
first time in 26 years in 2009.
Energy Overview
Electricity Market
Chile depends on foreign imports to meet its energy
Chile’s electricity market was privatized
demands, because it lacks indigenous natural
in the 1980s. Today generation,
resources. Natural gas consumption increased in 1996,
transmission and distribution are
due to the construction of several new thermoelectric
in the hands of the private sector.
power plants, and for a while the construction of
The market operates under the
several pipelines between Chile and Argentina helped
supervision of the National Energy
sustain Chile’s demand for natural gas. However,
Commission (CNE) and the Ministry
supply became restricted in 2004, when Argentina
of the Economy and Energy (MEE).
Projected coal consumption by existing electricity generators
Source: CNE
5000000
4000000
Short tonnes
Industrial activity fell during the last quarter of 2008,
2015
as diesel storage facilities. Enap,
3000000
2000000
1000000
0
20
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2015
to accommodate these fuels, such
middle – where most of the population resides
2014
with deserts in the north, mild weather in the
3000000
2014
due to the cost of infrastructure
2013
This has led to financial losses,
length is responsible for its variety of climates,
2013
stretches for more than 6435 km. The country’s
4000000
2012
alternative fuels, such as diesel.
2012
the natural gas shortage by using
entire western border, with a coastline that
2011
southernmost tip. The Pacific forms the country’s
Source: CNE
5000000
2011
Chile has been compensating for
2010
increased.
the east and the Drake Passage at the country’s
2010
north, Bolivia to the north-east, Argentina to
Projected coal consumption by existing electricity generators
2009
Since then restrictions have only
2009
started reducing its exports to Chile.
territory: long and narrow. It borders Peru to the
Short tonnes
Chile is mostly recognized for the shape of its
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PennWell Global Power Review 2009
Monthly gas consumption, 2008
300000
Thousand cubic meters
Chile is divided in four electricity
shortage of natural gas. Coal is now the largest
systems, the largest of which is the
contributor to energy production, with 38 per cent
central grid (SIC) with 9.1 GW of
of the total. A year earlier, its contribution was even
total installed capacity, serving mostly
higher at 43 per cent.
Source: CNE
residential costumers. The Norte Grande
The SIG market is dominated by six companies,
system (SING) provides 3.6 GW, mostly
which produce all the energy in the system. The largest
200000
to industries, while the remaining
generator, Electroandina, accounts for 30 per cent of
150000
Magallanes and Aysen systems provide
the energy produced, followed by Gasatacama with
80 MW and 48 MW respectively. Total
26 per cent, Edelnor with 19 per cent, Norgener with
installed capacity in the country was
14 per cent, AES Gener with 8 per cent and Celta with
14.9 GW at the end of 2007.
3 per cent, although this can vary on a monthly basis.
250000
100000
50000
Electricity
Aug
July
June
May
Apr
Mar
Feb
Jan
0
generation
in
2008
decreased by 0.31 per cent, or 41 845
Infrastructure Investment
GWh, compared with 2007, according
The restriction on imports of natural gas from Argentina
to industry sources. The government
is having a profound impact on the Chilean electricity
had not released its official figures when
sector, which in turn affects the short-term additions
Global Power Review went to press.
are scheduled to start commercial operation and none
2007 to November 2008 in the SIC system was
of these is scheduled to burn natural gas. Instead, 13
23 433 GWh, a 3 per cent increased compared with the
will use diesel and one coal, two will be hydroelectric
previous 12 months. Thermo electricity on this system
power plants and three wind farms. These projects will
dropped by 4.3 per cent year-on-year to 18 359 GWh
add a total of 1426 MW of capacity to the Chilean
from 19 177 GWh a year earlier. As in 2007, diesel
electricity matrix.
remained the largest source for electricity generation,
Coal-powered plants will increase their market
with 52 per cent of total production compared with 43
share in the near future. Between 2010 and 2011,four
per cent between 2006 and 2007. Diesel generation
new coal power plants will start operations in the
stood at 9476 GWh in the SIC.
SING. These plants will add a combined installed
Meanwhile, natural gas went from producing
Chile is also promoting renewable energy sources,
months ending in November 2007 to producing only
and several wind projects are being studied. One of
7 per cent during the same period a year later. Natural
these will be connected to the SING system and will
gas production went from 3494 GWh to 1224 GWh.
ease its dependence on thermo electricity derived from
Coal production’s contribution to the SIC did not
fuel. A wind farm is projected to have a total installed
change significantly during that period. Production
capacity of 140 MW. It will require an investment of
stood at 6291 GWh for the 12 months ending in
$316 million.
Electricity production in the SIC system increased by
Chile is pursuing electricity generation diversification to
to November 2008, rising from
not only exploit its few indigenous resources, but also
12 751 GWh to 13 193 GWh.
to guarantee supplies of fuels, such as liquefied natural
Source: CNE
SING
SIC
Aysen
Magallanes
50000
40000
30000
20000
10000
Total: 60138
0
Future Trends
3.5 per cent in the 12 months from December 2007
Electricity generation by system, 2007
GWh
capacity of 765 MW to the national system.
18 per cent of the total power generated in the 12
November 2008.
Self producers
to the generation matrix. During 2009, 19 projects
Total hydroelectricity generation from December
The SIC system is dominated
gas, coal or diesel, from multiple international suppliers.
by five private generators that
In future, if nuclear power is finally used in the country,
account for 92 per cent of total
then this list will also include uranium.
energy produced. Endesa was the
The country’s most abundant natural indigenous
largest producer, accounting for
resource is hydropower potential. Although there
37 per cent of total electricity
is great scope for exploiting this source of energy
produced. Then came Colbun with
in Chile, development faces tight opposition from
24 per cent, Gener with 16 per
environmentalists. The HidroAysen project, if built, will
cent, Pehuenche with 9 per cent
add a projected 2750 MW of hydroelectric capacity
and Guacolda with 6 per cent.
to the SIC system, becoming the largest hydroelectric
Other smaller generators produce
complex ever built in the country. The project would
the remaining 8 per cent.
produce 18 430 GWh a year, equalling the capacity of
The SING system is dominated
all current hydro power plants in the SIC. However, it
entirely by thermo generation and
will have to overcome the strong opposition from local
has been the most hurt by the
and international environmentalists first.
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Peru
AMERICAS
Peru is blessed with one of the largest natural gas reservoirs in Latin America.
While the country is still adapting to the impact of its discovery, the country
has become one of the fastest growing economies in Latin America.
Peru is located in the Andean Region, bordering
country. Part of Petroperu, a state-
Ecuador, Bolivia, Chile, Brazil and Colombia. It has
owned oil company, was privatized in
a long coastline in the Pacific Ocean. The country
1993, when the hydrocarbon market
is divided into 25 regions, and it has a variety of
opened to private participation. The
climates in its territory. Peru has a population of
largest oil producer in the country
28 million people, most of whom live in Lima, the
is currently the Argentinean oil
country’s capital.
company
Pluspetrol,
Petroperu remains an important
republic with a multi-party system. Under the current
market player. Other market players
constitution, the president is the head of state and
include Petrobras Energía Peru and
government. He or she is elected for five years
Petro-Tech Peruana.
and cannot seek immediate re-election, but must
Proven natural gas reserves
stand down for at least one full constitutional term
are estimated at 334.1 billion m3,
before re-election. The president designates the prime
according to statistics provided by
minister and, with his advice, the rest of the Council
Perupetro. Peru has become the
of Ministers. There is a unicameral Congress with 120
fifth-largest country with proven
members elected for a five-year term.
natural
reserves
1.53%
in
73.03%
GMP
Sapet
Petrobras
Olympic
Petro Tech
Aguaytia
Pluspetrol
Latin
America. Natural gas production in the country has
performing extremely well, and it was expected to
been increasing considerably in the past five years.
keep growing strongly in the next few years. Before the
Production stood at 453 million m3 in 2003, while it
international financial crisis, its economy was forecasted
reached a peak of 2.6 billion m3 in 2007. This increase
to grow by 9 per cent during 2009. However, as the
is fostering a change in energy use in the country.
global economy worsens, the Peruvian government has
Natural gas production and consumption is expected to
said that growth could be negatively affected in 2009.
keep increasing in the coming years, as Peru prepares
At the end of 2008, the government downgraded
its infrastructure to become a net exporter, mostly to
its forecast to 7 per cent, while independent analysts
Mexico and the US, but also possibly to Chile.
A liquefied natural gas (LNG) terminal is being built
To revive the economy, the government announced
in the southern part of the country, which is expected
a stimulus package of $12.3 billion to be injected
to start exporting natural gas from 2010. Its production
into the economy. The hope is that the stimulus will
capacity it is estimated at 4.2 million tonnes per year.
be enough to sustain the forecasted growth. Despite
The LNG project requires an investment of $3.8 billion,
the announcement, doubts remain over whether the
the largest direct foreign investment in Peru. Several
government can effectively implement it. It is also
major global energy companies have a stake in the
uncertain whether Peru can keep growing when its
project, including Hunt Oil Company from the US (50
core industry, mining, is experiencing a steep reduction
per cent), SK Energy from Korea (20 per cent), Repsol
in its exports.
YPF from Spain (20 per cent) and Marubeni of Japan
Energy Overview
3.90%
0.47%
5.43%
14.83%
For the past few years, Peru’s economy has been
predicted 5 per cent growth.
0.79%
Source: Perupetro
although
Peru is a presidential representative democratic
gas
Natural gas production share by contractor, 2007
(10 per cent).
Peru has traditionally relied on oil for its energy
Electricity Market
production and consumption. However, the discovery
Peru’s total installed effective capacity reached 6.4 GW
and tapping of a large reserve of natural gas in
during 2008, according to the latest figures released by
Camisea, which began producing natural gas in
the Ministry of Mines and Energy. The national electricity
2004, and further exploration are changing its energy
matrix was evenly split between hydroelectric power and
consumption habits. Natural gas has been increasing
thermo plants at 3 GW each until 2007, when thermo
its share in Peru’s energy sources, and in the near
generation installed capacity surpassed hydroelectric by
future it will become a net exporter of natural gas.
an additional 400 MW. The only renewable source is 0.7
According to Perupetro, the country had 416 million
GW of wind generation capacity. Of the total capacity
barrels of proven oil reserves at the beginning of 2007,
in the country, 5.5 GW are available for the electricity
most of which are located in the northern part of the
market, while self-suppliers use the remaining 0.9 GW.
22
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PennWell Global Power Review 2009
Total electricity generation by source
Source: Ministry of Energy and Mines
Investment in the electricity market
has been growing constantly since recov-
Hydro
Wind
8000
7000
6000
5000
4000
3000
2000
1000
0
Total
MW
The largest distributor is Endesa’s subsidiary,
and 2003, although the rate is still below
Edelnor, which supplies Peru’s capital, Lima, and the
that of 1999. In 2008, $373.8 million was
surrounding area.
2003 the investment was $92 million, the
Infrastructure Investment
lowest in the past 13 years.
There are several new power plants under construction
Hydroelectricity still supplies the largest
or being considered by different market players. During
proportion of energy to the market,
2008, the Peruvian government awarded 13 new
although there is a reverting trend in
contracts for the construction of hydroelectric projects
favour of thermo generation. During 2008,
with an installed capacity of 1371 MW. In addition,
hydroelectric power plants produced 19
five new plants are scheduled to begin commercial
333 GWh (59 per cent) of the year’s 32
operations in 2009. The largest is the hydroelectric
626 GWh total output. Hydroelectricity
plant El Platanal, which will add 220 MW of new
production decreased its rate of growth by
capacity. A small 10 MW hydroelectric plant, Poechos
1 per cent in 2008 compared with 2007,
II, is also due to enter service.
while thermo increased its electricity production by 28
Thermo plants, however, will contribute the greatest
per cent year-on-year. Wind capacity did not produce
boost to capacity, taking advantage of the increased
electricity during the year.
natural gas production in the country. Three plants are
Overall electricity production has been increasing
schedule for 2009: TG2 Kallpa and TG3 Chilca, with
consistently in the past decade. Production increased
176 MW each, and Oquendo, with 50 MW. In total,
by 9 per cent from 2007, following a period of strong
632 MW of new capacity is due to enter the Peruvian
economic growth. Since 1995, electricity production
market in 2009.
has grown by 95 per cent.
a large hydroelectricity investment in Peru. It is exploring
GWh in 2008, growing 9 per cent compared with the
the potential for constructing five hydroelectric facilities
previous year and 113 per cent compared with 1995.
with a combined installed capacity of 4.95 GW, enough
The industrial sector has traditionally been the largest
to supply energy to 11.5 million homes.
electricity user. It increased its yearly consumption by
The Ministry of Mines and Energy is forecasting a
13 per cent in 2008 to reach 15 597 GWh. Second is
total investment in the electricity sector for 2009 of
residential consumption, which accounted for 6403
$643 million. The government does not expect that
GWh in 2008, a year-on-year increase of 8.9 per
figure to decrease, due to the international economic
cent. The services sector increased its consumption by
crisis. Total private investment in the country is
2.6 per cent to reach 4504 GWh in 2008. Per capita
estimated at $13.9 billion, although the executive said
electricity consumption stood at 1010 kWh in 2008,
it would still be happy if it only expected $10 billion.
Investment in transmission lines reached its highest
level in 1999. Investment has fallen sharply since then
Source: Ministry of Energy and Mines
20000
15000
km
10000
5000
2008
2007
2006
2005
2004
2003
2002
2001
0
2000
Brazilian state-controlled Eletrobras is also planning
Total electricity consumption stood at 28 967
while per capita production was 1138 kWh.
Transmission line growth
generation company is state-controlled, Electroperu.
ering from a steep decline between 2001
invested in the generation sector, while in
Thermo
private sector facilities. Despite this, the single largest
and has remained at a low rate of growth.
The Peruvian government is also planning to
increase its budget for rural electrification, one of its
top priorities.
During 2008, transmission lines received
Future Trends
$46 million in investment, down from $70
The Peruvian market has become one of the most
million the previous year and 171 million
attractive in Latin America. Its economy is growing
dollars in 1999. Interconexión Eléctrica ISA,
fast, its regulatory environment is fairly stable and it
from Colombia, is the largest transmission
welcomes private investment with open arms. Despite
provider in Peru among the seven private
this, Peru needs to increase its generation capabilities
companies with a stake on the country’s
to sustain economic growth and the associated energy
transmission grid.
demand.
The Peruvian electricity market was
Although Peru has an abundance of natural gas, the
privatized and opened to competition in
government seems to prefer to develop hydroelectric
1992 to promote new investment and
plants and renewable sources of energy, using natural
a more efficient electricity system. Since
gas to plug gaps in capacity and exporting the rest of
then, the private sector has taken over the
it. In this way, the government aims to protect Peru‘s
generation market, and around 80 per cent
energy security, while using exports of natural gas as a
of electricity generation comes from the
new revenue source.
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USA
AMERICAS
The US government is planning to embrace the latest technologies and
invest in renewable energy to help cure the country’s economic ills and
reverse its declining influence.
The USA is a federal republic comprising 50 states
in 2008, due to the fact
and one federal district, Washington DC, where
that its demand is more
its city capital is located. Its main trading partners
correlated
are China, Canada, Mexico, Japan and Germany. It
conditions in the country
400
is the largest importer of goods in the world and
than oil. The USA is the
350
the third-largest exporter. However, the services
largest consumer of natural
300
sector is the true engine of its economy.
gas in the world and the
250
200
0
get worse in 2009 before it show signs of improving.
expects a new turn of
Not without reason, the US economy has been at
events and is forecasting
the epicentre of the international financial turmoil.
a fall in coal production
The government is launching unprecedented anti-
of 2.9 per cent in 2009.
crisis packages to save financial institutions, car
The USA holds the worlds
manufacturers and consumers, while the Federal
largest coal reserves, used heavily in its electricity
Reserve has reduced the interest rate to almost zero
generation matrix.
to stimulate the economy. The long-term implications
Many analysts believe that the USA is losing its
of these measures are unclear, and it is impossible to
position as the world leader in energy trends because
predict whether they will have the expected effect. The
it is not embracing green energies as quickly as other
only certainty is that 2009 will be a year to remember
countries. Although President Obama hopes that the
for the current US generation.
economic crisis and concurrent changes in consumer
Energy Overview
The USA is the largest energy producer and consumer in
the western hemisphere. It accounts for large reserves
behaviour towards energy consumption will provide
enough incentives for a green revolution in the
country.
of oil, natural gas, coal, uranium and various sources
Electricity Market
of renewable energy. The USA produces energy from
Total installed capacity in the USA reached 998.8
all sources imaginable, although its economy is heavily
GW at the end of 2007, according to the Energy
dependant on oil and coal for generating electricity.
Information Administration (EIA). The installed capacity
The world financial crisis has put downward
increased year-on-year by 1.2 per cent, mostly from
pressure on oil prices and natural gas, despite the
wind power, which increased its
Projected generating capacity between 2007 and 2030
fact that the Organisation for Petroleum Exporting
total base by 7.5 GW during
Source: Energy Information Administration
Countries (OPEC) has tried to keep prices stable by
the year, according to figures
reducing production, a measure that has not yet
released by the American Wind
worked. Demand for oil has decreased considerably
Energy
in the USA as consumers alter their driving habits and
The total installed capacity in
favour energy efficient vehicles.
wind energy reached 24 GW at
Association
(AWEA).
The US government expects oil consumption to
the end of 2008. Wind energy
decrease in 2008 by 5.8 per cent compared with 2007,
is experiencing extraordinary
and domestic oil production is also estimated to fall by
growth, which is bringing benefits
130 000 barrels per day (bpd). The downward trend
to the economy. According
in US oil production was accelerated by Hurricane
to AWEA, during 2007, 50
Katrina, which reduced oil production in Gulf of
manufacturing facilities were
Mexico facilities.
open in the USA, generating
Natural gas consumption was expected to increase
Other
However, the government
Wind
50
the economy is “very sick”, and the situation can only
Solar
100
to higher export levels.
Geothermal
2.8 per cent in 2008, due
Newly elected president, Barack Obama, has stated that
by
Biomass
now being compared to the Great Depression of 1929.
increased
Coal
production
Hydro
150
economic crises it has ever faced during 2008, which is
Nuclear
coal
Other gases
Meanwhile,
Natural gas
second largest producer.
Petroleum
showing negative signs. It was hit by one of the worse
weather
GW
In the past two years, the US economy has been
to
Source: Energy Information Administration
Total capacity, 2007
57 GW
46 GW
3 GW
139 GW
Coal
Natural gas
Nuclear
Renewables
employment for 14 000 people.
24
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—
One Power Plant at a Time
!" #
!
!!
"! !
!
"
For clean, safe and economical power,
choose excellence. Choose Shaw.
_________________________
%&)$$'(
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USA
AMERICAS
However, the recent boom in wind energy could be
Infrastructure Investment
slowed down considerably in 2009 if the government
The USA is facing a tough economic environment that
does not offer tax incentives for renewable sources of
is damaging the energy sector, particularly in terms of
energy, according to AWEA.
the of financing new projects. The government expects
Solar energy also experienced significant growth
energy consumption to decline by 0.5 per cent in
in 2007, with total installed capacity rising by 25 per
2009, but growth is expected to recover in 2010 with
cent from 400 MW to 500 MW compared with 2006,
a 1.5 per cent increase, due to an overall improvement
according to EIA figures. The Solar Energy Industries
in the economic climate.
Association (SEIA) estimates that, with tax incentives,
President Obama has a clear green agenda for
the solar industry could create 440 000 jobs and attract
the energy sector, which could further propel the
$325 billion by 2016.
growth of generation capacity in nuclear, wind and
solar power.
generation from various fuels, with natural gas having
The future of coal power does not look very prom-
the highest installed capacity and coal producing
ising over the short term. Plans to build around 50
more electricity. Total thermo power capacity in all its
GW of new capacity between 2008 and 2016 were
forms (coal, natural gas, petroleum and other gases)
cancelled or post-
accounts for 77 per cent of total capacity with 769
poned
during
GW, while hydroelectricity accounts for 10 per cent of
2008.
Planned
total installed capacity with 100 GW.
investment
nologies
near future. Nuclear generation accounted for 19 per
them uncompeti-
cent of total electricity generated in 2007 with 806.5
tive. This decline
TWh, its highest historical yearly production.
in
makes
coal-powered
NG Non-associated,
Wet After Lease Separation
NG Non-associated,
Wet After Lease Separation
NG Associated-Dissolved,
Wet After Lease Separation
NG liquids
In 2007, natural gas power plants had a total
plants for the next
installed capacity of 395 GW, a moderate increase
eight years will be
compared with the 388 GW of 2006. Although no
compensated for
new natural gas plants have been built in the USA for
by the construction of natural gas power plants, which
the past three years, the electricity sector still increased
make up the largest proportion of new additions to the
its natural gas consumption by 6.5 per cent to reach
US electricity matrix.
652.8 million m3.
In 2009, wind capacity is expected to maintain
Coal use has remained relatively steady and capacity
its growth trend. Some 26 per cent of new capacity
has not increased in four years, while in 2003 it
is predicted to come from this source during 2009, a
decreased compared with the previous year. Total coal
level only surpassed by new natural gas capacity.
capacity at the end of 2007 was 330.6 GW compared
with 330 GW a year earlier. Coal consumption by the
Future Trends
electricity sector remained almost unchanged during
The EIA forecasts that electricity demand in the USA
that time. Coal consumption was 1128.8 million short
will increase by 25 per cent by 2030, requiring about
tons in 2007, while in 2006 consumption amounted to
260 GW of new capacity. The new government is
1112.3 million short tons.
clearly going to need an aggressive agenda to promote
As with coal and natural gas, the petroleum
clean technologies.
installed generation base also remained flat for 2007
Wind power is becoming a dominant source of energy,
compared with the previous year, with an installed
as illustrated by the 40 GW of new wind capacity that
capacity of 58.3 GW, which is only 0.2 GW higher than
will be built between 2008 and 2016. Solar power
in 2006. Petroleum consumption for power generation
has also been growing in the past couple of years,
increased by 1.7 per cent from 289 000 bpd in 2006 to
especially in states such as California, where the state’s
294 000 bpd in 2007.
solar initiative aims to have 3 GW of installed capacity
Residential consumption was the largest consumer
8000
cost of these tech-
prepares to build 17 new nuclear power plants in the
the
7000
in the country. But this will soon change as the USA
as
6000
fading,
5000
nologies is also
accounts for another 10 per cent of the total capacity
4000
with capacity rising by 1 per cent to 101 GW, which
Dry NG
3000
clean coal tech-
Source: Energy Information Administration
2000
in
There was mild growth in the nuclear sector,
Natural gas reserves, 2007
1000
However, the USA still heavily relies on thermo
by 2016 and has allocated $3.3 billion to this end.
of retail electricity in 2007 with 1392 TWh, an increase
Nuclear energy will also play an important role in
of 3 per cent over the previous year. Commercial con-
the future expansion of the electricity matrix, while
sumption increased by 1.1 per cent in 2007 to reach
coal will suffer the steepest decline, due to the eco-
1343 TWh. Meanwhile, industrial sector consumption
nomic crisis and the postponement of new clean coal
decreased slightly from 1011 TWh to 1006 TWh.
technology projects.
26
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_________________
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asia-pacific
ASIA-PACIFIC
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____________________________
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Australia
ASIA-PACIFIC
Australia has embarked upon an ambitious climate change policy
encompassing a cap-and-trade emissions system, but coal remains king of
its energy policy.
Australia, the world’s sixth largest country by
of electricity transmission Coal production by year
size, is a democratic federal state within the
and distribution circuit,
Commonwealth of Nations. The legislature consists
and it has more than
of a federal parliament comprising a 76-member
9.5
Senate (upper house) and a 150-member House of
connections.
Australia is blessed with enviable natural resources
per cent from brown
and a small population of 21 million. It has a gross
coal, 12.2 per cent from
domestic product (GDP) per capita of $36 226, the
natural gas, 6.1 per cent
17th highest in the world according to the International
from hydro and 0.6 per
Monetary Fund. Annual GDP growth is expected to
cent from oil and other
average 2.4 per cent from 2009-2013, down from an
fuels.
Energy Overview
15000
10000
5000
0
Australia’s vast size
and the distance between
Coke
Coal by-products
rules out coast-to-coast interconnectivity. Therefore,
natural gas, coal and uranium oxide reserves. It is one
the National Electricity Market (NEM) of eastern and
of the few countries belonging to the Organization for
southern Australia is separate to the remote areas of
Economic Co-operation and Development (OECD) that
Western Australia and the Northern Territory.
third of its annual energy production.
Western Australia has a stand-alone arrangement,
known as the Wholesale Electricity Market (WEM),
The country exports approximately 60 per cent of
operating in the South-West Interconnected System
its annual coal production, which makes it the largest
(SWIS). The Northern Territory, because of its relatively
net exporter of coal in the world, comprising 29 per
low population and isolation, operates with independent
cent of global exports. Australia dominates the coking
power producers (IPPs) and remote generators.
coal market, where it is responsible for over half of all
The NEM is a wholesale market through which
world exports, and it leads the world in thermal coal
generators and retailers trade. Six participating
exports, accounting for 21 per cent of that market.
jurisdictions are linked by transmission network
Japan receives over 60 per cent of Australian coal
interconnectors. The network has around 260 registered
exports, while other important markets include the rest
generators, six state-based transmission networks
of Asia and Europe.
(linked by cross border interconnectors) and 13 major
As of 2008, Australia has 850 billion cubic metres
distribution networks that collectively supply electricity
of proven natural gas reserves. Total natural gas
to customers. In geographical span, the NEM is the
production in Australia in 2007/08 was 44 billion cubic
largest interconnected power system in the world,
metres. The country is also the fifth largest exporter of
covering 4500 km.
liquefied natural gas (LNG). Australia’s prospects for
The market has five regions divided along the
expanding energy exports in the future are promising
boundaries of Queensland, Victoria, South Australia,
as Asian demand for coal and LNG rises.
New South Wales and Tasmania.
Uranium exports represent a third of Australia’s
energy exports in energy equivalent terms.
Electricity Market
Brown coal briquettes
its most populous regions
Australia is rich in natural resources with significant oil,
is a significant net energy exporter – consuming only a
2006-07
from black coal, 24.5
2005-06
comprising 56.7 per cent
office for a fifth time after an incumbency of 11 years.
2004-05
Liberal party’s John Howard, who was standing for
20000
2003-04
was 226 600 GWh,
2002-03
generation in 2006-2007
2001-02
In December 2007, the Labor Party’s Kevin Rudd
became Australia’s 26th Prime Minister, beating the
average of 3.3 per cent in 2003-2007.
25000
electricity
2000-01
Principal
30000
electricity
GWh
Representatives (lower house).
million
Source:
The NEM is a compulsory wholesale pool into which
generators sell their electricity. The main customers are
retailers, which buy electricity for resale to business and
household customers.
The installed capacity of Australia’s electricity generators
The market is a virtual pool in which supply bids
is 44 900 MW in grid-connected capacity and 5200 MW
are aggregated and dispatched to meet demand. The
in embedded and non-grid capacity. There is 865 200 km
Australian Energy Regulator monitors the market to
30
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Reliability.
Powered by Experience.
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_______________
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ASIA-PACIFIC
ensure participants comply with the National Electricity
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Australia
Total consumption of electricity by state
Source:
Law and the National Electricity Rules. The National
Electricity Market Management Company (Nemmco)
100000
manages this pooled central dispatch system.
80000
Wholesale trading in electricity is conducted as a spot
market where supply and demand are instantaneously
60000
matched in real-time through a centrally co-ordinated
dispatch process. Generators offer to supply the
40000
market with specific amounts of electricity at particular
prices. Offers are submitted every five minutes of
20000
every day. From all offers submitted, Nemmco’s
0
systems determine the generators required to produce
electricity based on the principle of meeting prevailing
2000-1
dispatches these generators into production.
A dispatch price is determined every five minutes,
2002-3
New South Wales
Western Australia
demand in the most cost-efficient way. Nemmco then
and six dispatch prices are averaged every half-hour to
2001-2
2003-4
Schlumberger and Xstrata.
Renewables are taking off in a major way. Conergy,
Germany’s largest solar energy company, has teamed
price to settle financial transactions for all energy traded
up with Australia’s Macquarie Bank to build an A$2.5
in the NEM.
billion ($2.2 billion) 1 GW wind farm on the eastern
coast of Australia.
($6577) per MWh, which is the maximum price at
Spanish energy company Union Fenosa SA will
which generators can bid into the market. A minimum
invest A$1.9 billion ($1.2 billion) to double Australia’s
spot price is also set at the rate of -$1000 per MWh.
wind farm power generation by 2013, by adding 850
MW to the current capacity of 824 MW.
Coal is still king in Australia, but the country is striving
Future Trends
to adopt clean coal technology. The first carbon capture
In December 2008, Australia pledged to cut its 2000
and storage (CCS) project in the southern hemisphere
greenhouse emissions by 5 to 15 per cent by 2020
was launched in the Otway Basin near Nirranda South
and unveiled a carbon trading scheme. Around 1000
in Victoria. The facility will capture, compress and inject
of Australia’s biggest companies and 75 per cent
carbon dioxide into a depleted natural gas reservoir. The
of greenhouse gas emissions will be covered by the
project is being developed by the Cooperative Research
scheme from July 2010.
Centre for Greenhouse Gas Technologies.
In early 2010, the government will set an overall
GE Energy is expected to sign a deal to build an
cap on total carbon emissions for the first five years. It
integrated gasification combined cycle (IGCC) coal-
will then issue permits to cover every tonne of carbon,
fired power plant with carbon capture and storage
which can be bought and sold.
in the Australian states of New South Wales or
Companies are free to emit at whatever level they
Queensland by 2014. GE is looking at a 700-800 MW
choose, but they must surrender one permit for every
IGCC power station that would cost about $3 billion.
tonne of carbon
Another CCS project is the Callide Oxyfuel
2006-7
the Queensland state government, IHI, J-Power, Mitsui,
each of the regions of the NEM. Nemmco uses the spot
Infrastructure Investment
2005-6
Victoria
Queensland
Southern Australia
determine the spot price for each trading interval for
The rules set a maximum spot price of A$10 000
2004-5
they
produce.
demonstration project in Biloela, Queensland, which
The market will
will retrofit an existing power station with technology
set the price of
that burns pulverized coal in a mixture of oxygen and
carbon permits,
recirculated waste gases, creating a high concentration
but the govern-
of carbon dioxide in the gases exiting the power
ment will cap
station’s boiler. The carbon dioxide can then be
the price at a
captured, purified and liquefied, ready for transport to
maximum A$40
an underground storage site, rather than released into
($27) a tonne,
the atmosphere.
rising five per
Six partners are collaborating on the A$206 million
cent a year above
($135 million) project, which is based at CS Energy’s
inflation for four
Callide A Power Station in central Queensland. The
years, to ensure
project’s partners are: CS Energy, which is owned by
price stability.
Energy consumption by fuel, 2006/07
Source:
Black coal
Brown coal
Coke
Coal by-products
Brown coal briquettes
Wood, woodwaste
Bagasse
Refinery input
Petroleum products
Natural gas
Town gas
Electricity/hydro
Solar energy
0
100000 200000 300000 400000 500000 600000
32
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China
ASIA-PACIFIC
Demand continued to put pressure on China’s electricity system through
most of 2008. However, the global recession may give the country a
breathing space as it seeks to complete the integration of its grid systems.
China was 1.3 billion in 2008, making it the most
billion m3. Reserves in 2006 were
populous country in the world, and it continues to
estimated to be 2450 billion m3.
grow, currently at a rate of 0.63 per cent a year.
China is a centralised communist state in which power
China
has
enormous
hydropower reserves. Its gross
is
6083
600
500
400
300
lies with the central cadre of the Chinese Communist
theoretical
Party. Elections within the National People’s Congress in
TWh/year, of which 1753 TWh/
2007 confirmed Hu Jintao as president and Xi Jinping as
year is considered economically
vice president. The country has been moving towards a
exploitable today, according to
100
market-based economy since 1979, but the government
the World Energy Council. Total
0
still maintains tight control over policy. However, major
potential generating capacity could
economic changes have taken place, leading to rapid
be 400 GW or more, of which less
growth and a burgeoning private sector.
than half has been exploited, plus
GDP was $3251 billion in 2007, making China the
capacity
700
200
a further 125 GW of small hydro potential.
fourth largest economy in the world. GDP growth was
The country also has a vast wind resource.
11.9 per cent, following growth of 11.1 per cent in
Government figures suggest there could be between
2006. However, this slowed rapidly towards the end of
700 GW and 1300 GW of potential onshore and a
2008, and predictions have been revised downwards
further 250 GW offshore. Other renewable resources
for 2009, due to lower exports and slowing national
include solar, biomass and tidal energy.
demand as global economic conditions deteriorate.
Energy Overview
2007
to PetroChina, to reach 150-200
2006
over the next decade, according
the South and East China Seas. The population of
2005
southeast, south and western Asia. To its east lie
800
2004
is expected to more than double
2003
Russia, North Korea and a variety of countries in
China State Power Information Network, State Grid Corp of China, China Electricity Council
2002
23 per cent over 2006. Production
2001
It shares land borders with Kazakhstan, Mongolia,
Installed generating capacity
2000
2007 was 69.3 billion m3, a rise of
1999
Natural gas production in
in the world, occupying an area of 9.6 million km2.
Capacity (GW)
China is Asia’s largest country and the third largest
Electricity Market
The Chinese electricity sector is moving slowly towards
Coal is the main source of energy in China, accounting
a more competitive structure following the break-
for around 69 per cent of total consumption. It has
up of the State Power Corp of China in 2002 and
reserves estimated at 114.5 billion tonnes and produced
the creation of separate generation, transmission and
2.29 billion tonnes of coal in 2007, up from 2.11 billion
distribution companies. Transmission is dominated by
tonnes in 2006. Production was continuing to rise at the
two companies: the China State Grid Corp, which
beginning of 2008, and production capacity is expected
has five regional subsidiaries, and the China Southern
to reach 3.00 billion tonnes by 2010. The country is now
Power Grid Corp. Meanwhile, the generation assets of
both the largest producer and the largest consumer
the State Power Corp of China was devolved to seven
of coal globally, consuming 2.34 billion tonnes in
companies: Huaneng Group, Datang Corp, Huadian
2007, meaning demand exceeds the pace of domestic
Corp, Guodian Corp, China Power Investment Corp
production. Of this, 1.19 billion tonnes (around 51 per
and two nuclear power companies, which together
cent) was used by the electricity industry. Consumption
control around 50 per cent of generation. Another 40
in 2008 is expected to reach 2.49 billion tonnes. This is
per cent is under the control of local government power
4 per cent higher than in 2007, but represents a drop in
companies, while private and foreign independent
demand growth of 5 per cent.
power producers control the remaining 10 per cent.
China had 12.8 billion barrels of proven oil reserves
The State Electricity Regulatory Commission, created
in 2007. At the time, it produced 3.73 million barrels
in 2003, is responsible for regulation and setting
per day (bpd) but consumed 6.93 million bpd, a net
tariffs within the sector. Moves towards liberalisation
shortage of 3.2 million bpd. The country is conse-
continue, and pilot projects on establishing a wholesale
quently one of the world’s largest oil importers. Its
power market have begun in northeastern and eastern
major suppliers include Saudi Arabia, Angola, Iran,
regions. Full liberalisation of the power sector is
Russia and Oman.
planned for sometime after 2010.
34
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PennWell Global Power Review 2009
Production by source, 2007
Source: Xinhua
2
15
Thermal
Hydropower
Nuclear
and others
83
Meanwhile, generating capacity in
to centres of demand. As a consequence, some
China has increased dramatically during
key infrastructure projects in the country involve
the beginning of the 21st century. Capacity
interconnecting the six regional grid systems (excluding
had risen to 713 GW by the end of 2007,
the Tibet grid), so that power can be moved from west
an increase of 91 GW over the previous
to east and north to south. This will include increasing
year. Though large, this is less than 2005,
the capacity of the two main west to east transmission
when capacity increased by more than 100
interconnection routes from around 7000 MW in 2005
GW. Production in 2007 was 3260 GWh, a
to 40 GW each by 2020.
rise of 18 per cent over the level in 2006.
Meanwhile, investment in new generating capacity
Government figures suggested consump-
is continuing, but with a shift in emphasis, as strategies
tion in 2007 was 3250 GWh, which implies
to combat global warming become increasingly
either implausibly low losses of 0.3 per
important. This means that growth of renewable and
cent or much increased levels of electricity
carbon-neutral technologies such as hydropower and
imports. However, growth was slowing by
nuclear power will be accelerated at the expense of
the end of 2008, with demand falling by
coal-fired generation.
4 per cent in October and 7 per cent in November, the
Nuclear plans include increasing capacity from
largest reductions since 2001. Overall consumption
9 GW to 40 GW by 2020. This will involve the
could fall by as much as 5 per cent in 2009, according
construction of 30 or more new nuclear units over the
to some predictions.
next 11 years.
The most important source of electricity in China
A massive hydropower programme is already under
is coal, which accounted for 83 per cent of total
way, with major projects along the Yangtze and Yellow
electricity production in 2007. However, this is a small
rivers (among others) due to enter service between
fall compared with 2006, when coal was responsible
2012 and 2016. According to the Chinese Academy
for 84 per cent. The government has begun replacing
of Engineering, the country is planning 110 projects
small coal-fired plants with larger, more efficient and
with generating capacities of over 1000 MW, of which
cleaner units. In 2007, 553 small 14 GW plants were
20 are already in operation. The remainder, provision-
closed and a further 13 GW of capacity was due to be
ally due to be completed between 2010 and 2015,
shut down in 2008.
will add around 200 GW of extra capacity. With this,
These closures reflect growing environmental
concern in China, which is evident in the policy
hydropower will account for 28 per cent of installed
capacity by 2015, up from 20 per cent in 2007.
of closing small coal-fired plants while expanding
Installed wind capacity in China is expected to
renewable energy, particularly hydro and wind power,
reach 10 GW by 2010 and 70 GW by 2020. Even so,
and nuclear capacity.
the major additions to generating capacity will still
Hydropower is the most important renewable
come from coal-fired plants, which will account for
resource in China and its second most important
at least 300 GW of new capacity by 2020 if current
source of power, accounting for 20 per cent of
growth predictions are borne out.
installed capacity in 2007 and 15 per cent of produc-
Predicted growth
tion, up from 14 per cent in 2006.
Future Trends
Source: Chinese Academy of Science, State Grid Corp of China, Merill Lynch, IEA
The third main source of electricity is
The global recession may provide China with a breath-
nuclear power, which accounted for
ing space as it tries to keep pace with electricity
2 per cent of production in 2007.
demand. Demand was falling by the end of 2008, as
Wind power capacity, though still a
energy-intensive industries responded to the changing
small proportion of the total, grew
economic climate. Even so, medium-term growth is
from 2.67 GW in 2006 to 6.05 GW
likely to remain buoyant. Predictions before the reces-
by the end of 2007, a rise of 227 per
sion began suggested that installed capacity would
cent. Output in 2007 was 5.6 GWh,
have to grow to 1200 GW by 2020 and 1312 GW
up 95 per cent on a year earlier.
by 2030 as demand rose to 6000 GWh (2020) and
10000
Installed capacity (MW)
Production (TWh)
8000
6000
4000
8500 GWh (2030). Tight
Infrastructure Investment
2000
2007
2007
2007
2007
2007
2007
0
financial conditions will
restrict foreign investment over the short term, but
China has faced frequent power
large, labour-intensive projects such as hydropower
shortages
as
schemes could prove attractive to the government as
it has struggled with a shortage
a means of boosting the Chinese economy. Investment
of generating capacity and the
in the transmission network will also continue, as it is
difficult task of moving power from
vital that China eases the problem of frequent power
regions rich in generation resources
shortages.
in
recent
years
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India
ASIA-PACIFIC
Although India’s economy is showing signs of slowing, the government
must continue its ambitious power infrastructure investment as demand for
electricity continues to grow.
by the Persian Sea, to the southeast by the Bay of
In the public domain, electricity generation Total installed thermal power capacity (January 2009)
falls under the responsibility of the central Source: CEA
Bengal and the Indian Ocean to the south. Along
government and state governments. According
its northeastern frontier are the Himalayas, which
to the Central Electricity Authority (CEA), more
form India’s geographic boundary with the People’s
than 76 GW of this installed capacity is owned
Republic of China, Bhutan and Nepal.
by the State Electricity Boards (SEBs). The SEBs
95 per cent of retail sales.
of 3 287 590 km2. India has a democratically-elected
Approximately 49 GW of the generation
government, which has been led by the prime minister,
capacity is owned by the central government
Dr. Manmohan Singh since May 2004. National elections
via a number of government-owned
are scheduled in April this year.
companies, the largest being the Nuclear
40000
20000
India currently has the fourth largest economy
Power Corporation of India Limited, NTPC
in the world on a purchasing power parity basis,
and the National Hydro Power Corporation.
with an estimated gross domestic product (GDP) of
NTPC is the single largest company with an installed
$3.32 trillion in 2008. Since 2000, the country’s economy
capacity of close to 28 GW comprising 22 fully owned
has grown exponentially, averaging around 7 per cent a
thermal plants and four part-owned coal and gas plants.
year. However, the central bank has revised its estimate of
The remainder of India’s installed capacity, i.e. over
economic growth this year downwards to 7.5-8 per cent.
22 GW, is controlled by the private sector. This comprises
In 2010, the rate could fall to 5.5 per cent or less, the
independent power producers (IPP) and captive power
lowest since 2002.
plants. The capacity of captive power plants has grown
Energy Overview
at a higher rate than IPP capacity, prompted by irregular
and insufficient public electricity supply and by high tariffs,
According to the International Energy Agency (IEA), India’s
and was facilitated by certain provisions of the Electricity
proven reserves of oil were 5.6 billion barrels at the end
Act 2003. As a result many industries now use their own
of 2007. Oil production is around 800 000 barrels per
power plants for in-house consumption.
day (bpd), however this is insufficient to meet domestic
Of the total installed capacity in India, over two-thirds
demand, which is 2.9 million bpd, so India currently
is thermal generation (coal, oil and gas). Thermal capacity
imports over two million bpd, primarily from the Middle
is dominated by coal, which represents over 53 per cent
East, with Saudi Arabia the biggest supplier.
of the total, close to 77 400 MW, with gas and oil trailing
India’s proven natural gas reserves were reported by the
at 14 700 MW and 1200 MW, respectively.
Energy Information Administration to be 1.2 trillion m3 in
India’s has a significant installed hydropower base of
2006, while production amounted to around 28 billion m3.
36 700 MW, which represents close to a quarter of the
However, consumption of natural gas is expected to rise at
country’s total installed capacity. India ranks fifth in the
an average annual growth rate of 4.8 per cent to 2030,
world in term of exploitable hydropower resources.
according to the IEA, so in the longer-term production is
India has a largely indigenous nuclear power
not expected to meet the growing demand. Thus, natural
development programme. According to the CEA’s latest
gas imports will increase, with liquefied natural gas playing
figures, the nuclear installed capacity is 4120 MW as of
an ever more important role.
January 2009. Its nuclear fleet currently comprises of 15 small
India’s total coal reserves, which amounted to
(90-200 MW) reactors and two mid-sized (500 MW)
287 billion tonnes in 2007, are ranked fifth largest after
reactors. It also has six reactors under construction, four of
the USA, Russia, China and Australia. Its proven reserves
which are due to enter commercial operation this year.
total some 115 billion tonnes. State-owned Coal India is
responsible for 85 per cent of coal production in India.
Electricity Market
India has the fifth largest installed generation capacity in
the world, with over 147 GW as of January 2009.
0
Total
28 states and seven union territories and covers an area
60000
Oil
other companies and selling it, accounting for
Gas
are also responsible for buying electricity from
80000
Coal
It is home to close to 1.2 billion people, making it
the world’s second most populous country. It comprises
100000
MW
The Republic of India is bounded to the southwest
In 2004, the government set an ambitious target of
having 20 GW of nuclear capacity online by 2020, and for
this generation source to supply 25 per cent of electricity
by 2050.
In recent years nuclear development has been
hampered by chronic shortages in domestic uranium
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Ownership breakdown of installed capacity
Source: CEA
1199.75 MW
14734.01 MW
77398.88 MW
supplies. However, following a deal
crores ($180 billion), including associated transmission
with the US, signed in 2008, India will
and distribution improvements.
get access to US nuclear fuel, reactors
and technology, paving the way for
Infrastructure Investment
the entry of the private sector into the
India is now halfway through its 11th Five-Year Plan, and
country’s nuclear power sector.
in the 12 months from January 2008 to January 2009,
India’s renewable energy capacity
is 13 200 MW, and comprises
Total: 93332.64
the central sector to add of 46 500 MW by 2012, while at
biomass power plants, urban and
state level and private sector a combined 41 800 MW tar-
industrial water power and wind
get was set. The targets include 6400 MW of new nuclear
power. In the latter, India continues
generation and 10 700 MW through non-conventional
to make steady progress, and in
resources, most notably wind.
hydro,
biomass
2007 its installed wind capacity was
In 2006, the Ministry of Power launched an initiative
7845 MW. In 2007, India was ranked
to develop large coal based plants. Known as ultra-mega
as the fourth largest wind market in the world on the
power projects (UMPPs), these are a series of ambitious
basis of cumulative MW however, according to the latest
supercritical power projects, with each project having
figures from the Global Wind Energy Council, it slipped
a minimum capacity of 4000 MW, and are aimed at
to fifth position in total wind power installed capacity
bridging the capacity gap. The selection of the projects is
last year. In 2008, India added 1800 MW rather than
based on competitive bidding.
the expected 2000 MW, increasing its total capacity to
As of August 2008, a total of 12 UMPPs have been
9645 MW. However, BTM Consult forecasts that the
planned. To-date, four UMPPs have been awarded. India’s
demand for electricity from wind power will double
largest private power producer, Tata Power, won the
by 2012 and that India will have a total installed wind
UMPP in Mundra, Gujarat Province in 2007, while Reliance
capacity of 22 845 MW.
Power, part of Reliance Energy Limited, has bagged
On the transmission side, Power Grid Corporation
three UMPP to-date – Sasan, Madhya Pradesh Province,
of India Limited integrates India’s five regional grids into
Krishnapatnam, Andhra Pradesh Province, and in January
a national grid, although inter-regional capacity is still
this year, Tilaiya UMPP in the province of Jharkhand.
limited. Currently, 1700 km of 800 kV lines, 70 000 km
With the transmission constraint problem severe in
of 400 kV lines and 110 000 km of 220 kV lines make up
the eastern region, a plan has been developed to build
the bulk of the high voltage transmission network.
30 000 MW of inter-regional transmission capacity by
Chronic underinvestment in the country’s power
2012 and the formation of a national grid. Indian authori-
sector has been a major constraint to the country’s
ties have launched an international competitive tender
development, with close to 40 per cent of the population
for two transmission schemes, which together have an
not having access to electricity. According to the Ministry
estimated cost of more than $1 billion. The projects,
of Power, in the period 2007-2008 peak demand
the 1980 MW North Karanpura project and the Talcher
was 108 866 MW, while peak generation was only
augmentation system, due for completion between 2009
90 793 MW, representing a deficit of over 16 per cent
and 2012 are the first of 14 planned.
of peak demand.
According to the International Energy Agency, India
Wind power growth forcast (2008-2012)
Source: C EA
4000
Capacity additions (MW)
In 2007, the Ministry of Power set tentative targets for
gasifiers,
small
Coal
Gas
Oil
more than 5.5 GW of capacity has been added.
3500
Future Trends
will need to invest $1.25 trillion in energy
Coal will continue to be India’s main fuel source for new
infrastructure between 2006-2030, with
power generation. All of the country’s operating coal fired
more than three-quarters of this invest-
power stations use subcritical technology, and although
ment in power infrastructure (generation,
six supercritical plants were included in the 10th Five-Year
transmission and distribution).
Plan, none were built. The plan for 12 UMPPs in the 11th
3000
As part of the country’s 11th Five-Year
2500
Plan, which runs between 2007-2012,
2000
the Ministry of Power has set the goal of
With the meeting to decide on the successor to the
1500
‘Power for All’ by 2012, representing a
Kyoto Protocol taking place later this year, rapidly developing
total installed generation base of 200 GW.
economies like India will come under greater pressure to
To achieve this goal, 78 GW of additional
cut their carbon emissions. Thus, the country will continue
capacity will need to be created between
to diversify its fuel generation mix to bolster low-carbon
2007-2012, which represents more than
energy sources such as wind power and nuclear, as
the capacity added in the last 20 years.
well the greater exploitation of its hydropower resource
This will cost in the region of Rs.800 000
estimated to be 250 000 MW.
1000
500
2012
2011
2010
2009
2008
0
Five-Year plan is an important development, and four at
least look likely to reach construction.
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Indonesia
ASIA-PACIFIC
The Indonesian government urgently needs to expand the country’s
generating capacity and attract massive transmission and distribution system
investment if it is to rid itself of a damaging system of oil subsidies.
domestic consumption.
Jaya. The country occupies a land area of just under
Gross hydropower potential
2 million km2. With a population of 237.5 million
in Indonesia is 2147 TWh/year
in 2008, Indonesia is the fourth most populous
according to the World Energy
country in the world and the most populous Islamic
Council, of which 40 TWh/year
nation. More than half of the population lives on
is considered economically fea-
the island of Java.
sible. This translates into around
After years of military dictatorship, Indonesia has
76 000 MW of potential capac-
been moving towards full democracy. Elections in
ity, of which only 6 per cent has
2004 led to the appointment of its first democratically
currently been exploited, possibly
elected head of state, Susilo Bambang Yudhoyono.
because many of the best sites are
Since 2004, there have been significant economic
distant from the main population
reforms. The improved economic climate helped the
centres. There is also around 500
Indonesian stock market become one of the three best
MW of small hydropower poten-
performing in the world in 2006 and 2007. GDP in 2007
tial, which is mostly unexploited.
was $432.9 billion and GDP growth 6.3 per cent. Fuel
Jamali
Sumatra
Sulawesi
Kalimantan
Nusa Tenggara
Maluku
Papua
potential of around 27 GW, of which less than 3 per
2007 and 2008 has cost the government.
cent has been utilized. There is biomass potential, esti-
Indonesia’s oil reserves were estimated to be 4.3
mated to be around 50GW, and significant wind and
solar opportunities.
billion barrels in 2007, slightly higher than during the
Electricity Market
previous year. Oil production in 2007 varied between
The Indonesian electricity system is spread unevenly
950 000 barrels per day (bpd) and 985 000 bpd,
across the huge archipelago that makes up the country.
significantly lower than the 1.15 million bpd in 2006.
Today there are seven independent interconnected
Oil consumption in 2006 was 1.1 million bpd, making
systems and more than 600 isolated systems. The
the country a net importer of oil. This, coupled with fuel
largest of the interconnected systems is the Java-
subsidies, has been damaging the Indonesian economy,
Madura-Bali (Jamali) grid, with a total installed capacity
but the drop in the price of oil at the end of 2008 should
of 22 302 MW in 2007. Sumatra had a total capacity
relieve some pressure.
of 4634 MW, Sulawesi 1130 MW and Kalimantan 1000
Natural gas reserves were 2630 billion m3 at
MW, while the three remaining grids of Musa Tenggara,
the beginning of 2007. Production in 2007 was 92
Maluku and Papua have 237 MW, 197 MW and 170
billion m3 (252 million m3/day) and consumption was
MW respectively. Total installed capacity was put at
34 billion m3 (37 per cent), while 63 per cent was
29 705 MW in 2007, including isolated systems, but
exported. Domestic gas consumption is rising and was
it is not clear if this figure includes independent power
expected to account for 50 per cent of production
producers (IPPs).
in 2008.
Installed capacity by grid, 2007
The country has a geothermal
and electricity are subsidized, so the high price of oil in
Energy Overview
25000
to lead to a significant rise in
are Sumatra, Java, Kalimantan, Sulawesi and Irian
20000
power plants, which is likely
officially contains 13 677 islands; the five largest
15000
Malaysian peninsula to Australia. The archipelago
Source: PLN
Installed capacity by grid, 2007
10000
programme of new coal-fired
5000
However, Indonesia plans a large
stretches almost 500km from the west of the
0
The Indonesian archipelago in Southeast Asia
The most important electricity company in Indonesia
Coal reserves are estimated to be around 5 billion
is PLN, a vertically integrated company that controlled
tonnes. Production was expected to rise by 15 per
25 222 MW, 85 per cent of the total national capacity,
cent from the 165 million tonnes of 2006 to exceed
in December 2007. The company is wholly owned by
215 million tonnes in 2007, with 77 per cent of
the Indonesian government. Efforts to privatize PLN
the total exported. The additional production was
earlier this decade were overturned by the constitutional
to help feed the rising demand for coal in China
court in 2004 and its monopoly position has since been
during 2007 and early 2008, but demand has since
strengthened. PLN is mandated as the sole supplier
dropped significantly as the global economy slows.
of electricity through its monopoly of transmission
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PennWell Global Power Review 2009
Generation by source (%)
Source: PLN
and distribution. The company is regulated
by the residential sector with 39 per cent. Commercial
by the Ministry of Energy and Mineral
sector consumption is just under 16 per cent.
Resources (MEMR) and is also monitored
50
Java - Bali
Outside Java - Bali
40
30
20
by the Ministry of Finance. At the end of
Infrastructure Investment
2007, the company served 37.4 million
With the power sector in Indonesia in an almost
customers through its transmission and
continual state of crisis, there is an urgent need for
distribution systems. Most are domestic
investment to expand generating capacity. According
customers and represent only a small part
to PLN predictions, the capacity needs to grow from
of the population, although the country is
around 25 000 MW in 2008 to 82 000 MW by the end
considered 60 per cent electrified.
of 2018, an increase of 57 GW. Of this, around 35 GW
10
There is a small IPP industry in Indonesia
Hydro
Diesal
Gas turbine
Natural gas - combined cycle
Natural gas - steam
Fuel Oil - combined cycle
Coal - steam
Fuel Oil - steam
0
PLN has been mandated to build 10 000 MW of
MW, mainly through four coal-fired plants
new coal fired capacity by 2009 as part of a fast-track
in Java with a combined capacity of 4370
programme designed to improve the balance of supply.
MW. The remainder is made up of small
This forms part of a government strategy to become
diesel, geothermal and gas-fired facilities.
independent of imported fuel by moving away from oil
The government has attempted to attract
fired generation to coal and gas. The bulk of the new
new private sector investment to the mar-
capacity will be in Java, where 10 large plants will be
ket, but with little success.
constructed. A further 25 projects with an aggregate
In recent years, there has been significant
In a second accelerated phase of power plant
the margin of supply over demand in the
construction, a further 11 000 MW are planned between
main Jamali grid is only around 5 per cent.
2010 and 2014 with private sector participation. PLN’s
In some areas outside this region demand exceeds
share of this second phase is expected to be 7300 MW,
supply. Meanwhile, the government, which controls
including 5300 MW of coal-fired capacity, 1100 MW of
tariffs, has not increased them since 2003. The rapid rise
gas-fired combined cycle capacity, 300 MW of hydro
in fuel prices during 2007 and early 2008 meant that
capacity and close to 700 MW of new geothermal
subsidies had to rise alarmingly.
capacity. IPP projects slated for this phase include 2300
Electricity production was 143 682 MWh and
MW of coal-fired capacity and 1500 MW of geothermal
consumption was 121 522 GWh in 2007, according
capacity. There will also have to be massive investment
to the MEMR. Fossil fuels provide the main source
in the transmission and distribution system, and an
of electricity. On the Jamali grid, coal and natural
extension of its range to rural communities without
gas each provide 27 per cent of electricity, while
access to power today.
contributes 16 per cent and open cycle gas turbines 4
Future Trends
per cent. A significant geothermal capacity provides 2
Constrained by supply, electricity sales in Indonesia
per cent of production.
grew at an average rate of 6.8 per cent a year between
PLN predicted growth in generating capacity
Diesel is the major source
2002 and 2007. This has put a great strain on a
of electricity beyond the Jamali
system where supply can barely match demand and
grid, accounting for 44 per cent
electricity remains subsidized. The government needs
of total production. Natural
to attract private sector investment in order to meet
gas provides a further 16 per
this demand, but to achieve this it will need to remove
cent, coal 10 per cent and
subsidies and provide a clear legal framework for
open cycle gas turbines 11 per
IPP contracts.
Source: PLN
100000
80000
60000
40000
20000
cent, while hydro contributes
Most Western companies appear shy of investing.
13 per cent. These figures,
While there has been Chinese interest, this has centred
and particularly the high diesel
on supplying equipment and constructing plants, not
use, reflect the large number
operating them. The initial 10 000 MW fast-track
of isolated systems across the
programme has been estimated to require $10 billion
archipelago.
of investment, but much more will be required if
major
the economy is not to be constrained by electricity
of
electricity
shortages. Consequently, the government’s priority
Indonesia,
accounting
must be to create the confidence necessary to attract
for around 40 per cent of
investment in the power sector. In the current economic
consumption, closely followed
climate, that is likely to prove more difficult than ever.
Industry
consumer
2018
2017
2016
2015
2014
2013
2012
2011
2010
2008
0
2008
capacity of 3100 MW are planned for outside Java.
under-investment in the power sector, and
fuel oil and diesel make up 24 per cent. Hydropower
Predicted installed capacity (MW)
is to be built by PLN and 22 GW by private sector IPPs.
with a total generating capacity of 5080
in
is
the
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Malaysia
ASIA-PACIFIC
Malaysia is working hard to broaden its energy portfolio, amid concern that
its increasing reliance on imported fossil fuels in recent years undermines the
country’s energy security.
The Federation of Malaysia comprises peninsular
the Economic Planning Unit in the prime minister’s
Malaysia and the states of Sabah and Sarawak on
department had appointed a consultant to review the
the island of Borneo. Separating the peninsular
position.
Energy indicator
Value
north of the peninsular is Thailand and to the
Electricity Market
Energy production (Mtoe)
97.94
south is Singapore. Malaysia covers an area of
The Malaysian electricity system comprises three
Net imports (Mtoe)
-29.13
329 758 km2 and has a population approaching 28
geographically separated grids in peninsular Malaysia,
Electricity consumption (TWh)
88.46
million. The country is governed by a parliamentary
Sabah and Sarawak and is dominated by three utilities:
democracy with a constitutional monarch as the
Tenaga Nasional Berhad (TNB) serving peninsular
Electricity consumption (kWh/capita)
3388
head of state.
Malaysia, Sabah Electricity Sdn Bhd (SESB) and Syarikat
Source: (Key World Energy Statistics 2008, IEA)
from the island is the South China Sea. To the
Following a strong start to 2008, when real gross
domestic product (GPD) grew by 7.1 per cent in
Sesco Bhd (formerly known as the Sarawak Electricity
Supply Corporation).
the first quarter and 6.7 per cent in the second, the
The bulk of Malaysia’s electricity is consumed on the
country’s economic development has been damaged
peninsular and is generated from three sources: gas, coal
by the global financial downturn and unemployment is
and hydropower. Gas accounts for approximately 60 per
rising. Its GDP in the third quarter was 4.7 per cent and
cent of current generation capacity, but this is projected
this downward trend looks set to continue. That said,
to decline to 30 per cent by 2030. Coal has increased its
the country is less exposed to US sub-prime mortgage
share from around 11 per cent in 2002 to over 30 per
problems than many other nations and the Malaysian
cent today. Hydropower is predicted to increase its share
Institute of Economic Research (MIER) predicts growth
from 5 per cent today to 35 per cent by 2030.
of 3.4 per cent for 2009.
Energy Overview
TNB is the largest electricity utility in Malaysia, with
more than Ringgit69.8 billion ($20 billion) in assets.
TNB’s generation division operates and maintains six
More than 30 years ago, Malaysia met its electricity
thermal power stations and three major hydro-electric
needs largely through burning imported oil. The oil
power generating schemes in peninsular Malaysia.
shocks in the 1970s prompted the development of
The division also supports three independent power
Malaysia’s gas sector, led by state-owned Petronas. In
producers (IPPs) and manages the national transmission
2007, Malaysia exported 32 039 million m3 of natural
grid running throughout the peninsular. TNB’s total
gas, ninth largest worldwide, and in January 2008 it
installed capacity is 8416 MW, which includes 6505
was estimated to have 2.35 trillion m3 of natural gas
MW thermal and 1911 MW hydro power plants. TNB’s
reserves, or 1.3 per cent of the world’s total.
market share is 42.7 per cent, with the grid’s installed
Despite increasing production, the country’s
Energy indicators: Malaysia
capacity being just below 20 000 MW.
demand for gas has outstripped its supply. As a
Like many in
result, Malaysia is turning increasingly toward fuel
the power sector,
imports. In December 2008, Iran and Malaysia signed
TNB is facing a
three co-operation agreements in their oil and gas
financial squeeze.
sectors. Furthermore, new coal-fired power plants are
Its
being developed that are strongly reliant on imports.
financial
According to Tan Sri Leo Moggie, the chairman of
showed
Tenaga Nasional Berhad, the country is at risk of
of
shifting from nearly 80 per cent dependence on gas to
million
nearly 45 per cent dependence on coal.
million), which,
2007/08
Source: TNB
TNB installed capacity including IPPs (national grid)
45.1%
(8887.4 MW)
9.7%
(1910.5MW)
year
18.6%
(3670 MW)
profits
Ringgit2600
($719
With supply security becoming an increasingly
though substan-
important issue, concerns have been voiced about the
tial, represent a
structural balance of the country’s electricity market.
significant drop
In October 2008, the government sought to calm
from Ringgit4067
such fears, stating that the country had sufficient
million
reserves of electricity, and that it was “keeping tabs”
million) the year
on developments in the power supply sector and that
before.
4.2%
(840 MW)
($1125
8.4% (1653 MW)
14%
(2762 MW)
40
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Hydro
Conventional
thermal (coal)
Conventional
thermal (oil and gas)
Combinrd cycle
Gas turbine
IPPs
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Maximum electricity demand (MW)
Revenue (Ringgit billions)
100
Source: TNB
one of the first projects in creating the ASEAN grid. A
link between Sarawak and the peninsular should enable
an increase in the price of coal. At the
the integration of the Philippines into the grid.
same time, TNB’s customers are feeling the
International Operations
Export
Domestic
80
There are two main reasons for this
downturn: greater payments to IPPs and
60
40
effects of higher energy costs, while the
Infrastructure Investment
manufacturing sector recently asked for a
Exemplifying Malaysia’s investment in hydropower is
reduction in the electricity tariff. TNB rejected
the 2400 MW Bakun dam in Sarawak. Due to be com-
such calls in November 2008, stating that
pleted in 2010, the dam has reached a height of 207
while the price of oil has come down, the
m and claims to be the second tallest concrete-faced
electricity generated in peninsular Malaysia
rock-fill dam in the world. Preliminary work has also
does not use oil but mostly gas and coal.
begun on Sarawak’s Murum dam – a 944 MW project
Having recognized a need to reduce its
20
dependence on fossil fuels, the Malaysian
Turning to Sabah, domestic power generation
energy portfolio and has set a target of
capacity increased in 2008, following completion of the
generating 350 MW of renewable power
latest phase of the 100 MW combined cycle Sepanggar
by 2010. TNB commissioned the first wind-
Bay Power Corporation project (an IPP). By late 2008 the
solar hybrid renewable energy plant at Pulau
190 MW combined cycle Ranhill Powertron project had
Perhentian, Terengganu, in late 2007. And, in December
been largely completed, with an agreement in place for
2008, TNB announced that it had signed an agreement
a second phase. And Petronas signed an agreement in
to develop a 10 MW biomass power project in Pahang.
November 2008 with the state government’s strategic
Since 2001, when the Malaysian government launched
development vehicle, Yayasan Sabah, to embark on a
the small renewable energy power programme (SREPP),
300 MW power plant project in Kimanis, Papar.
FY2008
FY2007
FY2006
FY2005
($850 million).
government is working to broaden its
0
FY2004
that is expected to cost approximately Ringgit3 billion
TNB has signed 11 renewable energy power purchase
Such construction is welcome news for power
agreements (REPPAs) in peninsular Malaysia, with a
consumers in Sabah after a decision was taken in the
combined capacity of 54 MW.
first half of 2008 not to proceed with a new 300 MW
In 2007, the government announced its intention
coal-fired power station – the Lahad Datu project. In
to rely on hydropower to produce 30 per cent of the
response to this decision, TNB posted a statement on
country’s electricity needs over the next decade. While
the SESB website, highlighting its concerns for future
related investment is occurring in the peninsular – with
power supply in the region, that read: “Sabah faces an
TNB stating that approximately 600 MW of the total
acute power shortage problem… We foresee 2010 to
1700 MW hydropower potential is being earmarked
be a critical year for Sabah.”
for development – Sarawak offers particularly large
Returning to the peninsular, during the past year
hydropower potential. The Sarawak Corridor of
TNB’s generation division undertook “repowering” of
Renewable Energy (SCORE) was launched in February
the second phase of the 750 MW combined-cycle gas
2008 and, relying heavily on hydropower, has the
turbine plant at the Tuanku Jaafar Power Station in
potential to deliver 28 000 MW once it is fully developed.
Port Dickson.
The Sarawak government website reports that about
Ringgit500 billion ($138 billion) has already been
Future Trends
committed since the project’s launch. This investment
In 2008 the Malaysian government announced its
extends beyond hydropower and renewable energy,
intention to prepare a new national energy policy,
with the broad goals of improving the state’s economic
including plans for renewable energy and nuclear
position and the quality of life of its residents.
energy. “Dependence on gas is expected to reduced
One issue central to tapping the power generating
to 55.9 per cent in 2010,” said the energy, water and
potential of Sarawak is having a suitable transmission
communications deputy minister, Datuk Joseph Salang
network in place, not least because Sarawak cannot use
Gandum. “While the contribution from renewable
all of the power that it could generate. Taking a regional
energy, including hydro, is expected to increase to 7.4
perspective, energy ministers of the Association of South
per cent by 2010.”
East Asian Nations (ASEAN) signed a memorandum of
The country is developing a renewable energy
understanding in August 2007 covering the formation
action plan that will detail how renewable energy will
of the ASEAN power grid. The grid aims to interconnect
increase its market share of Malaysia’s generation mix.
the association’s ten member nations and thereby
Coming years may see the construction of the coun-
promote power trading and exchange across Southeast
try’s first nuclear power plant, highlighting the impetus
Asia. Malaysia has already established an interconnection
that is pushing the market away from coal and gas
with Thailand and a link to Sumatra is expected to be
towards exploiting other resources.
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Pakistan
ASIA-PACIFIC
Pakistan is tackling the challenge of generating sufficient power to meet
growing demand through short-term contracts with independent power
providers and long-term hydropower, coal and gas power projects.
Pakistan is located in the north-western corner of
there are low-ash, low-sulphur reserves
Installed generating capacity
the Indian subcontinent. It stretches around 1600
in Tharparkar. Coal represents the largest
km from north to south and 800 km from east to
fossil fuel reserve in the country. However,
Census of electricity establishments 2005-2006, IAEA, Hydrocarbon
Development Institute of Pakistan
west. To the west lie Iran and Afghanistan, to the
the coal industry in Pakistan remains
north China and to the east is India. The country
small.
Hydropower potential in Pakistan is
480 TWh/year according to the World
growth was around 2 per cent.
Energy Council, with 219 TWh/year tech-
Since the formation of Pakistan in 1947, there has
nically exploitable. This is equivalent to
been constant friction between India and Pakistan,
around 46 000 MW of potential generat-
leading to three wars. The country also faces a major
ing capacity, of which only 14 per cent
internal threat from Islamic militants. Though ostensibly
has been exploited. There is at least 41
a democracy, Pakistan has suffered several periods of
000 MW of potential wind capacity, and
military dictatorship.
the solar potential is considered much
15000
10000
5000
0
larger still. Biomass will be significant,
1996-7
1997-8
1998-9
1999-2000
2000-1
2001-2
2002-3
2003-4
2004-5
2005-6
2006-7
particularly using sugar cane bagasse.
2007. GDP in 2007 was $143.8 billion and GDP growth
Electricity Market
5.3 per cent. Inflation rose to 11 per cent during the first
The electricity sector in Pakistan has been
months of 2008 on top of rising commodity prices.
dominated historically by two state-owned companies:
the Karachi Electricity Supply Corp (KESC), which serves
Karachi and adjacent areas, and the Water and Power
Pakistan has significant reserves of oil, natural gas, coal
Development Authority (WAPDA), which covers the rest
and hydropower. However, these are insufficient to meet
of the country. The electricity sector is overseen by the
domestic demand, and the country imports oil, coal and
Ministry of Water and Power. There is also a National
electricity. Imports account for around one third of total
Electric Power Regulatory Authority (NEPRA), which
energy supply. The total commercial supply in 2007 was
licences electricity sector companies and sets tariffs for
60.38 million tonnes of oil equivalent (Mtoe). Of this
generation, transmission and distribution.
natural gas supplied 48.6 per cent, oil 30.5 per cent,
KESC was privatised in 2005 with control passing to
coal 7.3 per cent, hydropower 12.6 per cent and nuclear
private sector companies. WAPDA was also restructured
power 0.9 per cent.
to form separate generation, transmission and
distribution companies, but remained controlled by the
barrels at the beginning of 2007. Production in 2007
government. WAPDA was divided into
was 67 400 barrels per day (bpd), while consumption in
two entities in 2007: WAPDA, which is
2006 was 350 000 bpd. Consequently, there is a major
now responsible solely for hydropower
shortfall made up with imports from the Middle East,
and water development, and the Pakistan
accounting for 81 per cent of oil consumption in 2007.
Electric Power Company (PEPCO), a
subsidiary
responsible
for
energy consumption in Pakistan, natural gas accounts
thermal power generation, transmission
for close to 50 per cent. Reserves in June 2007 were
and distribution. The latter now controls
put at 917 billion m3. Production in 2006-2007
four generation companies, the National
was 40.8 billion m3, all of which was consumed
Transmission Dispatch Company (NTDC)
domestically. Indigenous reserves are not expected to
and nine distribution companies.
meet the growth in demand for natural gas, and there
The country also has a number of
are plans to import both pipeline gas and liquefied
independent
natural gas (LNG). Without them, gas shortages are
projects. Licenses for the first wave of
expected after 2010.
these were granted in 1994, following
power
provider
International Operations
Export
Domestic
80
60
40
20
(IPP)
Proven coal reserves were estimated to be 3.3 billion
a severe power shortage. By 2007 there
tonnes in 2007. Much of this is high-sulphur coal, but
was a total IPP capacity of 6397 MW.
0
42
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FY2008
WAPDA
100
Source: TNB
FY2007
While oil accounts for around 30 per cent of total
Maximum electricity demand (MW)
Revenue (Ringgit billions)
Oil reserves were estimated to be 376.8 million
FY2006
Energy Overview
FY2005
between 6 per cent and 8 per cent between 2004 and
20000
FY2004
After decades of under-investment, the Pakistan
economy began to improve in 2001 and grew by
Installed capacity (MW)
covers an area of 803 940 km2. The population
was 172.8 million in 2008, while annual population
25000
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Breakdown of generation by type, 2007
0.2%
2.3%
Source: Pakistan Energy Yearbook, 2007 Power shortages became severe
consumption in 2006-2007 was 72 712 GWh. Domestic
again that year, and a new wave of
consumers use the largest proportion of power, 33
licenses had to be issued. In total,
335 GWh, or just under 46 per cent, while industry
NEPRA granted ten new licenses in
consumed a further 21 066 GWh (29 per cent) and
2007-2008, for power plants with
agriculture 8176 GWh (11 per cent) in 2006-2007.
0.1%
capacities totalling 1536 MW.
32.5%
36.4%
28.5%
Natural gas
Oil
Hydro
Nuclear
Imported
Coal
Pakistan’s main transmission grid has a backbone
The total installed capacity in
running the length of the country, which operates at
Pakistan in June 2007 was 19 414
500 kV. This is supplemented with additional regional
MW, according to figures from the
lines at 220 kV. It is owned and operated by the NTDC,
Hydrocarbon Development Institute
a wholly owned subsidiary of WAPDA.
of Pakistan. This comprised 6479
MW of hydropower, 12 478 MW
Infrastructure Investment
based on thermal power plants and
According to the most recent predictions, total energy
462 MW from nuclear units.
consumption in Pakistan is projected to rise from 60.38
The electricity available to the
Mtoe in 2007 to 79.4 Mtoe in 2010, 177.34 Mtoe
grid in 2006-2007 was 98 213
in 2020 and 361.82 Mtoe in 2030, or more than six
GWh. Of this, 36.4 per cent was generated from
times the consumption in 2007. Natural gas will provide
natural gas, 28.5 per cent from oil and 32.5 per cent
most of this energy, rising from 29.31 Mtoe in 2007
from hydropower plants. The country’s nuclear plants
to 162.58 Mtoe by 2030. Oil consumption will rise
provided 2.3 per cent of the total and coal plants only
more slowly, and coal use will increase from 4.4 Mtoe
0.1 per cent. A further 0.2 per cent of the power
to 68.58 Mtoe by 2030. Hydropower, nuclear power
available to the grid was imported.
and renewable energy consumption are all expected to
The large contribution of oil to the generation mix
increase rapidly too.
has resulted in a sharp increase in generation costs
The demand for electricity is expected to rise equally
in 2007-2008. As a consequence, there have been
dramatically, with the installed capacity predicted to
significant tariff rises, and time-of-use metering has
reach 47 000 MW in 2010, 71 000 MW in 2020 and
been introduced to curtail peak load requirements. Total
182 000 MW by 2030. As with overall energy use, the
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____________________________
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ASIA-PACIFIC
greater part of the additional capacity will be based on
Pakistan
Projected capacity increases
Source: Pakistan Planning Commission
natural gas-fired power plants, which will account for
78 000 MW of the projected new capacity between
35000
increasing by up to 20 000 MW, and nuclear capacity is
30000
Capacity increases (GW)
2007 and 2030. Coal capacity will grow strongly too,
expected to increase by 8400 MW.
There will be considerable additional investment in
renewable power sources. Large hydropower projects
are likely to be the main focus of investment, with an
additional 26 200 MW of generating capacity expected
to enter service by 2030. Small-scale hydropower
is being targeted, with 1228 MW of capacity from
25000
20000
Nuclear
Hydro
Coal
Renewable
Oil
Gas
15000
10000
plants smaller than 50 MW available for development,
5000
and wind development is being encouraged too.
0
Under current plans, renewable sources, excluding large
2010
2015
2020
2025
2030
hydropower, will provide 5-10 per cent of the country’s
power, with a total of around 800 MW by 2010, 3000
moderated by the 2008-2009 global recession.
Estimates suggest that $50-60 billion will be needed
MW by 2020 and 9700 MW by 2030.
Future Trends
by 2030 to improve the situation. This will be provided
by both the government and the private sector, but
The immediate problem for the Pakistan electricity
until 2012 most new capacity is expected to be built by
sector is to provide sufficient power to meet demand
IPPs, from whom an additional 10 000 MW of capacity
without resorting to load shedding, rationing and
is scheduled.
power cuts. Demand exceeded capacity by 2546 MW in
New publicly funded hydropower projects could start
June 2007, and demand growth is expected to be over
entering service by 2011, but the larger projects being
8 per cent annually between 2009 and 1015, further
planned will not be completed before 2015, when new
exacerbating the situation. However, growth may be
nuclear capacity could also become available.
____________________________
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Philippines
ASIA-PACIFIC
Deregulation remains an ongoing issue in the Philippines, while increased
self-sufficiency and the development of renewable energy technology are
becoming increasingly important.
The Republic of the Philippines comprises more
2.7 per cent, and the import volume of finished
than 7000 islands with a total land area of almost
petroleum
300 000 km2. The terrain is mostly mountainous,
(41 046 million barrels in 2006 compared with
with narrow or sometimes extensive coastal
45 712 million barrels in 2007).
per
cent
Coal reserves in 2006 were estimated at 236 million
growth rate was put at approximately 2 per cent.
million tonnes and consumption was an estimated
10.15 million tonnes.
government (with some modification: there is one
The government has voiced plans to increase the
autonomous region largely free from the national
country’s level of self-sufficiency by increasing its use
government), where the president functions as both
of its oil, gas and coal reserves. The development
head of state, head of government and commander-
of renewable energy, particularly geothermal, which
in-chief of the armed forces. The president is elected
currently makes up about 17 per cent of the country’s
by popular vote to a single six-year term, during
power generation by source, is also helping reduce the
which time she or he appoints and presides over
country’s dependency on imported fuels.
There are three power grids in the Philippines:
The political climate can be tempestuous, with
Luzon, Visayas and Mindanao. Of these, Luzon is
President Gloria Macapagal Arroyo weathering several
the largest, catering for about three quarters of the
attempts to unseat her since she took office in January
country’s needs. Within each grid, there are three types
2001, including a rebellion by 300 soldiers, who
of distribution utility: electric co-operative (EC), private
seized a hotel in Manila in 2003 and demanded that
investor-owned utility (PIOU) and local government
she withdrew from office. However, the event ended
unit-owned utility (LGUOU).
The country’s economy was, according to 2008 Q3
Electricity Market
reports, considered relatively resilient in light of the
The privatisation of the country’s National Power
onset of the current global financial crisis. The gross
Corporation (NPC) continues in accordance with
domestic product (GDP) growth rate for the first three
Republic Act 9136 of 2001 (also known as the
quarters of 2008 averaged 4.6 per cent. The service
Electric Power Industry Reform Act [EPIRA]), albeit
sector accounts for about half of the Philippine GDP.
not as smoothly as the Philippine government wants,
according to some reports.
Energy Overview
Designed to reduce electricity rates and improve the
The Philippines has natural gas reserves of 98.58 million
delivery of power supply to end-users, EPIRA encourages
m3, according to 2008 estimates, most of which is in its
greater competition (and hopefully efficiency) in the
Malampaya offshore gas field. It is estimated that these
electricity industry. The Energy Regulatory Commission
reserves could contribute as much
(ERC) was created, as a result of EPIRA, to act as the
as 3000 MW of energy over 20
governing body for a restructured power industry, and
years. No gas is exported, and the
oversee its separation into generation, transmission,
country’s natural gas production
distribution and supply sectors.
Source: Philippine Department of Energy
0.10%
and consumption was put at 2.1
31.52%
8.63%
28.25%
11.4
tonnes. Production in that year was an estimated 2.36
peacefully.
17.14%
by
estimated to be in excess of 96 million and the
the cabinet.
14.36%
rose
lowlands. In July 2008, the population was
The Philippines has a presidential, unitary form of
Power generation by source, 2007
products
Natural gas
Coal
Geothermal
Oil-based
Hydro
Other
million m3 in 2006.
All of the NPC’s electrical transmission functions
were transferred to what was then a new company,
Proven crude oil reserves are
called the National Transmission Corporation (TransCo),
estimated to be 139 million barrels
which has since been acquired by a consortium called
(December 2006). The country’s
the National Grid Corporation, according to reports in
crude oil imports fell from 78
January 2009.
261 million barrels in 2006 to
Meanwhile, the government’s Power Sector Assets
74 380 million barrels in 2007,
and Liabilities Management (PSALM) corporation, also
a reduction of some 5 per cent.
created from EPIRA, has begun auctioning power
As a result, the volume of crude
plants and had, at the time of producing this review,
processed locally decreased by
set an auction date of 20 February 2009 for the
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7 - 9 October 2009
IMPACT Exhibition & Convention Centre
Bangkok, Thailand
www.powergenasia.com
Co-located with Renewable Energy World Asia
–ASIA–
Strengthening energy security
for sustained economic growth
During its 16 years, POWER-GEN Asia has grown to be the region’s
premier exhibition and conference for the power generation and
transmission and distribution industries.
The conference has become the major annual platform for the
industry to discuss topics and issues of the day and is regularly
contributed to with keynote speeches from Government Ministers
and Governors of the region’s utility companies.
Inspired by the successful Renewable Energy World events in
Europe and North America, and supported by Renewable Energy
World magazine, PennWell is delighted to announce Renewable
Energy World Asia.
The launch of Renewable Energy World Asia will play an important
role in the power generation industry and provide a unique
opportunity for this rapidly developing industry sector.
INCORPORATING: POWERGRID ASIA PAVILION
Providing a central location for suppliers of T&D products and services
For more information on
participating in the conference as
a delegate or speaker contact:
For more information on exhibiting,
sponsorship and advertising
opportunities contact:
Mathilde Seuer
Conference Manager
T: +44 (0) 1992 656 634
F: +44 (0) 1992 656 735
E: paperspga@pennwell.com
Kelvin Marlow
POWER-GEN Asia
T: +44 (0) 1992 656 610
F: +44 (0) 1992 656 700
E: exhibitpga@pennwell.com
Melissa Fitzgerald
Renewable Energy World Asia
T: +44 (0) 1992 656 632
F: +44 (0) 1992 656 700
E: exhibitrewa@pennwell.com
Emma Clowting
POWERGRID Asia Pavilion
T: +44 (0) 1992 656 663
F: +44 (0) 1992 656 700
E: exhibitpga@pennwell.com
Owned and produced by:
Flagship Media Sponsors:
Supporting Organisations:
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Electricity Generating Authority of Thailand
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Philippines
coal-fired Sual (1000 MW) and Pagbilao (700 MW)
an estimated 12 105 MW (of which the Luzon grid will
plants. Under EPIRA, PSALM will select independent
see predicted demand of 8884 MW). Annual demand
% share
power producer administrators (IPPAs) through
by 2016 is predicted to be almost 69 000 GWh,
compared with the 47 337 GWh of 2007.
Gross power generation by utility (2007)
UTILITY
Generation (MWh)
ASIA-PACIFIC
NPC
15 151 018
25.42
bidding. EPIRA also resulted in the creation of the
Philippine Electricity Market Corporation (PEMC), the
Renewable energies will play a critical role in
NPC-SPUG
437 373
0.73
governing body for the Wholesale Electricity Spot
meeting this demand. The Philippine Renewable
NPC IPP
26 155 929
43.88
Market (WESM).
Energy Bill was passed in 2008, after more than 18
MERALCO IPP
14 413 361
Non-IPC
3 454 109
Total Generation
59 611 790
Gross power generation saw an increase of some
years of deliberation. It is hoped that the bill will boost
24.18
five per cent, from 56 784 GWh in 2006 to 59 612
the country’s energy self-sufficiency to a target level of
5.79
GWh 2007. Of this total power in 2007, natural gas-
60 per cent by 2010.
100.00
Source: Philippine Department of Energy
fired power plants made the greatest contribution at
Based on DOE projections, if renewable energy
31.52 per cent (18 789 GWh), followed by coal fired
sources could supply an additional 2500 MW of
at 28.25 per cent.
total power supply in the next ten years, the country
Generation from oil-based power plants increased
by 10.36 per cent, from 4665 GWh in 2006 to 5148
Growth in peak demand by grid,
between 2006 and 2007
GRID
2006 (MW)
LUZON
6466
VISAYAS
2007 (MW) % CHANGE
6643
1066
GWh in 2007, to represent 8.63 per cent of the total
1102
2.74
3.38
MINDANAO
1228
1241
1.06
PHILIPPINES
8760
8986
2.58
Source: Philippine Department of Energy
Infrastructure Investment
oil-based power plants in the Luzon grid during July
According to the latest DOE figures, to meet the
2007, a month during which the Pagbilao and Sual
projected increase in energy requirements, the
coal-fired power plants were on outages, due to fuel
distribution utilities are planning for 23 414 circuit km
constraints.
of lines to be rehabilitated and/or upgraded and for a
Hydroelectric power generation fell by 13.84 per
further 14 249 km to be constructed. Also, some 6478
cent, from 9939 GWh in 2006 to 8563 GWh in 2007,
MVA of substation capacity will be required, of which
to represent 14.36 per cent of the power mix. This fall
the Luzon grid will need an estimated 4415 MVA.
was attributed to low rainfall during the summer.
These projects are predicted to require an investment
from
geothermal
power
plants
Planned power plant developments, which will
GWh in 2007, a fall of 2.39 per cent, due to
require approximately $600 million, include a 200
outages experienced by the Macban, Bacman and
MW coal-fired plant in Naga City, Cebu, and a 29 MW
Tiwi geothermal plants in Luzon. Most outages were
thermal plant and 15 MW diesel plant in Masbate
due to deactivated shutdowns as a result of steam
province. However, following the long-awaited passing
deficiency or isolation resulting from transmission/
of the Renewable Energy Bill, most interest seems to
network problems. Geothermal’s share in the power
be in renewable energy technology. For example, at
mix in 2007 was 17.14 per cent, down compared with
least six new wind power projects are expected to
its 18.43 per cent share in 2006.
start in 2009. These could account for almost 200 MW
Other renewable energy contributed only 0.10 per
of generation (from an investment of around $500
cent of gross generation in 2007, but this was up on
million), but the total potential wind power capacity
its contribution in 2006, and the Department of Energy
for the Philippines has been put at 7404 MW across
(DOE) is predicting that biomass, solar, wind and ocean
1038 sites surveyed nationwide.
Source: Philippine Department of Energy
3.42%
34.11%
of $2.3 billion.
decreased from 10 465 GWh in 2006 to 10 215
energy will play increasingly important roles in coming
28.06%
same period.
mix. A significant factor here was the full operation of
Generation
Electricity sales, 2007
could achieve $1.2 billion in energy savings over the
34.41%
Industrial
Residential
Commercial
Other
years. Some figures suggest these
Future Trends
sources may be contributing as
The Philippines is working hard towards self-sufficiency –
much as 104.1 million barrels of
with heavy emphasis on renewable energy. Fortunately,
fuel oil equivalent by 2012.
the country’s geography works heavily in its favour. It
Growth in electricity sales
is currently the world’s second largest generator of
accelerated between the 45 672
power from thermal energy after the US, but its plan
GWh of 2006 and the 48 009
to almost double thermal power generation during
GWh of 2007, an increase of some
the next ten years could see the country take the
5 per cent, with some 60 per cent
lead. Wind and hydro (including tidal) power will play
of 2007 sales made by PIOUs.
important roles.
The DOE, working with the
Another offshoot of EPIRA, the Countrywide
distribution utilities, is predicting
Electrification and Missionary Service Company
peak demand will grow annually
(CEMSCO) is promoting indigenous and renewable
at an average of 4.43 per cent up
energy as a way of electrifying those areas that do not
until 2016, by which time it will be
yet have access to electricity.
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Thailand
ASIA-PACIFIC
Electricity generation in Thailand is highly reliant on natural gas. As demand
for electricity grows, the Thai economy could be badly damaged by
disruption to its gas supply.
Thailand, in Southeast Asia, has a population of 65
a facility capable of producing Power generation by fuel type, October 2008
million people. Inflation in the country is around
5 million tonnes per year at Map Ta
4.6 per cent and real gross domestic product (GDP)
Phut in Rayong. While some have
growth approximately 5 per cent.
questioned the need for an LNG
In September 2006, a military coup overthrew the
import terminal, it is generally felt
government of Prime Minister Thaksin Shinawatra,
that it would add an additional layer
although the change in leadership did not immediately
of supply security by diversifying the
affect oil or natural gas production. During 2006,
country’s import sources.
Thailand’s real GDP grew by an estimated 5 per
cent, right on trend with average five-year growth
Electricity Market
levels. Political stability was restored when democratic
The Electricity Generating Authority
elections were held in December 2007.
of Thailand (EGAT) is primarily
5%
1% 3%
21%
Thailand’s energy intensity and carbon emissions
responsible for power generation and
have increased with the introduction of energy-
transmission, while the Metropolitan
intensive industries.
Electricity Authority (MEA) and the Provincial Electricity
Energy Overview
70%
electricity to Bangkok an
d the provinces respectively.
EGAT reports to the Office of the Prime Minister, while
portion of its needs. The country has large natural gas
MEA and PEA report to the Ministry of the Interior.
reserves, and production has increased substantially in
EGAT’s long-term plan is to increase the minimum
recent years. However, the country remains dependent
power reserve from 15 per cent to 25 per cent to raise
on imports of natural gas to meet growing energy
energy supply security. EGAT plans to increase net
demand.
installed capacity to 43 918 MW by 2011.
Thailand’s oil industry is dominated by PTT, formerly
There have been repeated attempts to privatise
the Petroleum Authority of Thailand. The company
EGAT, with the intention of using the funds raised to
underwent a partial privatization in 2001, during which
invest in building new power plants. In early 2004,
32 per cent of its equity was sold. Thailand’s oil sector is
massive employee protests forced the EGAT governor to
open to foreign investment, although foreign companies
resign, thus delaying the planned privatization. The new
usually work in joint ventures with PTT Exploration and
governor, Kraisri Karnasuta, worked with employees to
Production (PTTEP), PTT’s upstream subsidiary.
address their concerns and, by December 2004, 80 per
According to the Oil & Gas Journal, Thailand had
cent of the employees supported privatization, and the
419 billion m3 of proven natural gas reserves as of
process was restarted. The agency was transformed into
January 2007. Natural gas production has risen steadily
a public limited company in June 2005. However, EGAT’s
in recent years, although not enough to keep up with
privatization was again halted when a petition was filed
the growth in domestic consumption.
with the SAC a few days before the scheduled listing.
producing fields. Foreign companies, however, supply
Natural gas
Lignite/Coal
Hydro
Oil
Import & others
Authority (PEA) share responsibility for distributing
Thailand has limited domestic oil and imports a significant
PTTEP has a stake in many of Thailand’s natural gas
(Source: EGAT)
In March 2006, the court ruled against EGAT’s
the bulk of Thailand’s natural gas output. Chevron is
privatization, citing conflicts of interest, public Installed generating capacity, October 2008
hearing irregularities and the continued right of
the largest foreign operator, accounting for 70 per
expropriating public land. The court also ruled
cent of the country’s natural gas production.
that insufficient opportunities were given for
Several ongoing projects will increase Thailand’s
EGAT employees to make themselves heard, as
natural gas supplies in the next few years, particularly
there was only one public hearing for employees.
in the Malaysia-Thailand joint development area (JDA)
The court nullified two decrees: one ordering
located in the lower part of the Gulf of Thailand. It has
the dissolution of the status of EGAT as a state
been estimated that the JDA holds between 266 billion
enterprise and the other serving as a new charter
m3 and 679 billion m3 of natural gas reserves.
for EGAT plc.
PTT has established a subsidiary to study the feasibility
The Thai government has declared its objective
of building a liquefied natural gas (LNG) import and
of increasing the level of renewable energy
storage terminal in Thailand. PTTLNG is considering
use from the current level of 0.5 per cent to 8
(Source: EGAT)
EGAT
IPP
SPP
Import &
exchange
48
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0
5000 10000 15000 20000
MW
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PennWell Global Power Review 2009
Electricity production and consumption
(Source: EGAT)
2004
2005
per cent by 2011. Biomass-based energy is
invest $6 billion in building a 4000 MW nuclear power
expected to provide over 60 per cent of this,
plant, due to start commercial operation in 2020. A
reflecting Thailand’s high dependence on
consortium, which includes Siemens and Marubeni,
the agricultural sector and its access to large
is building a 700 MW combined cycle power plant,
amounts of waste agricultural material.
designated Bang Pakong 5, scheduled for completion
To achieve the 8 per cent goal, the
in March 2009. It will run on natural gas, with oil as a
2006
government is encouraging the power
back-up fuel. Amata and Sumitomo are building a 280
generation sector to produce around 1900
MW cogeneration plant in Rayong, due for commercial
2007
MW from renewable sources. Independent
operation in 2012. SGC Wind Energy is developing
power providers (IPPs) are required to adhere
Thailand’s first private wind-power plant, with a capacity
to the renewable portfolio standard, under
of 30 MW. It will be located in Nakhon Si Thammarat on
which power producers that wish to sell
the Hua Sai coastline. Demco is developing a 100 MW
power to EGAT must produce 5 per cent
wind plant in Petchaboon.
2008
0
30000 60000 90000 120000 150000
Production (GWh)
Consumption (GWh)
of their installed capacity from renewable
sources.
Finally, in June 2007, Thailand’s National Energy
Policy Committee called for bids for up to 1000 MW of
Agricultural residues, such as bagasse and palm
SPP plants, ranging in size from 10-100 MW. Around
fibre, have been used as energy sources in cogenera-
half of this capacity will be from cogeneration plants,
tion plants. Expected improvements in the operating
while the other half will be from renewable energy.
efficiency of these plants will ensure greater heat rate
and improved electricity levels.
Future Trends
EGAT also plans to encourage very small power
Between 2007 and 2021, electricity demand in Thailand
producers (VSPP) to use solar cells. A solar cell power
is expected to increase at an average of around 5.7 per
plant with a capacity of 500 kW, the largest plant in
cent per year. The domestic gas reserve is limited, and
Southeast Asia, was opened in a remote area in the
the country is likely to face increased dependency on
north of Thailand in July 2006. Solar energy plants
gas imports.
are expected to increase in remote areas that do
Although domestic lignite reserves are quite
not have access to the power grid. Unfortunately,
abundant, they have a low heat content and are
the adoption of solar power is hindered by its cost,
environmentally damaging. Any expansion of coal-fired
which is approximately four or five times higher than
power plants is unlikely, due to public opposition to
conventional biomass power generation.
environmental emissions. Therefore, any new coal-fired
Infrastructure Investment
power plants would have to rely on imported coal,
which raises the issue of supply security.
The Thai Board of Investment (BOI) is intensifying
The current high dependence on gas in power
its efforts to lure capital investment to the kingdom
generation makes Thailand vulnerable to fluctuations in
by launching an eight-point plan to hone Thailand’s
the international market. Spikes in the price of oil also
competitive edge as a destination for direct investment.
raise the price of gas, which in turn affects the electricity
The board aims to attract smart investment into projects
tariff. Meanwhile, this dependence makes the electricity
from knowledge-based industry sectors, life science and
generation system more vulnerable to disruption.
value creation industries, as well as renewable energy
investments, to foster sustainable development.
This vulnerability could be mitigated in a number
of ways. Reducing the cost of natural gas for power
The World Bank ranks Thailand 15th in the world
generation would be a complicated task, as it would
in ease of doing business, according to its “Doing
affect the whole gas supply chain and the whole
Business in 2008” study, well ahead of Malaysia,
national energy policy. Diversifying the fuel mix for
Korea, the Philippines, China and other Southeast
power generation would reduce vulnerability, but the
Asian markets.
environmental impact of coal-fired power makes it
Underlining the pace of development is a series
unlikely to be adopted in a major way. Nuclear energy
of power infrastructure investments over the past two
could mitigate vulnerability, and the country already has
years. A project to establish interconnections in the
plans to install four 1000 MW nuclear power plants
southern province Kari will involve installation of 33
by 2021. But nuclear power is not going to play a
kV subsea cables, which will link the islands of Koh Pu,
significant role in the near- to medium-term future.
Koh Phi Phi Don and Koh Siboya with each other and
Renewable energy will increase, but it is start-
the mainland, as well as the island of Koh Lanta with
ing from a tiny base, and will not be able to meet
the mainland. In addition, a 24 km, 115 kV, 100 MW
the country’s fast-growing demand for electricity.
connection will link Khanom on the mainland with Ko
However, it could reduce dependence on gas, as well
Samui island in the Gulf of Siam. EGAT is planning to
as fuel imports.
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Vietnam
ASIA-PACIFIC
Vietnam’s plans for an additional 2.7 GW of new capacity by 2010 have
been dealt a blow by the global downturn in demand for the Southeast
Asian nation’s exports.
The Socialist Republic of Vietnam is located
an estimated 332,000 bpd. Although it is a
on the Southeast Asian peninsula and has a
significant net oil exporter, Vietnam relies
population of 85.3 million. Much of Vietnam’s
on imports of petroleum products, due to a
history has been a battle to stave off domination
lack of refining capacity. According to OGJ,
by foreign powers, but the country’s war of
Vietnam has around 192.6 billion m3 of
independence finally ended in 1975 with victory
proven natural gas reserves.
for the communist north.
Electricity production in Vietnam/GWh, 2006
2289
The Cambodian-Vietnemese war resulted in a
of around 165 million short tons (MMst),
the majority of which is anthracite.
settlement of October 1991 allowed Vietnam, still
Production has increased considerably over
a communist state, to implement a programme of
the past decade. Vietnam exports most of
economic renovation (known as Doi Moi).
its coal to Japan and China. The country
The Vietnamese government still holds a tight
has started to promote the construction
rein over major sectors of the economy through large
of new coal-fired power plants to diversify
state-owned enterprises and the banking system. The
energy sources and utilize domestic supplies.
Vietnam’s total generation capacity is approximately
privatize state-owned enterprises, but implementation
11.36 GW, of which state utility group Electricity of
has been gradual and the state sector still accounts for
Vietnam’s (EVN’s) facilities accounted for about 81 per
approximately 40 per cent of GDP.
cent. The remainder was under the control of other
Vietnam’s major export sectors are crude oil,
local and foreign independent power producers (IPPs).
textiles, footwear and fisheries. The country’s total
The current power generation system relies mainly
GDP is $71.1 billion, with a GDP per capita of $830.
on thermal gas power (39 per cent) and hydropower
Vietnam’s rate of real GDP growth was an estimated
(37 per cent), while thermal coal power, which currently
6.9 per cent in 2008, down from an anticipated
accounts for 13 per cent, will play an increasingly
7.3 per cent, owing to lower credit expansion and
important role in the medium and long term.
For years, Vietnam had suffered from chronic power
inflation, which is expected to be 12 per cent, and to
shortages, but in January 2009 it announced, for
reduce downward pressure on the currency.
the first time, that it has more electricity than it
needs, due to slowing demand. The global economic
downturn, especially in Japan, the USA and Europe,
Over the course of two decades, Vietnam has emerged
Vietnam’s key trading partners, has hurt Vietnam’s
as an important regional producer of oil and natural
export manufacturers.
gas in Southeast Asia. The country has boosted
Coal
Oil
Gas
Hydro
Electricity Market
policy issues in 2009, most notably the need to control
Energy Overview
20915
Total: 56494
government plans to reform key sectors and partially
The government faces a number of challenging
9691
23599
Vietnam has recoverable coal reserves
period of isolation from the West. But the Cambodian
dampened consumption growth.
Source: International Energy Agency
In 2008, demand for power was led by industry.
exploration activities, allowed greater foreign company
It jumped around 16 per
involvement in the oil and natural gas sectors and
cent, while supply only
introduced market reforms aimed at strengthening
rose 12 per cent, forcing
Vietnam’s energy industry.
the government to import
According to Oil & Gas Journal (OGJ), Vietnam
electricity from China and
holds approximately 600 million barrels of proven oil
rotate power outages in
reserves, all of which are located offshore. Ongoing
both Hanoi and Ho Chi Minh
exploration activities are likely to increase this figure
City. Government officials
in the future, as Vietnam’s waters remain relatively
now expect that Vietnam
under-explored.
will have redundant capacity,
Vietnam’s oil production has increased steadily over
as demand is expected to
the past two decades. The country’s oil production was
grow by 6-7 per cent, while
around 400,000 barrels per day (bpd) in 2008, based on
generation capacity is set to
new production projects. In 2008, the country consumed
rise by 14-15 per cent.
Electricity production by sector (GWh), 2006
Source: International Energy Agency
6203
1547
607
22975
4159
20569
Total: 56494
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Industry
Transport
Residential
Commercial &
Public Services
Agriculture/Forestry
Energy Sector’s
own use
Distribution losses
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PennWell Global Power Review 2009
Soaring demand had also led EVN to plan to invest
Quang Ninh. AES Corp would invest up to 90 per cent
$3bn a year to build 33.2 GW of new generation
of the estimated cost while Incoming will contribute
350 700 bbl/day (2007 est)
capacity by 2015. So far there have been no delays in
the remaining 10 per cent.
271 100 bbl/day (2007 est)
EVN power projects.
Vietnam energy overview
Oil production
Oil consumption
Oil exports
Oil imports
Oil proved reserves
394 400 bbl/day (2005)
projects (one at 2 GW and two generating 4 GW),
the new electricity law that outlines how a competitive
with a potential total capacity of 10 GW. In November
271 100 bbl/day (2007)
electricity market will be developed in three phases:
2008, the Ministry of Industry and Trade announced
the first focuses on creating competition in power
plans to build two 2000 MW nuclear power plants
generation; the second introduces competition for
in the central province of Ninh Thuan, which will be
bulk supply of electricity, including supplying directly to
operational from 2020 to 2022.
600M bbl (1 January 2008 est.)
Natural gas production
Natural gas consumption
3
6.86bn m (2007 est.)
6.86bn m3 (2007 est.)
Natural gas proved reserves 192.5bn m3 ( 1 Jan 2008 est.)
Source: CIA Factbook
Vietnam plans to undertake three nuclear power
In 2004, the Vietnamese National Assembly passed
major industrial customers; and the final phase involves
The Ninh Thuan nuclear power plant No 1 would
competition at the retail level. The Ministry of Industry
be in Phuoc Dinh commune, Ninh Phuoc district. Its
anticipates that this market restructuring process may
two reactors will be put into commercial operation by
take as long as 20 years.
2020 and 2021.
One of the many important transitional steps towards
The Ninh Thuan plant No 2 will be built in Vinh Hai
a competitive electricity market is the restructuring of
commune, Ninh Hai district. Its two reactors will be put
EVN, a state owned monopoly with many wholly
into commercial operation by 2021 and 2022.
owned subsidiaries, into shareholding companies with
different types of shareholders, including local and
Vietnam has yet to choose the technologies it will
use for its new nuclear power plants.
foreign private investors. This restructuring aims to
In October 2008, OneEnergy (a joint venture
create a more market-oriented business model, which
between CLP Group and Mitsubishi) and EVN signed a
does not have as many close ties to the government,
memorandum of understanding for the development
by splitting various subsidiary entities away from EVN
and ownership of the 2000 MW coal fired Vinh Tan
to form new shareholding companies. In 2008, Hanoi
power complex in the Binh Thuan province of Vietnam.
approved the establishment of the National Electricity
Construction on the first phase of the project is
Transmission Corporation, which will be 100 per cent
expected to begin in late 2010. It is scheduled to enter
owned by Electricity of Vietnam.
operation by 2014.
As a result of the government’s broader rural
Alstom Hydro is providing EVN with all the electro-
electrification programme, nearly 12 million out of
mechanical equipment for the largest hydro power
around 13 million rural households in Vietnam now
plant in Southeast Asia, with a planned capacity of
have electricity. In 1996, only 50.7 per cent of rural
2400 MW, located in Son La, in a deal worth €190m
households had electricity, but by 2005 the reach had
($270m). The first unit is scheduled for commissioning
grown to 90.7 per cent. As of October 2006, the rural
in 2010 and the last in 2012.
electrification rate in Vietnam was 91.53 per cent and
is expected to reach nearly 100 per cent by 2020.
Infrastructure Investment
Future Trends
In May 2008, Vietnam’s trade and industry ministry
submitted plans to build a competitive electricity market
According to Hanoi’s Sixth Power Development Master
in Vietnam. The ministry put forward a three-stage
Plan, it is estimated that an additional yearly capacity
scenario for restructuring the electricity industry that
of 2700 MW will be required between 2006 and 2010
was supported by international consultants, the World
to meet the rapidly growing demand for power.
Bank and the Asian Development Bank (ADB).
In January 2009, Malaysian firm Janakuasa won
Following a study of Vietnam’s industry, targets
approval from the Vietnamese government to develop
and capacity to develop its market, the Vietnamese
and construct Duyen Hai 2, a 1200 MW coal-fired
government has decided that the model for its
power plant in the southern province of Tra Vinh.
competitive electricity market is a cost-based pool (CBP).
Duyen Hai 2 is among the projects listed in the Sixth
Under these plans, all electricity plants with capacity of
Power Facility Development Master Plan to boost
30 MW or higher (except BOT electricity plants with
power capacity in Vietnam.
long-term service and consumption contracts) must offer
In December 2008, the Vietnamese government
said it would grant an investment license to US utility
prices directly to the market and electricity generating
plants sign trading contracts with each buyer.
AES to build a 1200 MW coal-fired power plant in
The unit price that each generating plant can offer
northern Vietnam at an estimated cost of $1.4 billion.
is based on specific principles, and ceiling and floor
AES will form a joint venture with state-owned coal
prices, in an attempt to avoid unexpected price hikes
producer Incoming to operate the plant, which will be
in the market. The trade and industry ministry would
located in Mong Duong in the coal hub province of
regulate this new market.
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europe
EUROPE
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$#1))%)&*+"+)"!$+0
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Czech Republic
A steady growth in electricity demand since earlier in the decade means that
the Czech Republic will turn from a net exporter to a net importer of power
by 2015 unless new capacity is built.
The Czech Republic is a landlocked state within
Gross theoretical
central Europe. The country shares borders with
hydropower poten-
Germany to the north and west, Poland to the
tial in the Czech
north and east, Slovakia in the south-east and
Republic is 23 TWh/
Austria in the south. Its land area is 78 866 km2,
year, according to
and the population in 2008 was 10.2 million,
the World Energy
slightly lower than in 2007, reflecting a small
Council, of which
negative population growth rate.
4 TWh/year is con-
From the end of the Second World War until
sidered technically
2175 MW
3760 MW
exploitable.
part of the eastern European state of Czechoslovakia.
country has a tra-
Independence was achieved in 1989, and in 1993 the
dition of exploiting
two states that comprised Czechoslovakia, the Czech
small hydropower,
and the Slovak republics, separated. In 1999, the Czech
which declined dur-
Republic joined NATO, and in 2004 it became a member
ing the Soviet era
of the European Union (EU). The country hopes to
but is now increasing again, with 1188 sites in use.
become a member of the euro-zone in 2012.
Hydropower accounted for 76 per cent of the Czech
Steam and combined
heat and power plants
Nuclear power plants
Combustion plants
Hydropower plants
Wind power
The
The country is a democratic republic with an
Republic’s renewable output in 2005, with biomass
elected president and parliament. The economy is now
making up a further 18 per cent and biogas 5 per cent.
market based, with a strong industrial tradition. It was
Wind potential could amount to 11 667 MW of capac-
booming until the middle of 2008, when the financial
ity, but the economically exploitable capacity may only
crisis began to affect growth in all Eastern European
be 3000 MW. There is also a technically exploitable
countries. GDP in 2007 was $175.3 billion and GDP
geothermal potential of 300 MW.
Energy Overview
44 MW
51 MW
the fall of the Soviet Union, the country formed
growth 6.6 per cent.
Source: Czech Statistical Office
Installed capacity by type, 2006
11478 MW
Electricity Market
The Czech Republic electricity market was fully liberalized
Coal is the principal energy resource in the Czech
on 1 January 2006, when domestic customers were
Republic, accounting for 42.5 per cent of total energy
allowed to choose their supplier. The market is operated
consumption in 2005. Reserves are estimated to be
by the Czech electricity market operator, OTE, a joint
63.9 million tonnes, comprising both bituminous
stock company established by the government, which
coal and lignite. Bituminous coal production in 2006
must legally retain shares worth 67 per cent of its capital
was 13.4 million tonnes, while lignite production was
value. The market is overseen by two organisations: the
49.1 million tonnes. Of the latter, 41.0 million tonnes
Energy Regulatory Office, which controls tariffs and
was used for electricity and heat production. Coal
regulates market rules, and the Ministry of Industry and
consumption fell by 26 per cent between 1993 and
Trade, which oversees the whole sector. There is also a
2003, but has started to rise again, slowly.
State Energy Inspection Board.
Oil reserves in 2006 were 15 million barrels. In
Power generation in the Czech Republic is
2005, the Czech Republic produced 18 030 barrels per
dominated by CEZ. The group is a former state-
day (bpd) and consumed 203 700 bpd, making the
controlled utility and, although it is now a private
country a net importer. The country has traditionally
sector company, the government holds most of its
imported most of its oil from Russia, but new pipeline
shares. In 2007, CEZ controlled 73 per cent of the
projects have allowed it to diversity its sources.
generating capacity in the country. Its facilities include
Natural gas reserves were estimated to be
the country’s two nuclear power plants, as well as coal,
3.80 billion m3 in 2006, the lowest in the region.
hydropower, wind and solar plants. The remaining
Production was 165 million m3, but consumption was
27 per cent is provided by a large number of small
9.08 billion m3 in 2005. Most of this natural gas, like
companies, none of which has more than a 3 per cent
the oil, is imported from Russia, but small amounts also
share of generating capacity. Many of these are district
come from Norway and Germany. The use of natural
heating plants which, together, contribute as much as
gas has increased since the country joined the EU.
20 per cent to the national electricity output.
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EUROPE
F
which accounted for more than 95 per cent of the
capacity, but considerable
electricity supply market in 2007, according to the EU.
hope is being placed on the
Based on figures from the Czech Statistical Office,
development of wind power:
the total installed capacity in the Czech Republic in 2006
capacity should reach 1400
was 17 508 MW. This was dominated by coal-fired
MW by 2020. There are also
steam and combined heat and power plants, which
plans to co-fire biomass in
accounted for 11 478 MW (66 per cent). (OTE figures
fossil fuel plants, with the
suggest that roughly 4000 MW of these coal-fired
first co-fired unit due to be
plants have heat production capacity.) Nuclear power
built at Opatovice.
plants contributed a further 3760 MW (22 per cent)
Beyond 2018, OTE has
and hydropower plants, including two pumped-storage
considered three options.
hydro stations, generated 2175 MW (12 per cent). There
Under
a
was a small wind power capacity of around 1.2 MW in
option,
two
2006 and a 10 kW solar station. However, by the end of
supercritical hard coal fired
2007 wind capacity had expanded to 133 MW.
units
burning
0
Predicted consumption
70000
60000
50000
40000
Electricity production in 2006 was 84 362 GWh. Of
fuel will be installed, one
this, 54 992 GWh (65 per cent) was produced by coal-
in 2019 and one it 2026.
30000
fired steam and combined cycle plants. The country’s
The second, nuclear option
20000
nuclear plants provided the bulk of the remainder,
envisages
26 046 GWh (31 per cent). The remaining 4 per cent
a
was primarily from hydropower. Domestic consumption
pressurized water reactor
in 2006 was 60 368 GWh. A further 12 631 GWh were
by the middle of 2019.
exported, primarily to Germany, Austria and Slovakia.
However, this timetable is
Exports have fallen during the decade, but remain an
considered ambitious, so a
important source of revenue.
third scenario will see the
1200
commissioning
MW
advanced
Source: Czech Energy Market Operator (OTE)
80000
MW
imported
40000
20000
conventional
600
60000
2006
scope
2005
little
2004
is
for additional hydropower
2003
There
is dominated by three companies: CEZ, EoN and PRE,
GWh*
regional distribution companies, but their ownership
80000
2002
between 2013 and 2020.
Production (GWh)
Consumption (GWh)
2001
Western European system in 1995. There are eight
Source: Czech Statistical Office
2000
will be taken out of service
1999
Hungary and Slovakia. The country linked up to the
100000
1998
base load lignite-fired units
1997
Alongside this, 3380 MW of
system, which links the Czech Republic, Poland,
1996
Czech transmission system is part of the CENTREL
Electricity production and consumption (GWh)
1995
and grid balancing purposes.
10000
0
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
also be installed for peaking
GWh
The transmissions system is controlled by CEPS,
* These figures are based on the OTE reference scenario
nuclear unit enter service in 2026, while a 400 MW
combined cycle plant is installed in 2019.
According to the most recent reference scenario
An additional consideration is a proposal by CEZ to
for electricity consumption in the Czech Republic
expand the Temelin nuclear power plant from two to
developed by OTE, electricity demand will rise from the
four units, as was originally planned when the plant
current level of 60 GWh to 63 GWh in 2009, 72 GWh
was approved in 1979. In July 2008, the company
in 2020 and 78 GWh by 2030. A high consumption
applied to the Ministry of the Environment for an
scenario would push consumption by 2030 to above
environmental impact assessment of the proposal to
86 GWh, while in a low consumption scenario, it is
be carried out.
assumed to level off at close to 69 GWh around 2030.
B
Czech Republic
another independent yet state-owned company. The
Infrastructure Investment
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Based on the reference scenario, the country will
Future Trends
become a net importer of electricity in 2015 if no new
Electricity sector growth predictions made before the
capacity is constructed.
2008 global recession began suggest a steady rise
In order to meet growing demand and maintain
in demand for power in the Czech Republic. This is
export capacity, the country’s nuclear power plants
based on an assumption of continual GDP growth
will all have their lives extended to 60 years and
between 2006 and 2030, which is now unlikely. Even
the capacities of the four units at Dukovany will be
so, whatever path future growth follows, changes in
increased by around 20 MW to 481 MW. In addition,
the generating capacity mix will be necessary to cope
three 660 MW supercritical lignite-fired generating
with the retirement of old lignite plants and to meet
units will be built between 2009 and 2018, along with
tougher EU environmental controls to combat global
a 285 MW natural gas-fired combined cycle unit (for
warming. The country will also want to remain a net
completion in 2017). Three open-cycle gas turbines will
exporter of power for economic reasons.
56
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France
EUROPE
Attempts to unbundle France’s energy behemoths and create greater
competition in the market have met with predictable resistance. However,
regional energy market development and market openness are now a priority.
Electricity production in France
France is a founder member of the European
Under the new directive, France, like other EU
Union (EU) and remains a leader of the bloc’s
member states, has to play its part in meeting the
27 countries. Its 62 million population is growing
target of generating 20 per cent of its energy needs
at around 0.5 per cent annually. The country’s gross
from renewable sources by 2020. France’s renewable
domestic product (GDP) per capita was $32 000 in
energy target is 23 per cent. In 2005, the reference
2007 – growing at around two per cent a year –
year for the EU legislation, renewables provided only
which includes a significant contribution from the
10.3 per cent of France’s energy. Most of that was from
67 TWh of electricity it exported in 2007.
its hydropower installations, which supplied almost
Unemployment was running at 7 per cent in
10 per cent of the country’s energy. A shift towards
2007, but the global economic downturn in 2008
wind power is the most likely addition to the country’s
has damaged the French manufacturing sector, which
nuclear-heavy power portfolio.
Source: French Ministry of the Economy, Industry and Employment
9.9 TWh
6.9 TWh
20.9 TWh
21.6 TWh
60.9 TWh
has been hit by layoffs.
By January 2009, the
Electricity Market
French government had
State-backed EDF is the dominant player in France’s
announced
economic
electricity market by far. Even the recently combined
stimulus
packages
GDF-Suez, which plans on increasing its share of the
amounting
to
more
retail market, only expects to gain around 20 per cent.
than €400 billion ($512
(GDF-Suez is also backed by the government, which will
billion), including around
hold a 35 per cent share in the combined business.)
€46 billion ($59 billion)
428.7 TWh
Nuclear power
Hydropower
Coal
Gas
Oil
Wind and waste
energy
competition, in accordance with EU laws, EDF’s market-
would include spending
leading position has been supported by a tariff structure
on new infrastructure.
that allows it to offer much cheaper tariffs to domestic
France
always
customers who do not switch supplier. Customers
been more willing than
switching cannot switch back to the cheaper tariff, so
most other free-market
there is little incentive to change.
investment
has
European countries, such
In 2007, for example, although the government
as the UK, to retain a
agreed an increase in regulated prices, the regulated
government stake in key
tariff was still only about half the price of electricity on
industries such as electricity and gas, so these could be
the wholesale spot market, although the prices were
a target for government investment this year.
increased by 8 per cent for large businesses and by
Energy Overview
Coal consumption
144.3 million barrels
20.89 million short tons/year
Natural gas reserves
12.86 trillion cubic feet
Nuclear electricity generation 415.5 terawatt-hours/year
Source: Nationmaster
tariffs were increased by only 2 per cent.
The European Federation of Energy Traders said
and electricity companies, Gaz de France and Suez,
that renewing the tariff at all was “another step
has fundamentally altered the balance of the country’s
backwards” in the process of opening France’s
electricity supply industry. Despite the planned spin-off
energy market. It said the low prices for industry and
of a water and waste company – Suez Environnement
commercial consumers set by the French government
– the merged group will be among Europe’s top three
was “counterproductive”.
EDF and E.ON of Germany.
Oil reserves
6 per cent for small businesses. Domestic regulated
The merger between two of France’s largest energy
energy companies, similar in size to France’s mighty
France energy overview
Although the market has been partly open to
that
of
The slow pace of market reform in France has
attracted the attention of the European Commission
The merger had been a pet project of French
(EC), which opened an investigation into EDF’s practices
President Nicholas Sarkozy, who pushed it through
in the industrial and commercial market in July 2008.
more than two years of preparation and debate.
In December, the commission pressed ahead with anti-
Sarkozy was also, perhaps surprisingly, an important
trust action, claiming in a statement of objections – the
driving force behind EU agreements on measures to
first phase of legal action – that long-term industrial
tackle climate change. While he was not a wholehearted
contracts infringed EU rules on the abuse of dominant
supporter of the proposals, he wanted to ensure a
market position. It said the contracts prevent customers
compromise was reached before France relinquished its
from switching, reduce liquidity in the markets and
six-month EU presidency at the end of 2008.
stop new suppliers from entering the market.
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France
EDF has fought hard to retain its market dominance,
are signs that the credit crunch
Gross electricity generation from renewables, 2006
which is bolstered by the fact that it is vertically
is freeing up some capacity. So
Source: European Commission Directorate-General for Energy and Transport
integrated, with energy generation, transmission,
far the largest French wind farm
distribution and retail supply businesses. It has been
is rated at 87 MW. New nuclear
a leading opponent of the EC’s drive, embodied in
projects, in addition to the
its so-called “third energy package” of legislation.
station now under construction
The commission aims to force energy companies to
at Flamanville, also remain on
unbundle their transmission businesses from generation
the agenda. EDF also plans major
and supply, arguing that vertical integration allows
investment in photovoltaic (PV)
companies to limit competition in their markets. EDF,
solar power, with a target to
and the French government, have argued in favour
install 500 MWp by 2012. Its
of a “third way”, in which energy companies can
biggest investment so far is a 7
continue to own network companies, but the networks
MW PV plant in an industrial area
are operated or overseen by an independent system
in the Aude region, opened in
operator. EDF argues that its transmission company, RTE,
December last year.
already operates as an independent entity.
It remains to be seen whether France’s preferred
5281 GWh
Meanwhile, both companies’
been given impetus by disputes between Russia and
one of the institutions that has to approve new
Ukraine over Russian gas supplies. The dispute this
legislation, has reiterated more than once its support for
winter caused less disruption to west European gas
full unbundling and independence for network activities.
supplies than it did the year before, but concerns
The position of France’s heavyweight ally, Germany,
over the lack of supply diversity have meant GDF-Suez
which also opposes unbundling, has been weakened by
and EDF – in common with other European energy
recent national agreements in which energy companies
companies – have invested heavily in facilities to import,
agreed to sell their network companies to avert cartel
regasify and transport liquefied natural gas (LNG).
investigations by the German regulator.
Alongside new import facilities, France has joined a pan-
56659 GWh
European drive to develop additional gas storage sites.
The presence of two behemoths in the French market
Future Trends
and the EC’s determination to break the stranglehold on
Trends for the next year, and up to 2020, are beginning to
the energy market of these two state-backed utilities,
emerge as battle lines over the third energy package are
mean that much of the companies’ investments will be
drawn. Whatever the final compromise over unbundling,
outside their French home market.
it is clear that network companies will be further separated
But the strategies of both EDF and GDF-Suez depend
from their vertically integrated parents and more closely
on the final form of the EU’s legislation on unbundling,
co-ordinated with their network counterparts across the
and whether the two companies decide to divest their
continent. The need for closer co-ordination has also been
energy networks. That seems unlikely, especially in light
driven by technical requirements: the shift to renewable
of the EU’s commitment to increased interconnection
energy and the development of regional electricity
between electricity markets. A long-awaited new link
markets have both driven increasingly large transfers
between France and Spain, long-since named among
of power across national and regional boundaries.
the bloc’s priority interconnection projects, received new
Increased interconnection and greater market openness
impetus last year, and increased capacity across France’s
will add to that process. EDF’s RTE subsidiary joined its
link with the UK and a new link with Ireland have also
Belgian counterpart, Elia, in setting up a co-ordination
been proposed.
centre for cross-border electricity transmission (Coreso),
EDF’s £9 billion acquisition of the UK’s nuclear
Solar PV
Biomass
Wind
Hydro
Pumped storage
gas supply investment plans have
structure will be accepted, but the European Parliament,
Infrastructure Investment
12 GWh
4929 GWh
2189 GWh
and that group is likely to be joined by other utilities.
energy generating company, British Energy, and a
Meanwhile, the likely impact of Europe’s energy
still-planned acquisition of Constellation Energy in the
and climate package – which includes energy efficiency
USA, may be large mouthfuls to swallow in a year
and carbon dioxide emission commitments, as well as
when the cost of debt is rising.
renewable energy targets – has begun to be assessed.
Within France, both companies will be hard pressed
In the coming year the global economic crisis and
to invest fast enough to get on track to meet the
reduced industrial activity are likely to be the biggest
country’s commitments on renewable energy. Huge
contributors to both targets, but it remains to be seen
investment in offshore and onshore wind are likely to
whether France can stay on track over the next few
be hampered by the worldwide dash for turbines and
years as the economic cycle returns to an upward
the resulting supply chain bottlenecks, although there
trend.
58
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Germany
EUROPE
Germany’s policy of weaning itself off nuclear power is predicted to lead to
a major energy shortfall, which the current recession will do no more than
defer slightly.
The Federal Republic of Germany is Europe’s
requirement to meet
Electricity supply from renewable sources, 2007 (TWh)
largest economy with a population of 82.4 million.
tougher environmental
Source: BMU publication Renewable energy sources in figures
It is a key member of the continent’s economic,
standards
political and defence organizations and part
main
of the euro-zone. Since the unification of East
greater use of coal in
and West Germany in 1990, it has expended
power production in
considerable funds to bring eastern productivity
Germany.
and wages up to western standards.
The federal government is led by Chancellor Angela
is
the
constraint
to
3.85
4.3
20.7
7.5
Electricity Market
Merkal’s Christian Democrats, who remain popular
The electricity gen-
despite overseeing an economy in severe recession
eration
and facing the likelihood of high unemployment. GDP
Germany
in 2008 was 1.3 per cent, but is forecast to fall to -2.4
nated by four large
per cent in 2009, despite the introduction of a €500
players, who between
billion ($625 billion) financial market stabilization
them account for 80
package in October 2008.
per cent of national power generation: RWE, which
market
is
in
3.5
domi-
A decade of wage restraint and labour market reform
operates primarily in western Germany; E.ON Energy,
created a strong German manufacturing base, and
which produces in central Germany; Vattenfall Europe,
although Germany is now experiencing a manufacturing
which was formed in January 2003 and operates
slump, it remains an industrial powerhouse with high-
in the New Laender and Berlin; and Energie Baden-
tech and biotechnology industries that lead the world.
Wuerttemberg Aktiengesellschaft (EnBW), which
Energy Overview
operates in south-west Germany. These companies
supply regional and local distributors as well as their
Germany’s major fossil fuel reserves are in the form
own industrial, commercial and domestic consumers.
of coal, mainly lignite. Its reserves of oil total just 367
There are around 60 regional companies and over 800
million barrels and lie in the north of the country. As a
local or municipal electricity/heat suppliers, known as
result, Germany imports nearly three million barrels per
Statwerkes. The liberalized market has encouraged
day to meet its needs. Its largest source of crude imports
customer switching, which has made it harder for
is Russia, followed by Norway, the UK and Libya.
Statwerkes to compete.
Natural gas reserves total 257 m3 and Germany
Germany, along with France, has opposed the pace
produces around 20 m3 annually. Imports are around 81
of liberalization across European energy markets and
billion m3 per year, and as with oil, the biggest supplier
was initially slow to respond fully to the EU’s 2003
is Russia, which meets 37 per cent of Germany’s gas
competition reforms. The European authorities require
imports, either via Ukraine or Belarus. Most of the rest
open access to electricity transmission networks for
comes from Norway and the Netherlands.
third parties, and this will form part of its third energy
Germany’s heavy dependence on Russia for energy
package due to be passed this year. An energy regulator
is a concern, and the dispute over gas payments
was appointed in 2005, since when the switching rate
between Russia and Ukraine in early 2009, which saw
among German consumers has increased, although it
gas pressures fall sharply in the west, has only served to
remains low compared with other comparable markets.
add to German anxiety over its fuel supply security.
39.6
Hydropower
Wind
Photovoltaics
Biomass and biogas
Landfill and sewage gas
Waste
Germany has the largest electricity market in Europe,
Coal is by far the largest of Germany’s natural
generating 592 TWh in 2007, two-thirds of which came
resources. With an output of more than 175 million
from fossil fuels (mostly coal). Nuclear power made up
tonnes (2008), lignite contributes around 40 per cent of
the remainder, alongside a growing renewables sector.
Germany‘s primary energy generation and is the most
Germany is a small net importer of electricity. From 1990
important domestic energy carrier. There is an estimated
to 2007 electricity demand in Germany increased by
40.6 billion tonnes of economically viable lignite mining
0.7 per cent on average each year. In recent years the
reserves in Germany. Despite the introduction of flue-gas
increase in electricity demand has slowed significantly.
desulphurization, dust removal and nitrogen oxide (NOx)
Germany has an aging fleet of power plants, with
reduction technologies in domestic power plants, the
much of the coal-fired fleet in need of replacement or
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PennWell Global Power Review 2009
refurbishment. It is estimated that the country
on environmental and health grounds. Plant in various
will need to add around 12 per cent (16 GW)
stages of planning or construction include a new
of new built thermal capacity by 2012 and over
823 MW hard coal plant planned by KMW at Main-
35
30 GW by 2020. It is planned that around 60
Wiesbaden, a 1600 MW project on the Baltic Sea in
30
per cent of this new capacity will be coal fired,
which Denmark’s Dong plan to invest €2 billion ($2.5
with the remainder fuelled by natural gas and
billion), an Electrabel/BKW FMB 800 MW coal plant at
renewables.
Wilhelshaven due for commissioning in 2012, a 910 MW
Forecast gross electricity generation by source (%)
%
25
20
With its 17 operating nuclear power plants,
hard coal unit proposed by utility MVV in Mannheim
15
Germany is one of the world’s largest generators
and E.ON’s Staudinger 6 1100 MW unit to be built near
of this type of energy. Current legislation requires
Frankfurt. Vattenfall Europe is also planning a 1645 MW
the phase-out of all nuclear power by 2022.
coal plant in Hamburg incorporating carbon capture
5
Support for a softening or reversal of this
and storage. EnBW’s 900 MW hard coal-fired unit at
0
policy is growing, as concerns increase over
Karlsruhe is due to come into operation in 2011.
10
2003
2010
Hydro
Lignite
2020
2030
dependency on imported gas and the need to
The four German transmission system operators
meet carbon dioxide (CO2) and other emissions
(TSOs) are E.ON Netz GmbH, RWE Transportnetz
targets. The Christian Democrat government has
Strom GmbH, Vattenfall Europe Transmission AG
so far declined to back away from Germany’s
and EnBW Transportnetze AG. The German TSOs
nuclear pledge, but it may be forced to if the promise
currently prevent the development of congestion in
of alternative clean power generation sources do not
their networks by employing network and market-
materialize soon enough. Reports suggest that the
related measures. However, the predicted development
nuclear phase-out will result in a generation shortfall
of the German power generating market over the next
by 2015, but some believe it will arrive far sooner.
few years, which is likely to see the construction of
Meanwhile, German engineering giant Siemens has
new conventional power plants as well as onshore and
re-entered the nuclear power market through a
offshore wind farms, will require an expansion of the
collaboration with Russian nuclear holding company
transmission system and related planning.
Nuclear
Hard coal
Gas
Wind
Other
Rosatom to work on international projects.
Germany is also facing a reduction in coal-fired
Principal indicators, 2007
Area
Population
GDP growth
Installed capacity (2005)
Electricity production (2007)
Electricity consumption (2006)
Source: EIA and Nationmaster.com
357021
Future Trends
capacity, which currently accounts for close to 40
The main drivers for Germany’s electricity market over
per cent of generation. Some older plants will shut
the next few years will remain European and national
under the European Large Combustion Plant Directive.
environmental policy. Its target of producing 27 per
German utilities are encountering increasing opposition
cent of its energy from renewable sources by 2020
to new and replacement power generation projects.
remains ambitious, not to mention the further goal
Germany is in the forefront of developing and
of increasing this to 45 per cent by 2030. Germany’s
deploying renewable energy technology. Supportive
feed-in tariff policies have boosted development of
government policies have seen renewable energy grow
biomass and photovoltaic capacity, as well as onshore
to account for 14 per cent of energy production.
and offshore wind power. Larger and more efficient
Germany has the second largest installed base of
wind turbines are replacing some of those deployed in
wind farms in the world and the biggest solar thermal
early wind projects.
market. The country also has a strong commitment to
The pressure to cut emissions and CO2 levels will also
protecting its environment. It has actively promoted
influence the debate over nuclear power production in
the use of renewable energy, and energy tax revenue
Germany. The country may need CO2-free nuclear
is used to fund renewable projects. The city of Bonn is
production to bridge the gap until sufficient renewable
bidding to host the headquarters of the newly formed
generation is available and viable CCS enables coal to
International Renewable Energy Agency (IRENA).
remain part of the energy mix.
Infrastructure Investment
Germany’s electricity production, but European rules
Coal-fired generation will remain the bedrock of
Most new capacity additions in Germany in the last
will force the closure of older, dirtier plants. Permits and
82.4 million
year have been wind projects, which are offered grid
public support for new facilities are likely to become
2.5%
access and favourable terms. In 2008, Germany added
harder to obtain, which could see a switch to more gas-
883 new wind turbines with a capacity of 1665 MW,
fired generation using CCGT technology. The slowdown
120 400 MW
taking the total number of turbines to 20 301 with an
in economic activity will reduce demand for electricity
592 TWh
overall capacity of 23 902 MW. Further growth in 2009
in the short term and may defer a predicted energy
is anticipated, despite the financial crisis.
shortfall as early as 2010. However, with the shutdown
549 TWh
Environmental campaigners have been stepping up
their opposition to planned coal-fired power projects
of both nuclear and older coal plants, lost capacity will
need to be replaced faster than it is currently.
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Italy
EUROPE
Faced with a dearth of natural resources and a post-Chernobyl withdrawal
of nuclear capacity, Italy faces some of the highest energy costs in Europe
and remains vulnerable to energy supply disruptions.
With a total area of 301 230 km2, Italy’s estimated
In 2007, Eni’s oil and natural
58 million people support a diversified industrial
gas production for the full year
economy with roughly the same total and per
averaged 1.736 million barrels of
capita output as France and the UK. The country
oil equivalent per day, down by
became a nation-state in 1861 when the regional
1.9 per cent compared with 2006.
states of the peninsula, along with Sardinia
Production
and Sicily, were united. A democratic republic
hindered by mature field declines,
replaced the monarchy in 1946 and economic
price impacts and unplanned
revival followed.
events.
performance
Gross electricity generation from renewables, 2006
Source: European Commission Directorate-General for Energy and Transport
35 GWh
6431 GWh
was
Over the past decade, Italy has pursued a tight fiscal
However, in the past year,
policy, and has benefited from lower interest and inflation
Eni and fellow Italian energy
rates. The current government has enacted numerous
player Edison have jointly made
short-term reforms aimed at improving competitiveness
a number of gas field discoveries
and long-term growth, but it has moved slowly on
in the Sicilian Strait. Preliminary
implementing needed structural reforms.
tests on these fields have shown
The economy continues to grow by less than the
a production potential of around
euro-zone average, and growth is expected to fall from
170 000 m3 of gas per day, while
1.9 per cent in 2006 and 2007 to under 1.5 per cent in
the potential of the area is estimated at approximately
2008 as the euro-zone and world economies slow.
18 billion m3 of recoverable reserves. Italy’s energy mix
Italy’s problems include high levels of illegal
is shifting from oil towards gas, but the country is still
immigration, organized crime, corruption, high
dependent on external sources for these fuels, adding
unemployment and sluggish growth.
to concerns over supply security and price volatility.
Energy Overview
Electricity Market
With few natural resources of its own to exploit, more
Italy’s electricity market is characterized by a slow but
than 75 per cent of Italy’s primary energy requirements
steady move towards a competitive sector, although
are imported. Oil production is estimated at 166 600
with incumbents in such a strong position it has been
barrels per day (bpd), against consumption of more
difficult for new entrants to make a significant impact.
than ten times that, estimated at 1.7 million bpd.
Overall electricity production is estimated at around
Similarly, natural gas production is estimated at 9.7
293 TWh, against a consumption of over 316 TWh,
billion m3, while consumption is almost ten times as
leaving imports at around 48 TWh.
much, at an estimated 84 billion m3. Recent figures
The national utility champion Enel, Italy’s largest
suggest around 74 billion m3 of natural gas is imported
power company and Europe’s second largest listed
annually, close to the country’s total proven reserves of
utility in terms of installed capacity, dominates the
around 94 billion m3.
market. The group has 85 500 employees and operates
Coal is also a significant force in Italy’s primary
a range of hydroelect ric, thermoelectric, nuclear,
energy market. Although domestic production is
geothermal, wind-power and photovoltaic power
estimated at just 13 000 tonnes of oil equivalent,
stations across its international portfolio. The Italian
imports came in at some 1.7 million tonnes.
economy ministry holds 21.1 per cent of Enel stock
The domestic oil and gas sector in Italy is led by
Eni, an integrated energy company with activities in
Total: 52092
6565 GWh
directly and another 10.1 per cent indirectly through
the state-run bank CDP.
exploration and production, transport, transformation
Italy has made substantial progress in implementing
and the marketing of oil and natural gas, as well as
electricity and gas market reforms, with both markets
power generation. Although Eni is a private company,
fully open to competition and a transmission system
the government retains a significant equity stake in it.
operator in place. For example, the government
Enel is the second-largest Italian operator in the
introduced measures to cap Enel’s market share to
natural gas market, with approximately 2.6 million
less than 50 per cent, forcing the company to divest
customers and a 10 per cent market share in terms of
part of its generation and allowing new participants
volumes.
to enter the market. Meanwhile, action on enhancing
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2971 GWh
Solar PV
Biomass
Wind
Hydro
Pumped Storage
36994 GWh
Oil and gas production and consumption
Total oil production
168.61 billion bbl
Crude oil production
107.94 billion bbl
Oil consumption
1 701.74 billion bbl
Proven natural gas reserves
8000 trillion BTU
Natural gas production
388 trillion BTU
Natural gas consumption
2984 trillion BTU
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PennWell Global Power Review 2009
Electricity generation from 2006
competition has continued. In
Infrastructure investment
Source: European Commission Directorate-General for Energy and Transport
August 2008, energy market
Investment in energy production, transportation and
regulator
established
interconnection are crucial for Italy’s supply security,
the code for monitoring the
given its high dependence on imported oil, coal
wholesale electricity market
and gas. But such projects often meet strong local
and the dispatching service
opposition from local authorities.
7.64 TWh
52.09 TWh
44.21 TWh
to
A significant proportion of infrastructure-related
further boost market liquidity,
announcements concern new renewable energy
Italy launched an exchange for
developments, particularly solar installations, which
trading physical forward energy
have followed the passage of the feed-in-tariff law.
market.
45.88 TWh
Coal
Oil
Gas
Renewables
Other
Total: 31412 TWh
AEEG
In
November,
Even so, other types of renewable development,
supply contracts.
A new regulatory framework
as well as more coal and gas installations, have been
for the Italian electricity sector
mooted. In the past year, for example, plans to install
was also established in 2008
115 wind turbines in the Gulf of Gela, 5 km from the
with
covering
Sicilian coast, have been unveiled by Enel in co-operation
service quality, the rate system
with the construction group Moncada Costruzioni. The
for regulated activities from 2008-2011 and levels of
development will produce up to 575 MW, with an
remuneration.
investment up to €500 million ($643 million).
164.31 TWh
resolutions
A number of larger European utilities have made
E.ON’s new gas power plant, Livorno Ferraris in
inroads into the country’s energy market. For example,
Northern Italy has begun operating. The €400 million
in the past year E.ON completed the acquisition of a
($514 million) plant has an installed capacity of 800
substantial package of power stations and shareholdings
MW and will produce approximately 5 TWh annually.
in Italy as part of its takeover of Spain’s Endesa. E.ON is
Meanwhile, Eni and Enel have signed an agreement
taking over Endesa Italia, with over 7.2 GW of installed
to develop technologies to capture, transport and
capacity, making the company the country’s fourth-
geologically sequester carbon dioxide (CO2) and to
largest generator after Enel, Edison and Eni.
jointly construct Italy’s first project in this area.
Prior to completing the transaction, an agreement
Enel is currently completing Italy’s first industrial
was reached with the Italian supplier A2A on terminating
CO2 capture plant, capable of removing 2.5 tonnes
its 20 per cent shareholding in Endesa Italia in exchange
of gas per hour, at the Brindisi thermal power station.
for generation from Endesa Italia’s portfolio. In addition,
The pilot plant should be ready in the autumn of 2009.
E.ON is gaining access to a liquefied natural gas (LNG)
Eni has also started to implement a project to inject
terminal project on the coast of Tuscany.
Similarly, Suez has recently concluded an agreement
with Eni to acquire 1100 MW of virtual power production
8000 tonnes of CO2 per year at the Stogit exhausted
field at Cortemaggiore (Piacenza).
(VPP) capacity in Italy for 20 years, based on a combined
Future trends
cycle gas turbine (CCGT) model. The deal raises the Suez
In its 2009 credit outlook report on the Italian utility
Group’s total production capacity in Italy to 4600 MW,
sector, credit ratings agency Fitch says that the expected
an increase of approximately 30 per cent.
recession, the trend of oil price volatility and the effects
Despite improving competition, energy diversification
is restricted, due to the country’s dependence on
of the global financial crisis on the domestic banking
and capital market will put pressure on Italian utilities.
natural gas, particularly since it ruled out nuclear
The combined effect of declining oil prices, reduced
developments in the wake of the Chernobyl disaster
demand and restored generation reserve margins are
in 1987. However, renewable energy sources have
likely to drive down electricity prices over the next 12
been attracting policy developments, particularly solar
to 18 months.
power. A decree passed in April 2008 lays down the
Consolidation is expected to continue in 2009
criteria to stimulate electricity production from grid-
as electricity and gas utilities seek to expand their
connected solar thermal plants, including a feed-in
customer base in response to competitive pressure.
tariff. This follows legislation in February 2007 that
On top of these financial pressures come a number
introduced a new version of a feed-in tariff scheme for
of policy drivers from the European Union, not least
grid-connected photovoltaic plants.
of which is the passage of the “20/20/20” climate
Nonetheless, the contribution of renewable power
sources remains small when compared with gas,
package late last year that establishes a legally binding
renewables target by 2020.
which supplies around 158 TWh, coal with about 51
Meanwhile, as gas market volatility enhances the
TWh and oil with some 46 TWh of the total electrical
requirement for secure domestic supplies of energy, a
generation.
renewed push towards nuclear generation may arise.
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Poland
EUROPE
Poland is attempting to diversify away from its reliance on neighbouring
Russia’s gas by developing its indigenous reserves and building renewable
energy capacity.
tonnes of lignite and soft coal. Predictably, Poland has
territory that borders Germany, Belarus, the Czech
always heavily relied on coal for generating electricity.
Republic, Slovakia, Lithuania, Russia and Ukraine.
Coal fuels around 92.5 per cent of Poland’s supply.
After the Second World War, a Soviet-backed
However, inefficiencies have resulted in large
communist government ruled Poland until free
annual losses, spurring reform of the sector. In 1998,
elections in 1989 produced Eastern Europe’s first post-
the government introduced a five-year hard coal sector
communist government.
reform programme that closed the most inefficient
Poland joined the European Union (EU) in 2004,
mines and reduced the number of people employed in
and its economy has been one of the fastest growing
the industry. The government began consolidating the
in Europe. Rising residential demand poses a significant
industry for privatisation in 2003.
challenge for the electricity industry.
Economic development, increases in wage rates
Electricity Market
Poland began liberalizing its electricity sector in
contributed to changes in Poland’s energy consumption.
1998, and it is now completely open to competition.
Business Monitor International (BMI) is forecasting real
Government policy is to improve fuel consumption
gross domestic product (GDP) growth averaging 4.95
efficiency, rationalise heat and electricity consumption,
per cent per annum between 2007 and 2012. GDP
promote
per capita and electricity consumption per capita are
environmental protection and increase supply security
forecast to increase significantly. Power consumption is
through diversification of fuel supply. The plan is to
expected to increase from 141.7 TWh in 2007 to 176.4
increase the competitiveness of the Polish electricity
TWh by the end of 2012.
sector by introducing privatization and deregulation.
Energy Overview
an important restructuring of Poland’s electric power
energy
sources,
50
The Energy Law of 1997 opened the way to
According to the Oil & Gas Journal, Poland has
sector into three subsystems: generation, transmission
and distribution. The electricity sector remains largely
oil production is only 37 200 barrels per day (bpd),
controlled by the government, even if important reforms
compared with consumption of 447 000 bpd. This
have been undertaken.
forces Poland to import around 98 per cent of its
Poland’s high-voltage power transmission network,
requirements. It also imports 60 per cent of its natural
defined as all lines operating at 220 kV or 440 kV, is now
gas requirements, mostly from Russia.
operated by the Polish Electricity Grid (PSE) company.
With such a heavy reliance on imports, Poland is
The 28 local distribution companies operate lines
attempting to exploit its domestic reserves and improve
rated at 110 kV and below. These companies have
its energy security It is looking to increase upstream gas
been organized into seven geographical groupings,
activity in Norway and North Africa. The country is also
and two group consolidations have already taken place,
speeding up construction of its proposed Swinoujscie
creating the G-8 Group (eight distributors in central
liquefied natural gas (LNG) plant on its Baltic coast.
and northern Poland) and ENEA SA, comprising five
began in 1994. In August 2002, the Polish government
100
improve
proven oil reserves of 96 million barrels. However, its
The process of restructuring the oil and gas industries
150
0
and improvements in the standard of living have all
renewable
200
2006
has around 24 billion tonnes of hard coal and 14 billion
of 38.5 million people live in a 312 685 km2
(Source: OECD)
2005
and resource-rich Russia. The country’s population
Annual electricity generation
2004
domestic fossil fuel resource, are the largest in Europe. It
2003
The country’s coal reserves, its most extensive
a direct route between supply-hungry Germany
Generation (TWh)
Poland lies at the heart of north-central Europe on
merged companies. There are plans to create three
Contribution of renewable electricity
to total annual energy supply
more consolidated power distributors.
adopted a plan to restructure and privatize the Polish
The distribution companies are also becoming
Year
%
Oil and Gas Co (POGC), the wholly state-owned oil
electricity trading entities. In addition to the large power
2003
5.1
and natural gas company. According to the plan, POGC
stations that have been turned into companies, the
would remain responsible for natural gas transmission,
government has also begun to privatize more than 200
2004
5.2
storage and wholesale trade, while six separate regional
small-scale power and combined heat and power (CHP)
2005
5.3
companies would be responsible for distribution. In
plants that are connected at the distribution level.
2006
5.2
May 2004, the Polish government agreed to open the
country’s natural gas market to competition.
The Polish electricity sector continues to consolidate
in line with the government’s plan to restructure the
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Source: OECDr
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PennWell Global Power Review 2009
Electricity production in GWh, by month
Source OECD
Poland’s per capita consumption of electricity
is below the EU average, but domestic electricity
consumption is expected to reach this level by 2030.
15000
2006
2007
District heating systems require modernisation, creating
2008
great opportunities for equipment suppliers.
Polish power generation needs urgent restructuring,
12000
for environmental reasons, and to improve its efficiency
and make it competitive, offering another good
9000
opportunity for suppliers of modern equipment and
6000
associated maintenance.
3000
environmental protection and its target of a 14 per
Poland’s commitment to meet the EU directive on
renewable energy projects, mostly wind power plants.
Dec
Nov
Oct
Sept
Aug
July
June
May
Apr
Mar
Feb
sources make it a good place to investment in new
Jan
0
cent share of electricity generated from renewable
RWE Innogy will add 730 MW of total capacity to
this sector. The first two wind farms will be erected in
industry. In the power generation sector, this has
Suwalki and Tychowo in 2009.
focused on creating four large regional companies,
By 2010, energy utilities in Poland are required to
Polska Grupa Energetyczna (PGE), Południowy Koncern
provide 10.4 per cent of their energy consumption
Energetyczny (PKE), ENERGA and ENEA. PGE is the
from renewable energy. By 2020, this figure will
largest with an installed capacity of 11 800 MW and
increase to 15 per cent. According to calculations
produces 52.6 TWh of electricity per year.
by PSE, 4000 MW of wind electricity must come on
Although
Poland’s
electricity
generation
is
dominated by coal, there are 20 hydropower stations
stream by 2010 to achieve this target. Only 400 MW of
wind energy is currently connected to the grid.
located in the mountainous south-west of the country.
Upgrades are being made to existing coal-fired
Most of these are small, but there are also four
plants, such as the installation of air pollution control
pumped storage plants with a joint capacity of around
systems, while Alstom is building a 833 MW clean
1500 MW, adding significant flexibility to Poland’s total
coal power plant in Belchatow. Poland’s largest energy
generating capacity of 34.6 GW.
company, PGE, is building a 1600 MW coal fired power
Generation capacity construction in Poland has
station in eastern Poland. Foster Wheeler is building
been inconsistent over the past 30 years, resulting
the world’s first supercritical circulating fluidized bed
in an ageing system that is becoming an increasingly
(CFB) boiler island for a new 460 MW power plant at
serious problem. More than half of the current capacity
Lagisza in southern Poland, which is due to go into
was built in the 1970s, 60 per cent of the system is
operation this year.
more than 15 years old and 40 per cent is more than
20 years old. More than 1.5 GW has been in operation
Future Trends
for more than 30 years. Insufficient expenditure
The Polish power generation sector is the largest in
on maintenance and modernization projects has
Central and Eastern Europe, and the country currently
exacerbated the problem. PSE estimates that over
has power to export. The Polish government expects
20 GW of capacity needs rehabilitation, while almost
electricity demand to grow by over 50 per cent by
3 GW will need to be retired.
2020. This, combined with the ageing power station
Infrastructure Investment
fleet, presents a major challenge in terms of maintaining
supply security and reducing environmental impact.
In addition to framework legislation and good-faith
Therefore, efficiency has been a major part of
efforts, Poland will need money to match Western
Poland’s energy policy, along with the promotion of
European countries in terms of environmental protection.
cogeneration and combined heat and power, and
The Polish government estimates that it will need €40
investment in renewable energy sources. Implementing
billion ($52 billion) – equal to the Polish annual public
these policies, encouraging energy savings and closing
budget – to meet EU environmental criteria.
down inefficient industrial plants has reduced the
Poland is a leader among central European countries
country’s energy intensity level significantly.
in terms of volume of foreign investment inflows. The
BMI forecasts that Poland will account for 7.73 per
strong growth prospects of the Polish economy, the
cent of Central and Eastern European regional power
growing domestic market and its accession to the EU
generation by 2012 and remain a net exporter of
make Poland highly attractive to foreign investors.
electricity to neighbouring states.
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Russia
EUROPE
Russia’s nascent private generating companies, created as part of the
country’s reform process, are struggling to manage their infrastructure
investment commitments in the face of the economic recession.
Russia is located in northeastern Europe and
Gazprom’s four largest fields
northern Asia and is the largest country in the
are
world, with a total area of 17 075 200 km2.
fields in Siberia will be more
Its 142.3 million population live in a diverse
expensive to bring on-stream.
collection of territories located across 11 different
Russians
time zones.
in
decline,
and
consume
44
400 billion m3 each year, and
the government is looking
economic reform, the post-soviet, democratic Russia
to reduce consumption by a
still retains elements of a centrally planned economy,
quarter in order to increase
with considerable power residing in the Kremlin.
export sales.
Former president Vladimir Putin was responsible for
Coal reserves stand at 157
replacing directly elected regional governors with
billion tones, second only to
appointees, while as prime minister, Putin remains,
the USA. Production in 2006
in most Russians’ eyes, the most powerful force in
was 303 million tonnes, and
the country, despite the election of Dmitry Medvedev
output is expected to reach
as president.
400-450 million tonnes by 2020.
88
22
Thermal gas
Thermal coal
Nuclear
Hydropower
56
on the back of high oil and gas prices, with GDP
Electricity Market
running at an average of 7.3 per cent in the years
Russia is the fourth largest generator and consumer of
2003-2007. However, the world economic downturn
electricity in the world. Thermal power plants account
and the collapsing oil price has hit Russia harder than
for around two-thirds of production, followed by
most countries, resulting in a sharp slowdown in
hydropower (20 per cent) and nuclear (15 per cent).
economic activity and a fall in the value of the ruble of
Despite considerable geothermal, wind and wave
around 35 per cent against the US dollar.
resources, renewable energy production accounts for
Energy Overview
less than 1 per cent.
In July 2008, the state power monopoly RAO
Russia’s economy is heavily reliant on energy exports,
UESR was liquidated, having separated its assets
with oil, gas and fuel making up 65 per cent of
into multiple wholesale electricity companies (known
total exports in 2007. This has manifested itself in
as OGKs), which participate in a new competitive
contrasting ways in the last year, with Russia able
wholesale market. Fourteen territorial generating
to exert political pressure on neighbouring countries
companies (TGKs) were also created, and these
reliant on energy exports.
generated over $24 billion in investment from private
Its dispute with Ukraine in early 2009 created
investors in 2007.
unease in a number of other European countries,
Germany’s E.ON and RWE, Italy’s Enel and Finnish
whose Russian gas supplies are transported through
Fortum are some of the most prominent foreign
Ukraine. However, Russia’s economy has suffered
entities that have paid premiums for strategic or
heavily from the drop in oil prices from a peak of
controlling stakes in the generating companies.
$147 a barrel to the current $41 a barrel, and the
All 25 GW of Russia’s hydropower assets are held
government is now predicting that the economy will
by RusHydro, which remains state-controlled, as do all
shrink by 2.2 per cent in 2009.
nuclear power assets, controlled by Rosenergoatom.
Russia has 60 billion barrels of proven oil reserves.
The Federal Grid Company also remains state owned
Production of crude reached 9.4 million bbl/day in
and is responsible for system operation. Responsibility
2007, challenging Saudi Arabia for the title of world’s
for oversight of the electricity sector has been given to
biggest oil producer, with an estimated 7 million bbl/
the Ministry of Energy.
day being exported.
Source:
around
Despite going through a period of considerable
Russia’s economy has enjoyed very strong growth
Installed generating capacity by source, 2007 (GW)
new
There are seven separate regional power systems
At 47 570 billion m3, Russia has the largest natural
in the Russian electricity sector: Northwest, Center,
gas reserves in the world. Reported production in
Middle Volga, North Caucasus, Urals, Siberia and Far
2007 was 656 billion m3, but production at monopoly
East. The Far East region is the only one not connected
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Principal energy indicators
Electricity production
964 TWh
Electricity consumption
985 TWh
Electricity imports
10 TWh
Electricity exports
22 TWh
Coal production
309 million tonnes
Oil production
9.9 million b/d
Natural gas production
565 billion m3
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EUROPE
Russia
It also mapped out a range of new sites for the
are currently two efforts underway to integrate the
construction of nuclear power plants. A new nuclear
Russian and Western European electricity grids.
power plant was announced in the Baltic exclave of
Russia is participating in the Baltrel programme,
Kalingrad, in which private foreign owners would
designed to create an energy-ring of power
be allowed to take an ownership interest. With
companies in the Baltic states. Also, the Union for
the appointment of Sergei Shmatko (ex-head of
the Coordination of Transmission of Electricity (UCTE),
Atomstroexport) as Russia’s energy minister, it is
of which 20 European countries are members, has
expected that nuclear power generation will have a
entered into discussions with Russian colleagues
higher profile, both in terms of domestic electricity
over the technological and operational aspects of
production and as a vendor for international projects.
interconnecting their systems.
Equipment in Russia’s hydropower plant is over
Russia’s demand for electricity has been rising
40 per cent obsolete, due to chronic under-funding.
steadily since 1999 and was predicted to reach 1426
RusHydro recently announced a scaled-back programme
TWh by 2010. However this growth trend has gone
for 2009 that will see the sum of 79 578 million rubles
into reverse, with reported demand for electricity in
($2.2 billion) invested and the commissioning of 145
January falling 7 per cent year-on-year. As a result, free-
MW of generating capacity.
market electricity prices have fallen 40 per cent since
Russia’s first power plant to be built on the basis
August 2008. Currently, only 30 per cent of electricity
of a turnkey EPC contract by a non-Russian company
is freely traded, and this is expected to rise to 50 per
is nearing completion in Moscow. The €300 million
cent later this year. Plans are also being drawn up for
($378 million) advanced combined cycle cogeneration
the establishment of a long-term capacity market to let
facility, officially titled Mosenergo Moscow TPP-26 Unit
generation companies recoup building costs.
8, is being built by Alstom and will also be the most
Despite considerable geothermal, wind and wave
resources, renewable energy production accounts for
Future Trends
wind generation at the end of 2007, although a
Russia faces the problem of completing its reform
federal programme has called for 228 MW of wind
process and developing a fully traded market in
power by 2010.
the face of major economic pressures. Some of the
1500
1000
500
0
transition steps are likely to be delayed. Long-term
growth in demand will need to be met, and the current
Years of under-investment in Russia’s power generation,
owners of the wholesale generators are finding that
transmission and distribution infrastructure has left the
the calculations they made at the time they bought
system operating at full capacity. The years of economic
their stakes, no longer stand up. Some government
growth have put an increasing strain on the sector and
intervention or consolidation in the sector seems likely.
have been one of the main driving forces leading to the
A few of the original investors in OGKs are currently
liberalization of the sector as a way to attract investment
looking to sell their stakes.
in new plants and delivery infrastructure.
2000
efficient in the country.
less than 1 per cent. Russia had 16.5 MW of installed
Infrastructure Investment
Source: ______
Nationmaster.com
2020
of which are high-voltage cables over 220 kV. There
Forecast electricity consumption (TWh)
2015
completed structural reforms and increased its assets.
2010
During 2008, Russia’s nuclear energy sector
almost 2 million miles of power lines, 93 000 miles
TWh
to an integrated power system. The grid comprises
The contrast between the increasing state
The new OGK and TGK owners took over obligations
involvement in the oil and gas sectors and the trend
for construction programmes and the delivery specific
towards liberalization and private ownership in the
capacities to the market in time. The current economic
power industry has been much remarked upon. The
slowdown has meant that the majority of the new
difficulty in attracting investors to a nascent industry
owners have found it hard to meet these obligations,
with highly subsidized prices is evident. Although
partly due to non-payment issues. The new owners
tariffs rose 19 per cent in 2008, further reform is
have lobbied the government to cancel projects and
needed to bring consumer rates more in line with
change the ownership terms.
production costs.
Although the government has insisted that the
However, the current economic climate makes this
planned infrastructure expansion programme must
more difficult. If power producers were to recapture
go ahead, announcements are anticipated concerning
their costs and earn fair returns, prices would likely
corrections to the 2020 master plan and investment
jump as much as 200 per cent.
programmes. Much of the equipment employed in
Russia is not about to pull the plug on all state
refurbishing and expanding Russia’s electricity industry
controls, but it will move cautiously and try to walk a
is imported, and this is becoming more expensive as the
fine line between opening markets and avoiding the
ruble weakens.
large price hikes that could lead to social unrest.
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SEEING A LITTLE FURTHER
IS GOOD FOR BUSINESS.
#%
"
%%! !%
''!!!
!$#''!
!
!
!#
#
%!
"#
__________
__________________
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Spain
EUROPE
Faced with a challenging economic outlook and rising unemployment, Spain
continues to invest in the power sector, focusing on gas turbine combined
cycle generation, wind power and solar energy in particular.
Spain occupies approximately 500,000 km2 of land
medium term, because
and has a population of more than 46 million.
significant new power
It joined the European Union in 1985 and, until
generating capacity will be
recently, enjoyed a period of prosperity. However,
coming on stream, including
2008 could be a pivotal year.
a gas turbine combined-
Investment in Spanish residential housing has
cycle plant, on-shore wind
accounted for 9 per cent of gross domestic product
turbines and photovoltaic
(GDP) – a higher proportion than in many other parts
installations.
of Europe – so the recent housing market downturn
has had a significant impact on the country’s economy.
Electricity Market
In GDP terms, Spain’s economy grew by approximately
The past two years have
3.7 per cent in 2007 and 1.4 per cent in 2008. Current
seen significant moves to
predictions suggest 2009 will see a fall of approximately
deregulate Spain’s domestic
1 per cent. Unemployment, already the highest in the
electricity and gas markets.
EU, is predicted to rise to almost 15 per cent this year.
On the back of Law 17/2007,
The relatively rapid reversal of Spain’s economic
Market shares (by number of consumers) of suppliers and by energy share in 2007
Endesa
Iberdrola
Gas Natural
Union Fenosa
Cantábrico Energia
boost the growth of the liberalized market. For example,
the tariffs for high-voltage supplies (greater than 1 kV)
in March 2008. Steps being taken to meet this challenge
were abolished in 2008, leaving all non-household
include establishing a fund of up to €50 billion ($64
or small to medium enterprise (SME) customers to
billion) to buy assets from financial institutions that need
negotiate their electricity supplies in the free market.
liquidity and spending €11 billion on infrastructure, the
This step was prompted by a decline in the number of
motor industry and other targets.
consumers buying electricity in the free market, due to
0
10
20
30
%
40
50
60
Royal Decrees 222/2008 and 325/2008, which regulate
distribution and transmission activities respectively.
The companies Endesa and Iberdrola account for
its most plentiful indigenous resource is coal, natural
approximately three-quarters of the electricity supply
gas has become the country’s main source of fuel
market in Spain. (The other main operators in the
for electricity production. Enagás reports that 25 per
Spanish electricity sector are the EDP/Hidrocantabrico
cent of total electricity produced in Spain in 2007 was
Group, the Union Fenosa Group and Gas Natural.)
generated using natural gas. That year, Spain imported
Endesa is the leading utility in the Spanish electricity
34 474 million m3 of natural gas, making it the eighth
system. With an installed capacity of 24 490 MW,
largest importer of natural gas worldwide.
Endesa sold 40 629 GWh on the deregulated market
accounting for 52 per cent of primary energy
+
high prices. Other recent regulatory changes include
on imports to meet its energy requirements. While
Oil is the dominant fuel for energy generation,
Consumer share
Energy share
steps are being taken to
government, which was re-elected for a four-year term
Spain has limited fossil fuel reserves and is dependent
*
Others+
fortunes presents a serious challenge to the Socialist
Energy Overview
Source: CNE
and 72 746 GWh on the regulated market in 2007,
reaching more than 11 million customers.
demand, but high prices have prompted the Spanish
Nuclear and hydroelectric output accounted for
government to diversify its sources of energy and
41 per cent of Endesa’s mainland generation mix (at
implement an energy savings and efficiency plan for
22 906 GWh and 7149 GWh respectively), coal provided
2008-2011. Key objectives of this plan include raising
34 802 GWh and combined cycle plants 8080 GWh.
Fuel consumption in Spain in 2007
Fuel
Consumption (million tonnes of oil equivalent)
environmental awareness and reducing the negative
Iberdrola is the second largest operator in the
impact that Spain’s heavy dependency on fossil fuels
Spanish electricity sector and it is expanding its presence
Oil
78.7
has on its economy. In total, Spain produced 90 TWh
on a global platform. For example, it completed an
Natural gas
31.6
of electricity from burning fossil fuels in 2006.
acquisition of US-based Energy East Corporation in
Coal
20.1
Nuclear energy
12.5
Hydroelectricity
7.4
According to Spain’s national energy commission
September 2008. Its renewable energy arm, Iberdrola
(CNE), the country’s demand for energy is increasing at
Renewables, is an important player in the global wind
an above average rate compared with other European
energy sector and has an installed wind power capacity
countries. However, the CNE does not predict any
in Spain of 4450 MW, complimented by a further 3696
particular stress in meeting demand during the short to
MW of wind capacity abroad.
Source: (BP Statistical Review of World Energy)
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Recent trends in Spanish electricity production
Source: Monthly electricity statistics, OECD/IEA 2008
liquefied natural gas (LNG)-fired gas turbine combined
cycle (GTCC) power generation systems from Endesa.
GE Energy’s F-class gas turbine technology has been
Sept 2008 (GWh)
Sept 2007 (% change)
Combustable
fuels
Nuclear
Hydro
Geoth./Wind/
Solar/Other
Indigenous
production
Imports
Exports
selected to extend the life of an existing combined cycle
power plant at Granadilla on Tenerife.
In October 2008 the Irish power utility ESB
International (ESBI) announced plans to build a €500
million ($639 million) gas fired power station in
northern Spain.
Data released by the European Wind Energy
Association shows that wind capacity grew more in
Europe in 2007 than any other power-generating
technology and that this increase was driven primarily
by Spain. The country set a record in 2007 for installing
10
0
-10
-20
-30
-40
25000
-50
20000
15000
10000
5000
0
the highest wind generation capacity, 3522 MW, of
any European country in any year. Approximately 10
per cent of Spain’s electricity now comes from wind.
Total electricity supplied 22319 Total electricity supplied -5.6
Spain is also being seen as the main market for
developing concentrating solar power worldwide,
having led the way by inaugurating the first commercial-
Red Eléctrica de España (REE) is the sole owner of
scale plant some two years ago. The 11 MW PS10 solar
transmission assets in Spain. REE reported that demand
thermal power plant at Sanlúcar la Mayor in southern
for electricity in 2008 reached 263 961 GWh, which
Spain, developed by Solucar, is designed to generate
represents growth of 1 per cent compared with 2007.
23 GWh of electricity per year.
Looking at the electricity supply mix, REE noted a
The AndaSol solar power plant in Andalusia
progressive increase in combined cycle generation and
converts solar energy into electricity using a parabolic
wind energy production, which satisfied 32 per cent and
trough collector and a molten-salt thermal storage
11 per cent of demand respectively. Most significant
system. Andasol 1 started its test run in the autumn
decreases have been seen in coal and hydroelectric
of 2008. It is expected to yield 179 GWh of electricity
power generation, which met 16 per cent and 7 per
per year.
cent of demand respectively (compared with 24 per cent
REE expects to spend an average of €800 million
and 10 per cent in 2007), which in part may be due to
per year on Spain’s transmission network until
drought conditions in Spain over the past few years.
2012. Transmission links are also developing with
The need to reduce the country’s dependency on
Spain’s neighbours. In 2008, the French and Spanish
imported fossil fuels has prompted further scrutiny
governments signed a formal agreement to almost
of the government’s anti-nuclear policy. Operating
double the capacity of the link through the Pyrenees.
permits for seven of Spain’s eight nuclear plants are up
REE and French operator RTE will jointly develop the
for renewal by 2011.
project. The reinforcement of Iberian electricity market
Speaking at the 50th anniversary meeting of the
(MIBEL) internal links follows foreseen deadlines:
nuclear energy agency in October 2008, Spanish
capacity will be close to 2000 MW in two years and is
minister Miguel Sebastián commented: “Whatever
expected to reach 3000 MW by 2014.
the future of nuclear power in Spain, the Spanish
government is determined to ensure that the use of
Future Trends
nuclear energy will be possible only under the highest
In the summer of 2008, the Spanish minister of industry
safety standards, and the most reassuring levels of
explained the government’s plan for the electricity and
protection to the population and the environment.”
gas sectors from 2008 to 2016. Nearly €19 billion ($24
In January 2009, Iberdrola announced an initiative
to build nuclear plants
in the UK, working in
billion) of investment will be used to improve the gas and
electricity network grids, connect new generation plants
conjunction with Scottish and Southern Energy.
to the grid and develop international connections.
Infrastructure Investment
looks set to continue, exemplified by a programme
As already outlined, natural gas has become an
to install 500 MW of solar power in Spain by 2010,
increasingly important source of power generation in
announced in September 2008, with 233 MW allocated
Spain. Plant investment in this sector is widespread.
to ground installations and 267 MW for rooftop
For example, MHI has received an order for two sets of
installations.
The growth of the renewable energy sector also
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Sweden
EUROPE
Development in Sweden’s power infrastructure, which has the lowest carbon
footprint in the European Union, is focused on combined heat and power,
biomass and nuclear power.
The Kingdom of Sweden is a Nordic country on
per cent in 2006. This is
the Scandinavian Peninsula in Northern Europe.
composed
Sweden has land borders with Norway to the west
electricity generation (18 per
and Finland to the north-east, and is connected to
cent), the industrial sector
Denmark by the Öresund Bridge. The Baltic Sea
(14 per cent), the district
wraps around its eastern and south-eastern land
heating sector (6 per cent), the
borders, while the Gulf of Bothnia lies to its east.
residential and services sector
At 449 964 km2, Sweden is the third largest
country in the European Union. Its population of
of
Electricity production by source, 2007 (GWh)
505 25
1430
7471
5763
The renewable proportion
of the energy use of dwellings,
the country, the second and third largest cities are
excluding electricity and district
Gothenburg and Malmö.
Hydro power
Nuclear power
CHP in industry
CHP in public steam
and hot water works
Condensing
steam power
Gas turbines & others
Wind power
heating, has increased from 32
Sweden is a constitutional monarchy with a
per cent in 1990 to 75 per cent
parliamentary system of government and a highly
in 2006. The industrial sector,
developed economy. The country became a member
especially the pulp and paper
of the EU in 1995, but rejected adopting the single
industry, is the largest biofuel user. The proportion of
currency in a referendum in September 2003. Sweden
renewable energy in district heating has increased from
has a GDP per capita of $49 441.
24 per cent in 1990 to 55 per cent in 2006.
64279
Following the general election in September 2006,
Sweden has ten operational nuclear reactors. The
a centre-right coalition government comprising the
nation’s largest power station, Ringhals Nuclear Power
Moderate, Centre, Liberal and Christian Democratic
Plant, has four reactors and generates about 24 TWh
parties took office in October 2006. This victory for
a year, the equivalent of 47.6 per cent of Sweden’s
the Alliance for Sweden ended 12 years of Social
electricity consumption. Sweden used to have a
Democratic Party (SAP) rule. The next general election
nuclear phase-out policy, aiming to end nuclear power
is scheduled for 2010.
generation in Sweden by 2010. However, in February
2009 the Swedish government decided to scrap a
three-decade ban on building new nuclear reactors,
In 2007, Sweden produced 145 130 GWh of electricity,
saying it needs to avoid producing more greenhouse
importing 16 052 GWh. Sweden has a very small
gases. The centre-right coalition government’s
capacity to produce oil at 2350 barrels per day (bpd),
proposal, which needed approval from parliament
which is dwarfed by its consumption of 353 700 bpd.
at the time GPR went to press, called for new
The country has no proven natural gas reserves and
reactors to be built at existing plants to replace the
imports all 1 billion m3 of its annual consumption.
ten operational reactors when they are taken out of
service. Prime Minister Fredrik Reinfeldt said he did not
to become a world leader in the implementation of
feel bound by the referendum because it did
renewable energy. Renewable power accounts for
not specify how to replace nuclear energy.
55 per cent of all electricity generation in Sweden, of
which 45 per cent is large-scale hydropower.
65658
sector (1 per cent).
cent. The capital, Stockholm, is the largest city in
The lack of indigenous fossil fuels led Sweden
Total: 145130
(5 per cent) and the transport
more than 9.1 million is growing at a rate of 0.7 per
Energy Overview
Source: Swedish Energy Agency
renewable
Electricity Market
Swedish energy overview
Coal production
4000 tons
Electricity from hydropower accounts for 45
Sweden is a forerunner in electricity market
per cent overall, while nuclear power delivers 47
liberalization and its energy sector is largely
per cent of Sweden’s power. Wind power produces
privatized. The Nordic energy market, Nord
Natural gas consumption
1.006bn m3
1 per cent. Biomass (wood) is also used extensively in
Pool, is a common marketplace for energy in
Nuclear reactors operable
11
combined heat and power (CHP) plants to produce
Sweden, Norway, Denmark and Finland. The
heat for district heating, central heating and industry
group comprises Nord Pool ASA and Nord
Oil consumption
processes.
Pool Spot AS. The latter comprises the wholly
Total energy usage per person
Geothermal power use
Sweden now leads the EU in the proportion of
owned subsidiaries, Nord Pool Clearing ASA
its total capacity generated by renewable energy,
and Nord Pool Consulting AS. The national grid
Wind energy installation
which increased from 33.9 per cent in 1990 to 43.3
companies of Sweden and Norway, Svenska
Source: Nationmaster
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1147 GWh/year
353 700 bbl/day
5.7 tons of oil equivalent per person
442 MW
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Electricity usage in Sweden, 2007 (GWh)
Source: Swedish Energy Agency
14736
Kraftnät and Statnett, each
Infrastructure Investment
hold 50 per cent in Nord
Sweden has the lowest carbon power generation
Pool ASA.
capacity of any EU member, and it is currently meeting
Nord Pool allows these
its targets to reduce its greenhouse gases under the
countries to assist each other
Kyoto Protocol. With more than 90 per cent of its
when additional electricity
power capacity coming from established nuclear and
supplies are required. If one
hydropower plants and the energy policy emphasis
country is unable to satisfy
on efficiency, Sweden has little new capacity in the
domestic demand from its
pipeline. Most infrastructure investment is being
own output, it can import
spent on upgrading existing nuclear plants and in
the necessary power from
transmission and distribution.
Total: 161182
10845
57983
33434
2964
40039
Manufacturing
industries,
mines & quarries
Services
Agriculture
Households
Losses
Exports
In January 2009, ABB received an order from
a neighbour.
The system operators of
utility Vattenfall to support a 160 MW upgrade of the
each country are responsible
Forsmark 3 reactor. Under the deal, ABB will provide
for
areas
the electrical package needed to increase gross output
electrically stable, which in
of the Swedish unit from 1200 MW to 1360 MW. The
Sweden is Svenska Kraftnät. In practice, this means
project, which will also extend the operating life of the
the transmission system operator (TSO) keeps the
reactor, is scheduled to be completed by 2014.
keeping
their
frequency at 50 Hz and maintains supply security in
In March 2008, Nexans won a deal worth €150
their area. For each local area, there is a local grid
million ($237 million) from the Finnish and Swedish
operator, effectively a non-commercial participant,
national grid operators for a subsea cable between the
which handles the local low- voltage system.
two countries. The link will boost transmission capacity
Since Svenska Kraftnät is responsible for keeping
between Finland and Sweden by 800 MW, or about 40
the power system in Sweden balanced, it effectively
per cent, and is set to go live in late 2011. The new
controls the power system throughout the country.
connection is 270 km long, while the subsea cable
Therefore, commercial participants in the Swedish
element will extend for about 200 km.
energy market are not, and cannot be, responsible for
the security of supply.
Finnish energy group Fortum is developing carbon
capture technology suitable for pressurized fluidized
Nord Pool says that if a retailer in the south of
bed coal combustion technology at a test site in
Sweden, for example, has bought power from a
Stockholm. The demonstration started in 2007 and
Swedish producer in the north, then the producer
uses a complex system of pressurized filters, absorbers
has no way to guarantee there will be power at the
and condensers that have been found to capture 95
plug with the retailer’s customers. Ultimately, the
per cent of carbon dioxide.
commercial participants are only able to decide what
price to charge each other and the end users. Since the
Future Trends
commercial participants deliver financial services only,
While the planned phase-out by 2020 of nuclear
their role depends on how liberalized the market is.
power was suspended in 2006, the outlook for
The Nordic system price is set in Nord Pool’s physical
nuclear power remains uncertain. It is hard to see
market for the following day on an hourly basis. This
how phasing out nuclear power could serve Sweden’s
is based on registered offers/bids from generators and
broader energy and climate policy goals, according to
distributors respectively.
the International Energy Agency (IEA), which also says
The price is determined by Nord Pool’s trading system,
which matches offers and bids with Nordic transmission
that the current situation has created uncertainty for all
forms of electricity generation in the Nordic area.
capacity. The electricity price is basically the same across
In an effort to reduce dependency on nuclear
the whole region, but with certain regional differences,
power and oil use in transport, Sweden has launched a
which reflect transmission bottlenecks. Prices paid by
multi-billion dollar programme to promote renewable
consumers can vary from country to country, however,
energy and energy efficiency.
primarily because of different tax levels and competition
in the Nordic consumer market.
Sweden’s 3500 clean technology companies jointly
earn an estimated $14 billion in revenue. Exports, which
Variations in the wholesale (spot price) for each
make up about a quarter of their overall sales, have
country also play a minor role. In the financial
grown 75 per cent over the past four years. To further
market, the same buyers and sellers conclude forward
boost this sector, Sweden has earmarked around
contracts for power. This allows them to hedge against
$590 million for environmental projects over the next
price changes, which also provides a measure of
two years, including $180 million to commercialize
predictability for consumers.
green technologies.
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Turkey
EUROPE
Turkey’s power sector is being privatized as the country seeks to join the
European Union and link up to the European energy grid. Meanwhile,
demand for natural gas, its preferred fuel, is far outpacing production.
Turkey is located at the eastern end of the
of hard coal and 9.3 billion tonnes of
Generating capacity
Mediterranean Sea, straddling the sea passage
lignite, of which over two-thirds is of
that links the Mediterranean and Aegean Seas
low calorific value. Production was 60.2
Source: Turkish Statistical Institute - Statistical Yearbook 2007, TEIAS, EUAS, Ministry of
Energy and Mineral Resources
to the Black Sea. The country shares borders
million tonnes of lignite and 2.2 million
with Bulgaria and Greece in the west and
tonnes of hard coal in 2006, while
Georgia, Armenia, Iran, Iraq and Syria to the
consumption was 60.9 million tonnes
east. The smaller western part of the country is
and 19.5 million tonnes respectively. In
geographically considered part of Europe, while
the same year, 83 per cent of lignite and
the larger eastern part is in Asia. The country
27 per cent of hard coal was used for
covers a total area of 780 580 km2 and a land area
power generation.
economically
under which the members of the Grand National
generating capacity is 35 000 MW,
Assembly are elected by popular vote. They, in turn,
of which less than 40 per cent has
elect the president for a single seven-year term. There
been utilized. There is estimated to be 35 000 MW
have been several military interventions in the country’s
of exploitable geothermal capacity and 50 TWh/year
recent political history, most recently in 1997, while
of economically exploitable onshore wind potential.
fundamentalist Islam and a Kurdish independence
Economically viable solar potential is around 300 TWh/
movement threaten stability.
year, and there is significant biomass potential.
The economy suffered a severe contraction in 2001,
exploitable.
Potential
but has since recovered. GDP in 2007 was $663.4
Electricity Market
billion and growth was 4.5 per cent. However, inflation
Turkey’s electricity market is undergoing a slow
has been rising, reaching 12 per cent in mid 2008. The
restructuring as the country brings its institutions in
country is in negotiation to become a member of the
line with the requirements for EU accession. In 1993,
European Union (EU), but faces opposition from some
the state-owned Turkish Electricity Authority was
existing member states, notably Greece.
split into two in parts: a generation and transmission
Energy Overview
company (TEAS) and a distribution company (TEDAS).
In 2001, an Energy Market Regulatory Authority
Turkey has limited fossil fuel reserves and is a net
(EMRA) was created and TEAS was split into a
importer of oil and gas. Oil reserves were estimated
transmission company (TEIAS), which also operates the
to be 260 million barrels in 2006. Production was
electricity market, a generation company (EUAS) and
then around 42 000 barrels per day (bpd) and the
a wholesale market trading company, TETAS, that also
output level was similar in the first six months of 2007.
controls the import and export of power. In 2004, the
However, consumption was 666 000 bpd. The national
government published its plan for full privatisation and
oil company is investing in overseas oil fields in order to
liberalisation of the market, in conformation with EU
secure national supplies.
regulations, over a period of eight years.
Natural gas reserves in Turkey are around 8500
First to be fully privatized is TEDAS, which currently
million m3. It produced 680 million m3 of gas in 2006
controls 20 of the country’s 21 distribution companies.
and consumed 30 500 million m3, rising to 35 100
Bidding for these finally began in 2008. Meanwhile,
million m3 in 2007. With demand roughly 45 times
the sale of some of EUAS’s power plants to the private
production, most natural gas is imported, currently
sector has also been announced, but this will exclude
from Russia and Iran, but supplies have been regularly
a number of large power plants with a combined
interrupted for political and economic reasons. The
capacity of around 7500 MW. Whether the power
country is planning to import gas from Azerbaijan
plant sale will actually take place soon, given the
through a new pipeline.
present economic outlook, seems doubtful. Eight small
Coal reserves are estimated to be 1.3 billion tonnes
0
2007
of which 130 TWh/year is considered
state until 1946. Today it is a presidential democracy,
2006
remains of the Ottoman Empire. It was a one-party
2005
according to the World Energy Council,
2004
10000
Modern Turkey was formed in 1923 from the
2003
potential in Turkey is 433 TWh/year,
20000
2002
hydropower
30000
2001
theoretical
40000
2000
in 2008.
Gross
Installed capacity (GW)
of 770 760 km2. Its population was 71.9 million
50000
plants belonging to EUAS, with a combined capacity
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Principal indicators
Country area
780 580 km2
Population (2008)
71.9 million
GDP (2007)
$663.4 billion
GDP growth (2007)
4.5 per cent
Installed generating capacity (2007) 40 834 MW
Electricity production (2007)
191.6 TWh
Peak demand (2006)
28 000 MW
Electricity consumption (2006)
143.0 TWh
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PennWell Global Power Review 2009
of 150 MW, were transferred to the Ankara Dogal
for interconnection with the Union for Coordination
Electricity Generation Company in 2007.
and Transmission of Energy (UCTE) grid by 2009.
Generation in Turkey is provided by a combination of
public and private sector plants. Total installed capacity
Infrastructure Investment
was 40 834 MW in 2007, according to EUAS, which has
According to the transmission company TEIAS, the
changed little since 2006, when capacity was 40 565
installed capacity in Turkey needs to increase by between
Predicted demand growth
MW. Of this, 23 874 MW (58.5 per cent) was
20 GW and 30 GW by 2016 to meet an expected
Source: Ministry of Energy and Natural Resources
controlled by EUAS and 16 960 MW by other,
demand peak of up to 70 GW, based on a high-growth
mainly private sector, organisations as well
scenario in which demand continues to grow by 8 per
as the state lignite company TKI. The private
cent each year. Meanwhile, the state planning authority
sector in Turkey is a mixture of BOO and BOT
predicts that demand could more than double between
and BOT-structured projects, auto producers
2007 and 2016, and TEIAS figures suggest it could
and licensed generators. EUAS capacity
reach 500 000 GWh by 2020, by which time as much as
comprised 12 525 MW from thermal power
50 GW of new capacity will be required compared with
plants and 11 349 MW from hydropower
the installed capacity in 2007.
500
Low growth scenario
High growth scenario
TWh
400
300
200
100
Potential sources for new capacity include the
includes 14 747 MW based on thermal
country’s lignite deposits and extensive hydropower
power plants, 2045 from hydropower, 23
potential. Hydropower could supply around 20 000
MW of geothermal capacity and 146 MW
MW of additional capacity, with a further 11 000 MW
of wind capacity.
supplied by coal and lignite. There are also proposals
Total production in Turkey in 2007 was
to import hard coal for power generation. Wind offers
191.6 GWh. Of this, EUAS provided 92
a further option and proposals have been put forward
327 GWh (48.2 per cent) while the private
for wind farms with a total capacity of 8000 MW, but
sector contributed 99 231 GWh (51.8 per cent). The
project approval is slow. The country has been planning
bulk of this power, 155 196 GWh, was provided by
a nuclear plant for many years and a power plant law
thermal power plants, primarily burning natural gas
currently permits construction of 4000 MW of nuclear
(81 TWh) followed by lignite (32 TWh) and coal
capacity, but there is no firm nuclear timetable. Any
(14 TWh). Hydr opower provided 35 851 GWh,
further shortfalls will be met with imports of natural
geothermal 156 GWh and wind 355 GWh. Hydropower
gas and oil.
2020
2015
2010
2005
0
plants in 2007. Private sector capacity
output was notably lower in 2007 than in 2006, when
it reached 44 200 GWh. EUAS is currently engaged
Future Trends
in a power plant rehabilitation programme that will
Capacity margins in Turkey are narrowing, making
improve the availability of its power plants. This
the need for investment in new generating capacity
programme is due to be completed by 2013.
vital. Full privatisation is due to be completed in 2012,
Consumption in Turkey in 2006, the last year for
but the completion of that schedule will depend on
which figures appear to be available, was 143.0 GWh.
continued government goodwill. A sale of distribution
The industrial sector consumes most electricity, 54.7 per
companies was postponed in 2007 for fear of a
cent of the total in 2006, followed by the residential
backlash during an election year. By the end of 2008,
sector with 24.1 per cent and the commercial sector
the programme appeared to be on track again.
Although it seems likely that at least some
with 14.2 per cent.
Tariffs in Turkey are regulated by EMRA, and there
generating capacity will remain with EUAS after
are elements of both subsidy and cross-subsidy in
privatisation, most will be owned by the private sector.
those applicable in 2008, although these are due to
A large part of future capacity must therefore be built
be phased out by 2010, when tariffs should be set by,
with private sector investment. While the investment
supposedly, private sector distribution companies.
climate in Turkey has improved during this decade, it is
The transmission system in Turkey comprises a
backbone of 400 kV lines and 154 kV transmission
lines together with a small number of 66 kV lines,
still vulnerable to both global economic conditions and
the political situation.
On the positive side, tenders have been sought
The
for two new private sector financed lignite plants
distribution system is extensive and operates at 34.5
with capacity of 1200 MW each. Bids for these
kV and below. Losses at the end of 2007 were below
projects were accepted in June 2008. Meanwhile, a
3 per cent.
EUAS power plant rehabilitation programme, which
which are due to be upgraded to 154 kV.
There are numerous interconnections between
is due to be completed for thermal plants by 2011
Turkey and its neighbours, including two 400 kV
and hydropower plants by 2013, will provide and
interconnections with Bulgaria that will form the basis
additional 13 900 GWh annually.
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EUROPE
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United Kingdom
The UK’s response to the challenges of energy security and climate change
centre on investment in combined cycle gas turbines in the short term and
on nuclear power and wind energy over the long term.
The UK covers an area of almost 250 000 km2
Electricity Market
Wholesale UK electricity market share, 2007) (GWh)
and includes England, Scotland and Wales (which
In 2007, the UK generated
Source: National Grid (as reported in the 11th report of the Business and Enterprise Committee, July 2008)
together comprise Great Britain) and Northern
408 TWh of electricity and
Ireland. The UK has a parliamentary democracy.
had
Its population is approximately 61 million, and this
capacity of nearly 83 GW.
population is projected to increase by 4.4 million by
Furthermore, Great Britain
2016. Its unemployment rate was 6.1 per cent for
had the capacity to import
the three months to November 2008, up 0.4 over
and export a total of 2500
the previous quarter and up 0.9 over the year.
MW from and to France
The economy was a major issue for the UK in 2008.
In the autumn, the government announced a £50 billion
a
total
5%
5%
13%
Great Britain’s electricity
network
flow of capital dried up. The country’s gross domestic
National Grid, has predicted
product (GDP) contracted by 1.5 per cent during the
a total increase in aggregate
fourth quarter of 2008.
power station capacity of
operator,
the
7%
12%
9%
peak to the 2014/15 winter peak. Peak unrestricted
demand in Great Britain was approximately 61.4 GW
fuels for its primary energy supply. While it has a
for 2007/08. This is estimated to rise to 67.3 GW by
relatively rich and diverse resource base, over recent
2014/15, a growth rate of about 1.3 per cent per year.
gas and oil.
Northern Ireland has current total installed
generation capacity of 2793 MW (including renewables).
Natural gas became the UK’s dominant fuel in the
A single electricity market for the whole of Ireland was
mid-1990s and currently meets nearly 40 per cent of
established in November 2007. Eirgrid, the transmission
primary energy demand. In 2007, the UK produced
systems operator in the Republic of Ireland, carried out
76.04 billion m3 of natural gas, representing 2.5 per
a series of adequacy studies in support of generation on
cent of the world’s total. Gas production peaked in
the grid for 2013. These studies found a capacity deficit
2000 and has since been declining. The UK imported
of around 1000 MW across the island.
30.84 billion m3 of natural gas in 2007. Petroleum
A new UK Planning Act is designed to support the
meets about one-third of the UK’s primary energy
introduction of new capacity by making the planning
demand (the UK has recently become a net importer of
regime clearer and more streamlined. Ministers will
oil), and coal contributes about 18 per cent, its share
provide National Policy Statements and a newly
having fallen from nearly 50 per cent in 1970.
established Infrastructure Planning Commission will
Following publication of the government’s Energy
agree final consents. Currently, consent has been
White Paper in 2007, important developments affecting
granted to build approximately 10 GW of conventional
the energy sector in 2008 have included support for
electricity generating capacity in the UK, of which 7.5
nuclear energy and formal approval of the Energy Act
GW is under construction.
2008, plus bills on climate change and planning. The
Focusing on the more immediate future, the
government hopes to see construction of a new phase
National Grid predicts a sharp increase of 8.3 GW in
of nuclear power stations begin in 2013/14.
capacity during 2009/10, 18 per cent of which will
The Energy Act covers a range of areas. For
example, it seeks to enable a fit-for-purpose regime
10%
British Energy
E.ON
SSE
RWE
EDF
Drax Power
Scottish Power
International
Power
Centrica
Others
37.8 per cent (or 30.2 GW) from the 2008/09 winter
In 2007, the UK was 91 per cent dependent on fossil
years it has grown increasingly reliant on imported
18%
6%
and Ireland.
package to support the country’s banking sector, as the
Energy Overview
15%
generating
include new wind capacity in Scotland and 12.5 per
cent new wind capacity in England and Wales.
for certain types of offshore gas infrastructure such
The UK market is supported by the renewable
as offshore gas storage; it introduces a renewable
energy obligation, which requires electricity suppliers to
heat incentive and a feed-in tariff for small-scale
source at least part of their electricity from renewable
renewable electricity generation; and it updates the
generators. In Great Britain, this level started at 3 per
legislative framework to reflect the availability of new
cent of electricity supplied in 2002/03. The level for
technologies, such as carbon capture and emerging
2007/08 was 7.9 per cent and for 2008/09 it is 9.1
renewable technologies.
per cent. The total obligation for electricity supplied
76
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Electricity generating capacity in the UK by technology Source: Digest of UK Energy Statistics 2008
2%2% 1%
3%
5%
32%
CCGT
Coal
Other conventional
steam*
Nuclear
Oil
Hydro pumped
storage
Hydro natural flow
Other renewables
Wind
13%
14%
28%
* Other conventional steam includes mixed or dual fired
thermal capacity and gas fired stations that are open cycle
gas turbines or have some CCGT capacity but mainly operate as conventional thermal stations.
UK electricity generated in 2007
1%
3%
1% 1% 1% 1%
to customers across the UK
infrastructure. In November 2008, Centrica outlined
in 2007/08 was 25 551 357
the important role that Qatar will play in supplying
MWh.
liquefied natural gas (LNG) to the UK, beginning with
A substantial proportion of
the shipment of the UK’s largest LNG delivery to date
the UK’s electricity generating
for use in the commissioning of the second phase
capacity is due to close soon:
expansion of the Isle of Grain LNG terminal in England.
12 GW of coal and oil-fired
Furthermore, construction of two new terminals to
generating plants have opted
import LNG is under way, near Milford Haven in
out of the European large
Wales. In October 2008, E.ON began the next phase
combustion plants directive,
of preparing eight caverns at its Holford gas storage
which came into effect in
facility in Cheshire, England, which should be able to
January 2008, and as a result
store up to 165 million m3 of gas. In August 2008,
will have to close by the end
former energy minister Malcolm Wicks gave the go
of 2015 or after 20 000 hours
ahead to Thor Cogeneration Ltd to construct a 1020
of operation from 1 January
MW gas-fired combined heat and power station at
2008 (whichever is the sooner).
Seal sands, Teesside in England.
In addition, according to current timetables, 7.3 GW of
The wind sector dominates renewable energy
nuclear generation capacity will have closed by 2020
in the UK, as highlighted by Prime Minster Gordon
and all but one of the UK’s nuclear power stations will
Brown when he announced in October 2008 that the
have closed by 2025. Therefore, significant investment
UK is now generating 3 GW of its electricity supply
is likely to be made in the UK
from the wind. Exemplifying projects under construc-
electricity sector in the coming
tion, the first turbine was installed at the 180 MW
years.
Robin Rigg 60 turbine offshore wind farm in the
Source: Digest of UK Energy Statistics 2008
Making this investment
1%
41%
16%
34%
Total generated power in 2007: 407 671 GWh
Gas
Coal
Nuclear
Other renewables
Oil
Hydro pumped
storage
Hydro
Wind
Other
Net imports
Solway Firth in November 2008.
are companies such as the
A range of other projects are at varying stages of
so-called “big six” – E.ON,
development, as demonstrated by energy secretary
RWE npower, EDF Energy,
John Hutton’s approval of the UK’s fourth largest
Scottish
Scottish
offshore wind farm, which will generate 315 MW at
and Southern Energy, and
Sheringham Shoal, off the coast of Norfolk, England.
Centrica – plus operators such
The renewable industry is also showing increased
as British Energy, Drax Power
interest in biomass and tidal power as future sources
and International Power.
of power. Drax is in the middle of building a 400 MW
The
Power,
emerging
nuclear
biomass co-firing facility in North Yorkshire, England.
market is leading to greater
Turning to electricity transmission, a second elec-
collaboration in power supply.
tricity interconnection to mainland Europe is being
In September 2008, EDF bid
built with a capacity of 1.3 GW. In December 2008,
£12.5 billion ($18.7 billion) for formal acquisition
energy regulator Ofgem published a consultation on
of British Energy. And in January 2009 collaborative
encouraging investment in electricity transmission. A
ventures were announced between Iberdrola and
month later, the regulator appointed financial advi-
Scottish and Southern Energy, and between RWE and
sors to assist it in running the competitive tendering
E.ON, to develop new nuclear power stations in the
of transmission licenses for more than £10 billion
UK.
($15 million) worth of new offshore power networks
Investment Infrastructure
needed to carry electricity to the mainland.
The significant UK plant capacity is aging and requires
Future Trends
investment. Exemplifying such investment, in 2008
The National Grid predicts that the largest change
RWE npower began a £60 million ($89 million)
in the coming years for Great Britain’s electricity
upgrade to the gas-fired Didcot B Power Station in
generation capacity will result from a 13.9 GW increase
England, Scottish Power announced a £20 million
in combined cycle gas turbine (CCGT) plant capacity.
($30 million) programme to upgrade its three hydro-
The second largest increase is due to the growth in
electric plants and RWE npower recently completed a
wind generation, which is set to rise in capacity from
£235 million ($351 million) upgrade to its coal-fired
3.8 GW in 2008/09 to 15.9 GW by 2014/15.
Aberthaw power station in Wales.
Beyond such upgrade work, important areas of
current investment include gas and renewable energy
This year, the government looks set to publish
documents on carbon budgets and carbon capture,
plus its new strategy on renewable energy.
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middle east-africa
MIDDLE EAST-AFRICA
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Office No. LOB 16-504, Jebel Ali Free Zone, P.O. Box 17204, Dubai, U.A.E
Tel: (+9714) 887 1891, Fax: (+9714) 887 1869, Email: info@pdi.ae, Website: www.pdi.ae
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Angola
MIDDLE EAST-AFRICA
After years of civil war, Angola’s infrastructure is only just beginning to
be rebuilt. With less than 20 per cent of the population having access to
power, the transmission and distribution system needs massive investment.
Council. The Cuanza, Queve, Cunene and
1 246 700 km2. Apart from a coastal plain, much
Catumbela rivers all have great potential.
of the land is rugged and arid. In 2008, the
With solar irradiation levels of 5 kWh/m2/
population was 12.5 million.
day in the capital, Luanda, the country
The country was a Portuguese colony until 1975,
has significant potential for solar energy
when it was granted independence, but a bitter civil
as well as wind power, but neither is
war ensued that only ended in 2002 and devastated
exploited to a significant extent today.
much of the country. Legislative elections were held
Biomass is used by around 80 per
in September 2008, with the ruling MPLA (Popular
cent of the population as their main
Front for the Liberation of Angola) winning decisively.
source of energy, but much of this use is
Presidential elections are predicted for 2009, moving
unsustainable and there are large areas of
the country further towards full democracy.
deforestation around the major cities. The
1000
500
0
in the future. No recent figures for gross
70 per cent of the population live on less than $1
energy consumption are available, but the
per day. The Angolan government is bureaucratic and
US Energy Information Administration put
lacks transparency, making business dealings difficult,
the 2005 consumption at 160 billion MJ.
Electricity Market
The electricity sector in Angola is government
controlled through ENE (the state-owned
Angola is the third largest oil producer in Africa after
electricity utility). This is overseen by MINEA
Nigeria and Libya. Output has risen dramatically during
(the ministry of energy and water). There
the past decade, growing from 710,000 barrels per
is also the electricity sector regulator, IRSE,
day (bpd) in 1997 to 1.7 million bpd in 2007 and an
which was created by a 2002 decree.
1000
Installed capacity (MW)
Available capacity (MW)
800
600
400
200
expected average of 2 million bpd in 2008. Oil reserves
ENE is responsible for the grid systems in
were estimated to be 9 billion barrels in 2008, most of
Angola and a number of isolated systems. It
which are located offshore. Local consumption is low
is active in 15 of the country’s 18 provinces.
at 56 000 bpd, and most crude oil is exported to the
Meanwhile, the largest distribution company
Chinese and US markets. China, in particular, has been
in Angola, EDEL, distributes power to the
investing heavily in Angola in recent years with loans
capital Luanda. EDEL is another state-owned
backed by oil. The 2008 fall in the price of oil is likely to
company, and 80 per cent of its customers are domestic.
have a significant effect on these loan repayments.
In addition to these two major electricity sector
Natural gas reserves were estimated to be 270
companies, there are a number of municipally owned and
billion m3 at the beginning of 2008, a massive increase
controlled utilities that generate and distribute electricity
over the 2007 estimate of 56 billion m3. Estimated
to isolated communities. The main independent power
production in 2006 was 790 million m3, all of which
producer is Hidrochicapa, which was created in 2002.
was consumed locally. In the past, much of this local
Hidrochicapa’s ownership is split between Alrosa, a
consumption was a result of gas flaring, but the
Russian diamond monopoly, which controls a 55 per
government is to phase the practice out, and there are
cent stake in the company, and ENE, which controls the
plans to convert it into liquefied natural gas for both
remaining shares. Hidrochicapa is building a 16 MW
export and domestic electricity production.
hydropower plant to supply power to a diamond mine
0
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Total
nuclear industry may be established
in the coming year. Even with this income, around
Source: OECD/IEA
Isolated sytems
the fall in the value of oil is likely to reduce growth
Capacity on Angolan grids
Southern grid
it could exploit, suggesting that a
Energy Overview
1500
Central grid
it does have natural uranium deposits
$61.4 billion and growth 16.7 per cent in 2007, but
are widespread.
2000
country has no known coal reserves, but
years, as a result of an expanding oil sector. GDP was
according to the World Bank. Allegations of corruption
2500
Production (GWh)
Consumption (GWh)
Northern grid
The country has had a high growth rate in recent
3000
2005
exploitable, according to the World Energy
western boundary. The total area of the country is
ENE, CIA World Factbook
2004
year, of which 65 TWh/year is technically
east is Zambia. The Atlantic Ocean forms its
2003
of Congo, to the south Namibia and to the
ENE annual electricity production and consumption
2002
hydropower
2001
theoretical
capability in Angola is 150 TWh/
GWh
Gross
Africa. To the north lies the Democratic Republic
MW
Angola is located on the western coast of southern
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Installed capacity by source
Source: OECD/IEA
at Catoca and to the population
Oil revenues should help support reconstruction,
of Luanda Sul in the north-east of
but international financial support will be needed. One
the country.
of the electricity sector’s main targets is to increase
The
37%
63%
Hydropower
Thermal power
transmission
and
the availability of power by extending the transmission
distribution of electricity in Angola
and distribution systems. One important project is to
is currently provided by three grid
link the northern grid, where most power is currently
systems: Sistema Norte, Sistema
available, to the central and southern grids.
Central and Sistema Sul. In 2006,
Angola is part of the Southern African Power Grid
the generating capacity of the
(SAPP), which was formed in 1995. The country is not
northern system was 643 MW, the
currently an active part of SAPP, but a proposed project
central system could generate 106
to build a transmission line to export power from the
MW and the southern system 64
Democratic Republic of Congo (DRC) via Angola and
MW, according to a report jointly
Namibia to South Africa does offer the means of linking
published by the Organisation
the three Angolan grids. This would also provide access
for Economic Co-operation and
to additional power from the DRC and, ultimately,
Development (OECD) and the International Energy
South Africa.
Agency (IAE). However, much of the capacity was
The government has acknowledged the need for
unavailable. While in the northern system, 508 MW
rural electrification to provide power to people who
were available (79 per cent), only 27 MW (25 per cent)
currently rely exclusively on biomass for energy. However,
and 24 MW (38 per cent) were operational in the central
it is likely to take many years to achieve full coverage.
and southern systems respectively.
The development of Angola’s oil and gas reserves
The latest figures suggest that the total installed
has opened up the possibility of generating power
capacity in Angola was 1128 MW in 2008, of which
from natural gas, which is currently flared. There is
943 MW were available. This appears to be more
already 146 MW of gas-turbine-based capacity, but
than sufficient to meet demand, since the peak
only 40 MW is available. Meanwhile, hydropower
consumption in 2007 was only 476 MW. Demand is
offers a major future source of new generating
weak because most of Angola’s citizens do not have
capacity. A 2002 study suggested that there was
access to electricity. The best current estimate suggests
around 18 GW of potential generating capacity, of
that 20 per cent of the population have a supply, but
which only 3 per cent has been developed. One new
this may be optimistic. Peak demand is predicted to rise
project, Cambambe II, with a capacity of 260 MW, is
to 1010 MW by 2012.
due to enter service in 2011.
Hydropower is the main source of electricity in
Angola, accounting for close to 63 per cent of total
Future Trends
installed capacity, based on the OECD/IEA report.
Angola’s electricity sector is at the beginning of a
Capanda, the largest hydropower plant, is capable of
lengthy process of reconstruction and modernisation,
supplying 260 MW to the northern grid. It entered
following decades of civil war. The growth of the
service in 2007. A second hydro plant, Cambambe, has
oil industry and exports of crude oil should provide
an installed capacity of 180 MW, also supplying the
revenues for reconstruction, but with loans from China
northern grid.
backed by oil, the value of which is falling, these funds
Annual production by ENE in 2005, the latest
may be significantly reduced.
date for which figures are available, was 2585 GWh.
Rehabilitation of existing capacity and better reliability
Consumption was 2201 GWh. By 2012, production is
will lead to significant improvements. Natural gas could
predicted to rise to 3935 GWh.
provide an important future source of electricity and
Infrastructure Investment
the country’s hydropower potential is also likely to be
exploited to increase domestic capacity.
Twenty-seven years of civil war have left Angola’s
The overriding need, however, is for a single
infrastructure devastated, and it is likely to take
connected system transmission and distribution system
many more years to rebuild. In 2008, with financial
that will permit the large generating capacity in the
support from the US Trade and Development Agency,
north to be transmitted to areas with less capacity. Grid
MINEA requested tenders from US companies to
connections to towns currently without them and the
carry out a study entitled ‘Technical Assistance for the
extension of rural distribution networks are also vital. On
Electricity Distribution Rehabilitation and Hydropower
top of this, the tariff system needs overhauling so that
Development Project in Angola’, suggesting planning
prices reflect production costs. The future prosperity
for the electricity system’s reconstruction is only
of the country is likely to depend on how quickly and
just beginning.
effectively these measures are implemented.
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Egypt
MIDDLE EAST-AFRICA
Egypt is seeking to meet growing demand for energy by building thermal
and nuclear plants, investing in interconnection infrastructure, expanding its
energy alliances and liberalizing its electricity market.
electricity is adequate, covering most populated areas,
on the Mediterranean Sea and the Red Sea, and
and permits gases and liquids to be exported.
shares land borders with Libya, Israel and Sudan.
Egypt is enhancing its energy ties with Europe
It has a total area of 1 001 450 km2. Following
and the rest of the Middle East. It recently signed
the completion of the Suez Canal in 1869, Egypt
a memorandum of understanding in Brussels, for
became an important transportation hub.
example, that will pave the way for the gradual
President Mohamed Hosni Mubarak has led the
convergence of European and Egyptian energy
country’s rapidly growing population of 82 million
markets. Last year, it also began developing a strategic
since October 1981, although the first presidential
gas alliance with the Italian power company Enel.
election in the country was only in 2005. The next
election is scheduled for 2011.
Peak demand for electricity in Egypt is estimated at 18
personal and corporate tax rates, reduced energy
GW, while total electricity production capacity is 115
subsidies and privatized several enterprises. Gross
TWh and consumption close to 96 TWh. Electricity
domestic product (GDP) growth accelerated as a result,
generation is dominated by gas, with around 84 TWh,
reaching more than 7 per cent in 2007. However, while
followed by oil at around 18 TWh and hydropower at
foreign direct investment has increased significantly
some 13 TWh.
rate of growth.
Energy Overview
5000
0
Electricity demand is increasing at an average
from fossil fuels. Peak load is expected to reach 25 110
MW by 2011/2012, and a plan has been developed
to add a total of 6800 MW of new capacity between
well as a favourable geographical location position,
2007/2008 and 2011/2012, which would bring the
Egypt is ideally placed to be a major hub of energy
country’s total installed capacity to around 30 GW.
exports, particularly natural gas. Its proven oil reserves
The government has exclusively managed the
stand at around 4.2 billion barrels, from which it
electricity sector since it was nationalized in 1965.
produces around 700 000 barrels per day (bpd) and
However, reforms began transforming the landscape
exports up to 205 000 bpd. Domestic oil consumption
in 2000, when the Egyptian Electricity Authority
is estimated at 653 000 bpd. Proven natural gas
became the Egyptian Electricity Holding Company
reserves were estimated at 1.66 trillion m3 in 2008,
(EEHC). A succession of restructuring steps led to
production at around 47.5 billion m3 and consumption
the formation of 15 affiliated electricity companies,
at some 32 billion m3. Gas exports are around
including: five generating companies (Cairo Electricity
16 billion m3 annually. In fact, crude oil and natural gas
Production Co, East Delta Electricity Production Co,
reserves are larger than currently reported, following
West Delta Electricity Production Co, Upper Egypt
substantial oil and gas discoveries in 2008.
Electricity Production Co and Hydro-Power Plants
The energy sector in Egypt is managed through
10000
annual rate of more than 6 per cent, mainly coming
With extensive indigenous hydrocarbon reserves, as
the Ministry of Electricity and Energy (MOEE) and the
15000
Electricity Market
In 2005, a series of government reforms reduced
since then, further reforms are required to sustain this
20000
2006-2007
Energy distribution infrastructure for oil, gas and
the fertile Nile Valley. Egypt has long coastlines
2005-2006
the African continent. It is neatly split in two by
Source: EEHC
Peak load development, 2003-2007
2004-2005
and wind.
2003-2004
to exploit renewable energy resources, particularly solar
mild winters, occupying the northeast corner of
MWh
Egypt is a desert land, with hot, dry summers and
Principal indicators
Electricity Production Co); one transmission company;
Population (2008)
and nine distribution companies.
GDP (2008)
Ministry of Petroleum (MOP). Primary energy demand
All electricity companies remain state owned under
has grown at an average annual rate of more than
the EEHC, which is responsible for financing its
4 per cent over the past two decades, and much of
own investment plans. The EEHC and its affiliated
this growth has been supported by the increasing role
companies build and operate large power plants,
of gas. Fossil fuels satisfy about 94 per cent of primary
substations and the transmission grid, as well as
energy demand, with around 50 per cent generated
additional electrical interconnection projects with Arab,
from oil and 44 per cent from natural gas. The rest
African and European countries. In addition, there are
comes mainly from hydropower, at close to 4 per cent,
a number of smaller independent power providers
and coal. However, Egypt also has a very high potential
(IPPs) that sell output to the EEHC.
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1 million km2
Area
81.7 million
$158.3 billion
GDP growth (2008)
7%
Installed generating capacity (2006)
Electricity production
Peak demand (2006-2007)
Electricity consumption
22 500 MW
115 TWh
18 500 MWh
96 TWh
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PennWell Global Power Review 2009
Capacity additions (MW)
Wind power growth forecast, 2008-2012
In August 2007, the government announced
plants, a renewed focus on nuclear technology is a
that it would gradually phase out subsidies to
major plank of Egyptian energy policy. The country
energy-intensive industries, such as iron, cement
plans to build several nuclear power plants as part of
400
and aluminium production, with the intention of
its strategy to meet rising energy demand and improve
350
reaching market rates by 2010. However, in the
energy security. Egypt launched a tender in February
300
wake of the global economic crisis, the government
2008 seeking international help in building the plant,
250
has announced that prices for electricity and
at a cost of up to $1.8 billion. This was followed in late
200
natural gas will be frozen until the end of 2009.
2008 by the Egyptian Ministry of Electricity and Energy
150
This measure is part of an industrial support
awarding a contract to engineering player Bechtel to
100
package that includes financing for technology
help design and consult on the country’s first nuclear
transfer and industrial modernization.
power plant. Bechtel will be responsible for choosing
Source: BTM Consult ApS
50
2012
2011
2010
2009
2008
0
Despite what may appear to be a retrograde
the location of the plant, which could be built at Dabaa
step, there are some signs of energy market
on the Mediterranean coast, west of Alexandria and
reform, with plans to privatize the nine distribution
220 km north of Cairo.
companies and moves to allow foreign players
However, while nuclear and renewable capacities
to enter the market being considered. For example,
are important features of Egypt’s energy strategy, it is
Italian energy major Eni signed a memorandum of
expected to continue with its programme of expanding
understanding in April 2008 with EEHC and the
thermal capacity. To that end, the African Development
Egyptian Natural Gas Holding Company (EGAS) for a
Bank recently approved a loan of $413 million to
feasibility study to apply combined cycle generation
finance a thermal power project in Egypt. This involves
technologies to some Egyptian power plants. The
constructing a 1300 MW supercritical steam turbine
application envisaged by the memorandum will lead
power plant adjacent to the Ain Sokhna sea port on
to energy savings of more than 20 per cent and bring
the Gulf of Suez, 112 km east of Cairo.
significant environmental benefits, according to Eni,
Another significant development in infrastructure
which is already a major foreign oil and gas player
will come from improved transmission links with
in Egypt. Its equity production of oil and natural
neighbouring countries in the Middle East, and further
gas reached approximately 240 000 barrels of oil
afield in Europe and the wider African continent. A
equivalent per day in 2007.
long-term plan for the interconnection network involves
There are also policy drivers for the growth of the
extending links to countries lying east of the Red
renewable energy sector. The New and Renewable
Sea, such as Kuwait, Qatar and the UAE, through an
Energy Authority (NREA), which owns and operates
interconnection between Egypt and Saudi Arabia, which
all existing renewable energy facilities, was established
in turn is implementing interconnection projects with
in 1986 as part of a plan to boost renewable energy
the Gulf Cooperation Council. A feasibility study for the
capacity. This was followed in 2006 by the creation of the
interconnection between Egypt and Saudi Arabia has
Supreme Council of Energy as well as the development
already been signed as part of this programme.
of a National Sustainable Development Strategy through
the Ministry of State for Environmental Affairs.
Future Trends
In the western region of the Gulf of Suez, there
In light of rapid growth in demand, Egypt is expected
is 20 GW of estimated renewable energy potential.
to see significant capacity growth in the coming years.
The Egyptian Electricity Transmission Company (EETC)
Along with gas-fired combined cycle gas turbines
bears the cost of wind farms’ connections to the 220
(CCGT) and new nuclear development in the longer
kV transmission grid, in addition to paying a tariff
term, renewable energy sources are expected to
per kWh about 10 per cent higher than that paid to
form a growing proportion of installed capacity. An
conventional generation companies.
overall target is to achieve 20 per cent of electricity
Although wind capacity is currently only around
from sources such as wind and hydro power by 2020.
300 MW, there are plans to increase this to 850 MW
Egypt is already the regional leader for hydroelectricity,
by 2010, which would account for about 3 per cent
which provides up to 12 per cent of its electricity.
of the country’s electricity demands. This is expected
Perhaps more significant, as a country that receives a
to reach 3000 MW by 2021/2022, about 7 per cent
lot of sunshine, Egypt’s solar potential is huge. With
of demand, solely from capacity installed in the Gulf
improved transmission infrastructure the country could
of Suez region.
export solar energy to demand centres in Europe.
Infrastructure Investment
lower carbon options, a phased liberalization of the
As well developing new renewable capacity and
electricity market is also anticipated, with all consumers
boosting the efficiency of its existing thermal power
being free to choose supplier by 2020.
Along with a shift in installed capacity towards
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Kuwait
MIDDLE EAST-AFRICA
Kuwait needs to rapidly increase its generating capacity by attracting
investors, ending subsidies and moving towards renewable sources of power
if it is to avoid power shortages and summer power cuts.
The middle-eastern country of Kuwait is situated
reserves, Kuwait has been seeking to
Installed generating capacity
in the north-western corner of the Persian Gulf,
import natural gas in recent years
Source: Kuwait Institute for Scientific Research, US Energy Information Administration
which forms its eastern border. The country
with approaches to both Qatar and
borders Iraq on the north and east, while in the
Iran. Imports from Iraq, interrupted by
south it shares a border with Saudi Arabia. The
the 1990/1991 war, may eventually
be resumed. Imported gas is likely to
be used for power generation and
the capital, Kuwait city, is located. Most of the
desalination.
Installed capacity (MW)
country, which occupies an area of 17 820 km2, is
mostly desert, except for the coastal region where
12000
10000
8000
population lives here and only 5 per cent of the
The abundance of fossil fuel has
country is inhabited. In 2008, the population was
meant that Kuwait has devoted little
2.60 million, including 1.29 million non-nationals.
attention to renewable resources.
The Al Sabah family rules Kuwait, and most Kuwaiti
Some wind surveying has been
nationals are employed by the government. There is a
carried out, indicating that the wind
democratically elected legislative assembly, but it has
resource is most abundant during
limited power. Political parties are illegal in practice,
the summer, when energy demand
although most members of the assembly have some
is also at its peak. The country has
affiliation. GDP was $111.3 billion and GDP growth
considerable solar potential for both
4.7 per cent in 2007.
solar photovoltaic (pV) and solar thermal power plants,
* According to some sources, capacity grew
but this has not been quantified.
to 9800 MW in 2007.
Electricity Market
export revenues and 80 per cent of government
The electricity sector in Kuwait falls
revenue. The government invests around 10 per cent
under the auspices of the Ministry
of oil revenue in an investment fund against the day
of Energy (Electricity and Water). The
its oil reserves are exhausted. The Kuwaiti currency was
ministry was established in 2003 by
pegged against the US dollar until May 2007, when it
the merger of the Ministry of Oil and
changed to a basket of currencies to reduce volatility.
the Ministry of Electricity and Water.
apparently, an independent unit,
global oil reserves. It also has another 5 billion barrels
though both sections are headed
in the neutral zone, a region on its border with Saudi
by the same minister. The ministry
Arabia that is shared between the two countries. Oil
is
production in 2007 was 2.63 million barrels per day
managing and operating the country’s
(bpd), according to the BP ‘Statistical Review of World
power and desalination plant and for
Energy’, and consumption in 2007 was 276 000 bpd.
distributing power.
responsible
for
establishing,
2008
2007
2006
2005
2004
2003
2002
25000
20000
15000
10000
5000
0
Most Kuwaiti oil is located in the Greater Burgan area,
Kuwait’s electric power system is a vertically
which has been producing oil since 1938. However,
integrated, state-owned organisation. The system has
the old oil fields are becoming exhausted, and in
five major power stations: Doha East, Doha West,
2005 the Kuwaiti Oil Company revised downwards
Al-Subiya, Shuaiba South and Al-Zour South. The
its production plateau estimates for the Great Burgan
capacity at these sites includes a large number of gas
field from 2 million bpd to 1.7 bpd over the next
turbines, many of which operate in open cycle mode,
20-30 years.
leading to inefficient generation. Total installed capacity
Natural gas reserves at the end of 2007 were
reached 10 300 MW in 2008, following an emergency
estimated to be 1780 billion m3. Production in 2007
construction programme during the year that added
was 12.6 million m3 and consumption was the same,
1000 MW to the earlier capacity of 9300 MW. Until then,
indicating that all the natural gas produced was
capacity had remained relatively unchanged since 2005.
consumed domestically. With relatively limited domestic
This expansion became essential as demand threatened
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2004
billion barrels at the end of 2007, around 8 per cent of
30000
2003
Energy (Electricity and Water) is now,
35000
2002
again in 2007, so the Ministry of
Kuwait’s oil reserves were estimated to be 101.5
40000
2001
The two sections were segregated
Source: CIA
2000
Energy Overview
Annual electricity consumption
2005
accounted for close to half of GDP, 95 per cent of
2000
1999
During the recent period of high oil prices, petroleum
4000
0
Electricity consumption (GWh)
The primary source of income in Kuwait is oil.
6000
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Fuel consumption for electricity production, 2005
Source: Ministry of Energy
782700 bbl 2567m3
19323394 bbl
46349461bbl
Heavy oil
Crude oil
Gas oil
Natural gas
to outstrip supply, highlighted
Infrastructure Investment
by power outages during the
The electric power system has suffered from significant
summers of 2006 and 2007.
under-investment in recent years, often as a result of
The newly constructed facilities
bureaucratic tendering regulations. There were plans in
included 800 MW of additional
2005 to increase generating capacity by around 3500
gas turbine generation at
MW through three new projects: a 2500 MW plant
Al-Zour South, completed in
at Al-Zour North, an additional 500 MW at Al-Zour
June 2008.
South created by converting the plant to combined
All Kuwait’s power stations
cycle operation and a 1500 MW project at Subiya. A
are fuelled with fossil fuel,
lack of interest from contractors coupled with a rigid
primarily oil, although natural
tendering process led to all three projects foundering,
gas does account for a small
forcing an emergency programme to be implemented
proportion. In 2005, the last
in 2007.
year for which detailed figures
While this has enabled demand to be met,
are available, consumption of
significant new investment is required if supply
heavy oil, crude oil and gas oil for power generation
reliability is to be maintained. In June 2008, the
was 64.9 million barrels. Natural gas consumption was
Ministry of Energy unveiled a five-year plan to build
2567 million m3.
an additional 6700 MW of capacity. This is expected
Electricity in Kuwait is heavily subsided and this,
to include one 1500 MW scheme and one 2000 MW
combined with the extensive use of air conditioning
scheme entering service in 2010, a 1500 MW project
during the summer, has resulted in one of the highest
starting up in 2011 and a further 1700 MW from as
per capita electricity consumptions in the world. In 2005,
yet unspecified projects.
per capita consumption was 14 000 kWh. Electricity
The Ministry of Energy announced in November
demand has been growing at between 6 per cent and
2008 that it had received bids from GE Energy, Siemens
8 per cent annually for the past decade and is expected
and Iberdrola for construction of the proposed 2000
to continue to grow by 5 per cent to 6 per cent over the
MW power plant. The cost of this project is expected
next decade, although this predicted rate of growth may
to be $2.59 billion.
be moderated by the recession of 2008.
Kuwait’s transmission and distribution network is
Future Trends
concentrated in a relatively small area of the country
Kuwait’s immediate need is to rapidly increase
centred on Kuwait city and along the Persian Gulf
generating capacity in order to avoid power shortages
coast. All five power plants are on the coast, and the
and regular summer power cuts. Over the longer
distance between the furthest is 160 km. The system
term, however, two other factors are likely to become
backbone, to which they are all connected, operates
prominent: the restructuring of the power sector and
at 275 kV. This includes 18 substations and 854 km of
the introduction of renewable capacity to replace fossil
transmission line. There is a further 4000 km of 132
fuel for generating electricity.
kV lines and 246 substations linking to the distribution
system at 33 kV and 11 kV.
Restructuring, if it takes place, is likely to be a
painful process. It will become a necessity as the
While the system is considered to be reliable, the
demand for power grows because the government
concentration of a large number of interconnections
will at some stage need to attract private investment in
over a small area means that the overall system
the power sector. Foreign companies currently cannot
impedance is low, leading to high fault currents when
be established in Kuwait unless Kuwaiti ownership is
problems occur. There is also some transmission system
more than 50 per cent, so legal changes are likely to
substation congestion during periods of high demand,
be needed to create an attractive economic climate.
which can result in a reduction in transmission capacity
Subsidies are another barrier and will need to be
of 600 MW.
phased out, although this is likely to be extremely
Kuwait is about to become part of the Gulf
unpopular.
Cooperation Council grid, a scheme that will link the
Meanwhile, Kuwait has begun to examine
states on the Persian Gulf. A final agreement covering
renewable options with a $150 million research
the grid was signed in late 2008. Meanwhile, the
and development grant, and it is also encouraging
first phase of this project, which will link Kuwait,
renewable initiatives. One result was the signing, in
Saudi Arabia, Bahrain and Qatar, is due to become
December 2008, of a memorandum of understanding
operational in early 2009. This part of the grid will
between the Ministry of Energy and the Japanese
have a capacity of 1200 MW and an estimated cost
government for a feasibility study into the construction
of $1.6 billion.
of an integrated solar-thermal combined cycle plant.
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MIDDLE EAST-AFRICA
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Saudi Arabia
As the world’s largest petroleum exporter with enormous hydrocarbon
reserves and a voracious appetite for electricity, Saudi Arabia is a major
investor in the energy sector.
Saudi Arabia is the fastest-growing consumer of
cent of power is supplied to the industrial sector (not
energy in the Middle East, with transport fuels
including water supply), which is largely in the oil and
growing even faster than electricity use. It is also a
petroleum supply business that represents 90 per cent
major energy supplier: it has a fifth of the world’s
of Saudi Arabia’s industry.
known oil reserves and, as a major player in the
Typically, electricity demand is greatest during the
Organisation of Petroleum Exporting Countries
summer months, when heavy loads for air-conditioning
(OPEC), it has considerable influence over the
have to be supported. In recent years, demand growth
price of oil. The country is home to 28 million
has outstripped the speed of construction, leading to
people, including 5 million permanent or semi-
power cuts and rationing.
permanent overseas nationals. It is controlled by
All power generated in Saudi Arabia is from thermal
the royal family, the house of Saud, whose head is
sources, making use of its huge indigenous reserves of
both the prime minister and head of state. Since
oil and gas. Although a switch to gas-fired power
2005, this has been Abdallah bin Abd al-Aziz Al
stations was expected in the past, and nearly 900 MW
Saud. The heir apparent is his half-brother, crown
of gas fired stations were planned for the 2007 fiscal
prince Sultan bin Abd al-Aziz Al Saud. There are
year, a royal decree in 2006 demanded that coastal
no elections, although the proposal has been
generation must be fuelled using crude oil. Saudi
raised. Instead, the king appoints a council of
Aramco is building combined heat and power plants at
ministers at four-year intervals.
several of its oil refineries and other installations, each
Energy Overview
project providing up to 300 MW of electricity.
Some 90 per cent of the population has access
Saudi Arabia is the world’s largest producer of petroleum
to electricity through a transmission and distribution
and has the largest proven crude oil reserves, at 266.8
network of around 241 400 km. It is estimated that
billion barrels. In addition, it has extensive natural gas
bringing power to the remaining 10 per cent of the
reserves of 7.2 trillion m3, which is still the country’s
population could require a further 32 000 km of
most important resource: it provide 40 per cent of the
transmission and distribution lines.
country’s gross domestic product (GDP) and comprises
90 per cent of its exports.
Saudi Arabia has sought to attract private
Saudi Arabia electricity production by source
Electricity production
179 100 TWh
156 800 TWh
investment into its power projects since 2002, and in
This dominance is likely to persist as the country
2004 it announced plans to develop ten independent
Electricity consumption
continues to invest in developing its existing oil fields
water and power projects by 2016, costing $16
Electricity production – nuclear
0%
and turns to ready export markets in developing
billion at the time of the announcement. Around 60
economies as the West tries to reduce its dependence
per cent of each project would be funded by private
Electricity production – hydro
0%
on oil. That investment outweighs investment in low-
equity, with the remainder split between SEC and a
Electricity production – other
0%
carbon technologies, although Saudi Arabia has signed
public investment fund. So far, the first six have been
and ratified both the UN Convention on Climate
approved, the first four of which are expected to come
Change and the Kyoto Protocol.
into operation between 2009 and 2010 and generate
Saudi Arabia’s per capita carbon dioxide emissions
a total of around 7 GW. These are Shuaibah 3 (900
in 2005 were 15.6 tonnes, approaching those of the
MW), Shuqaiq 2 (850 MW), Ras Az Zour (originally
USA, which were 20.1 tonnes per capita. An electricity
planned at 2000 MW, now likely to be 1000 MW),
industry based almost entirely on thermal generation,
Jubail 3 (2750 MW), Yanbu 2 (1700 MW) and Rabigh
much of it oil fired, and the large energy requirements
(2400 MW). The majority of these facilities will be in
of the country’s desalination processes were important
the western parts of the country, drawing water from
contributors to the total.
the Red Sea.
Saudi Arabia’s interest in non-conventional and
Electricity production – fossil fuel
100%
Source: CIA Factbook
Saudi Arabia energy overview
Natural gas reserves
6 339 000 000 000 cubic feet
Crude oil exports
8 900 000 bbl/day
However, a feasibility study was carried out for a
Crude oil production
10 250 000 bbl/day
waste-to-energy facility in the south-western city of
Crude oil proven reserves
266 800 000 000 bbl
Electricity Market
renewable energy has been limited up to now.
Electricity use in Saudi Arabia is still growing by up to
7 per cent annually. The installed capacity, estimated
at 30.5 GW in 2005, must more than double to match
Jizan. Following the study, a plant was proposed that
demand of 65 GW by 2023, according to predictions
would produce 6 MW of electricity and up to 250 000
by the Water and Electricity Ministry. Some 60 per
gallons of distilled water per day.
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Oil exports
6 710 000 barrels per day
Source: Nationmaster
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Total energy consumption in Saudi Arabia by type
Source: Energy Information Administration
40%
60%
Oil
Natural gas
SEC has also expressed interest
SEC is also working with SWCC on a new
in solar power, suggesting that
desalination plant, Shoaiba 3. SEC’s share in this build,
this huge resource could one day
own, operate (BOO) project amounts to 8 per cent,
allow the country to generate and
while the private sector contributes 60 per cent and
export thousands of megawatts of
the Public Investment Fund the remaining 32 per cent
power. Up to now, however, there
of the value of the project.
has been little investment in solar
SEC will install new transmission lines to export
energy, and this looks unlikely to
electricity to the western region, while SWCC will
change as investment conditions
construct pipelines and pumping stations to transport
tighten. SEC reported profits fell in
the 734 million litres of water produced daily. The
the third quarter of 2008, the first
project will serve and meet the water needs of the cities
decline in summer profits for four
of Makkah Al-Mukarama, Jeddah, Taif and Baha. It will
years. The company was also hit by
also support the electricity grid of the Western Region.
a commitment to raise the wages
With a total project cost of $2.5 billion, this is
of its 28 000 staff and by higher
one of the largest public-private projects in the world
commodity prices for its investment programme.
and will be the largest oil-fired project in the Middle
Higher up the Saudi agenda than renewables is a
East. A $1.9 billion contract was recently signed with
long-mooted project to link the Saudi grid with those
Alstom, which led a consortium that built the first and
of its neighbours. The aim is to link the grids of the six
second phases at the site, competed in 2003 and 2007
Gulf Cooperation Council (GCC) countries, beginning
respectively. When Shoaiba 3 is complete, the site’s
with interconnections between Saudi Arabia and
total power output will be 5600 MW.
Kuwait, and Bahrain and Qatar. The $1.2 billion first
phase will include an overhead linkup to Kuwait and
Future Trends
marine transmission infrastructure to Bahrain.
Although Saudi Arabia greatly relies on its oil and gas
Infrastructure Investment
reserves to fuel its thermal power stations, it relies on
them far more as exports. That is behind Saudi Arabia’s
The Water and Energy Ministry estimates that the
interest – along with other oil-rich Middle Eastern
direct investment in the electricity generation industry
countries – in nuclear power. It is already a member of
required over the next 15 years will be $120 billion.
the Arab Atomic Energy Agency (AAEA).
According to the Saline Water Conversion Company
In the near and mid term, however, grid links with
(SWCC), new desalination projects will add a further
neighbouring countries are higher up the Saudi Arabian
$50 billion to that total.
agenda. Differences in peak times should allow countries
SEC has recently begun the tendering process for
to import energy to meet peak loads in advance on new
a series of three dedicated power projects – part of
plant construction. The Arabian Union of Producers,
the group of ten it announced in 2002. The first is a
Transporters and Distributors of Electricity has also been
second plant at Rabigh, a 1200 MW project 140 km
pushing for such links and working on the grid codes
north of Jeddah and due to start up in June 2012.
required for regular power export and import.
SEC extended the bidding period on this project to
Along with links to other gulf states, the Saudi
December 2008, and is evaluating bids from two
Arabian electricity minister, Hassan Younis, has called for
consortia: Kepco with ACWA Power Projects; and
a link with Egypt, which he said would have immediate
International Power, with Suez International and Saudi
economic benefits.
Oger. In January, SEC said it planned to sign a power
SEC expects its total generation capacity to reach
purchase agreement with a preferred bidder by 14
46 563 MW by 2013 and anticipates that an additional
March 2009 and close the deal by 1 June 2009.
243 TWh will be required. At the same time, SEC
The second independent power producer (IPP) is
is predicting that 99.8 per cent of Saudi Arabia’s
a 2000 MW project in Riyadh. In August, SEC invited
residential consumer areas, serving some 6.7 million
expressions of interest for a developer or consortium
customers, will be electrified.
partner to build, own and operate this combined cycle
Transmission lines are forecast to total some
plant, which is to be fuelled by natural gas and is
53 363 kilometres, linked to 720 grid stations and
due to go into operation in April 2012, but could be
368 000 transformers. The state company said that it
delayed until 2014.
would continue to seek independent power producers
SEC’s third IPP is also a gas-fired 2000 MW plant,
to supply some of its future generation requirements,
sited at Qurayyah, in the country’s Eastern Province.
with 30-40 per cent of its future generation needs
That plant is due to enter operation in 2014, but could
set to be supplied by such producers in the next
be delayed to 2016.
ten years.
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MIDDLE EAST-AFRICA
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South Africa
South Africa continues the battle to ensure its electricity supply meets
demand, with Eskom more than doubling its infrastructure investment
programme up to 2026.
The Republic of South Africa occupies the southern
Electricity Market
tip of Africa, its long coastline stretching more than
South Africa’s electricity sector is dominated
2500 km from the desert border with Namibia on
by state-owned Eskom, which is one of the
the Atlantic coast, southwards around the tip of
world’s largest electricity utilities (based on
30
Africa, then north to the border with Mozambique
generation capacity) and generates 95 per
25
on the Indian Ocean. It has a total land area of
cent of the country’s electricity and 45 per cent
around 1.2 million km2, and a population in excess
of the electricity for the African continent.
South Africa’s real GDP growth to contract by 0.8 per
(1400 MW). It also owns over 360 000 km
cent this year, before recovering in 2010 as the global
of power lines, around 27 000 km of which
economy recovers and the FIFA World Cup kicks off.
constitutes the national transmission grid.
South Africa is a constitutional democracy, with
South Africa has been a significant exporter of
the African National Congress the ruling party in
electricity to its neighbours, including Botswana,
parliament. Its president is Kgalema Motlanthe.
Lesotho,
Energy Overview
Namibia,
Swaziland
and Zimbabwe. When the Apartheid era ended,
however, the government made a policy decision
South Africa has only small deposits if oil and natural
that electrification should proceed rapidly, bringing
gas, so it relies on coal production to meet most of its
electricity to everyone in the country. This programme
energy needs.
was successful, increasing the percentage of the
According to the Oil and Gas Journal, as of January
population with access to electricity from 30 per cent
2008 the country has proven oil reserves of 15 million
under Apartheid to over 80 per cent. However, this
barrels, all located offshore. In 2007, South Africa
increase brought significantly increased demand.
produced 199 000 barrels per day (bpd) of oil, of which
This increase in demand coupled with a failure
160 000 bpd were synthetic liquids processed from
to keep pace with this increase with investment in
coal and natural gas.
generation and transmission capabilities has meant
Approximately 66 per cent of its oil consumption
that Eskom’s reserve margins have been eroded.
is imported. According to the South African Petroleum
According to the state utility, net reserve margins
Industries Association, most of the oil imports come
have decreased to 8 per cent and are likely to continue
from the Middle East.
to fall until new permanent power stations come into
According to Cedigaz, as of January 2008, South
operation. Eskom wants to eventually return to an
Africa had 9 billion m3 of natural gas reserves. To
internationally accepted reserves margin of 15 per cent.
compensate for the lack of large reserves, South Africa
Towards the end of 2007 and in the first months
has developed natural gas supply agreements with its
of 2008, forced rolling blackouts or load shedding,
neighbours, Mozambique and Namibia.
caused by a higher than expected demand in electricity
The country’s economy is heavily dependent on
coal. It provides approximately 88 per cent of total
primary energy and supports around 90 per cent of
0
2008
and two hydroelectric pumped-storage stations
2007
conventional hydroelectric plants (600 MW)
has revised its growth forecast downwards, and expects
2006
economic slowdown. The Economist Intelligence Unit
5
2005
cycle gas turbine generators (1400 MW), two
2004
slow in the second half of last year because of the global
10
2003
station at Koeberg (1800 MW), four open
2002
addition, the utility operates a nuclear power
growth for many years. However, its economy began to
2001
the African continent, and it has enjoyed robust GDP
15
2000
is 38 700 MW, which is primarily coal fired. In
1999
South Africa remains the biggest economy on
Mozambique,
Source: Eskom
20
Eskom’s net maximum generating capacity
%
of 48 million.
Net reserve margin during winter peak
Electricity supply parameters, 2008
Electricity sold – local (GWh)
210 458
and low reserve margins, wreaked havoc on South
Electricity sold – international (GWh)
13 908
Africa’s economy.
Total electricity sold (GWh)
224 366
Peak demand on integrated system (MW)
36 513
Peak demand on integrated system
including load reductions (MW)
37 158
In a bid to handle the electricity crisis, the
electricity generation. South Africa has the world’s six
government
largest recoverable coal reserves at 50 billion tonnes.
Management Plan and called on citizens, businesses
launched
the
National
Electricity
The National Energy Regulator of South Africa
and other organizations to come together and work
(NERSA), created in 2005, regulates policy over the
towards finding solutions to the current power crisis.
entire South African energy industry and is responsible
Large electricity consumers agreed to decrease their
Demand-side management savings (MW)
for implementing the country’s energy plan.
consumption by 10 per cent leading to some industries,
Source: Eskom
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PennWell Global Power Review 2009
Capacity expansion, 2006-2008
Source: Eskom
500
1200
400
900
300
600
200
300
100
0
0
2006
2007
2008
Generation capacity installed
and commissioned (MW)
Transmission lines installed (km)
the extra units come online Ankerlig’s installed capacity
under tremendous strain. There were also
will rise to 1350 MW
a series of unplanned blackouts.
km
MW
1500
the mining sector in particular, being put
Eskom is upgrading its Arnot coal-fired power
In January 2008, the Department of
station, increasing its total installed capacity from
Mines and Energy and Eskom jointly released
2100 MW to 2400 MW. The utility is also investing
a policy document ‘National response to
in new high-efficiency coal-fired power generation for
South Africa’s electricity shortage’. The
the first time in more than 20 years. Currently, under
plan includes the restructuring of the
construction is the Medupi power plant, located in
country’s electricity distribution industry
the Limpopo Province. Once completed in 2015, it will
and fast tracking of electricity projects by
provide 4700 MW of power. Eskom plans to have the
independent power producers. The plan
first unit working by 2011.
also focuses on the importance of reducing
In August 2008, construction began on the Kusile
demand by pricing electricity correctly, as
coal-fired power station in Mpumalanga Province. The
well as promoting energy efficiency. Eskom
power station, which is described as South Africa’s
aims to reduce demand by 300 MW by
cleanest coal-fired power station, will consist of six units
2012 and a further 5000 MW by 2025.
and will generate approximately 4800 MW of electricity.
The cost of electricity in South Africa is
The first generating unit is scheduled for completion in
among the lowest in the world. Last year the country’s
2013, with the entire power station complete by 2017.
energy regulator, NERSA, gave permission for Eskom to
Work is progressing well on Ingula, a pumped-
raise average electricity tariffs by 14.2 per cent. Then in
storage scheme in the KwaZulu-Natal Province, with
June, NRSA agreed to a further increase of 13.3 per cent
an output capacity of 1332 MW. The station should
for the year ending March 2009. This represents a 27.5
be fully operational by the middle of 2013. Eskom is
per cent average increase year-on-year. NERSA, howev-
also planning to invest R19 billion in a second pumped-
er, also ruled that the price increase to ‘poor’ residential
storage scheme, called Tubatse, in Limpopo Province.
customers was to be limited to 14.2 per cent.
Infrastructure Investment
In January the South African government took over
the Nuclear 1 project, and said South Africa’s next
nuclear power plant would come on stream by 2019.
Eskom has revised its expansion programme, which
Eskom’s major transmission projects include a new
it launched in 2005, to upgrade and expand the
400 kV transmission line and three new substations
country’s electricity infrastructure. The project will see
to strengthen the supply to the Platinum Basin, which
it double its capacity to 80 000 MW by 2026. Over
will be completed this year. Another is the new 765
the next five years to March 2013, Eskom will spend
kV transmission power line and substations from Zeus
R343 billion ($34 billion) on capacity expansion, which
substation in Mpumalanga down to Omega substation,
is significantly higher than the R150 billion reported
near the Koeberg power station – approximately 1450
previously for the five years to 2012. Generation
km – which will be completed by 2011. This will
projects will take up 73 per cent of the budget, with
strengthen supply to the Western Cape.
transmission investment accounting for another 13 per
cent. The rest of the budget will fund improvements
Future Trends
to its distribution network. Its expansion budget is
South Africa is a signatory to the United Nations
expected to grow to more than R1 trillion by 2026.
Framework Convention on Climate Change (UNFCCC)
Since the programme began, an additional 2582
and its implementing mechanism, the Kyoto Protocol.
MW have been commissioned, and in terms of the
As a developing country, it has no binding obligations
revised plan, Eskom will now deliver a further16 304
to reduce greenhouse gas emissions, but South Africa
MW in generating capacity by 2017. Of this, 4644MW
is the 12th largest carbon polluter in the world.
will come on stream within the next five years. This
In recognition of this, the government is targeting the
includes the return to service of the three mothballed
generation of 10 000 GWh of electricity from renewable
coal fired stations.
energy by 2013. According to Eskom, although its
In October 2007, the formal opening of Ankerlig
carbon emissions will increase in the short to medium
and Gourikwa open cycle gas turbine stations took
term, its ultimate aim is to reduce its carbon footprint
place. Both of these stations are now being expanded.
by investing in low-carbon emitting technologies as they
At Gourikwa, two 150 MW units are being added,
become commercially viable. Its plans include increasing
increasing its capacity 750 MW. The expansion is due
the renewables components of its generation portfolio
to be completed this year. Five additional 150 MW
to a minimum of 1600 MW by 2025.
units are also being constructed at Ankerlig, and again
this project is due to be completed later this year. Once
Last year, Eskom announced it plans to build a 100
MW wind farm on the country’s west coast.
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UAE
MIDDLE EAST-AFRICA
Energy demand in the resource-rich UAE is growing rapidly, while the country
is becoming increasingly dependent on gas. New policies on nuclear and
renewable energy are part of an ongoing push to strengthen non-oil sectors.
The UAE is situated in the south-east of the Arabian
national policy on nuclear energy, which includes plans to
Peninsula, bordering Oman, Saudi Arabia, the
establish a nuclear energy implementation organization.
Persian Gulf and the Gulf of Oman. It was formed
On the eve of the World Future Energy Summit in
in December 1971, initially comprising six emirates:
January 2009, the government of Abu Dhabi announced
Abu Dhabi, Dubai, Sharjah, Umm al-Qaiwain,
that it wants 7 per cent of its power to come from
Fujairah and Ajman. The seventh emirate, Ras
renewable energy sources by 2020. Much of this will
al-Khaimah, formally joined the UAE in 1972.
be created by its flagship Masdar initiative. The initiative
The Emirates are governed individually and also
have assigned specific areas of authority to a Federal
Supreme Council. A UAE government strategy was
announced in May 2008 that it would be investing
$2 billion in thin-film photovoltaic solar technology.
formally launched in 2007, outlining plans for the
Electricity Market
coming years. Development in the UAE continues
The total capacity for electricity production in the
apace, with real GDP growth of 9.4 per cent in 2006
UAE was approximately 16 670 MW in January 2008,
and 7.4 per cent in 2007. Similar levels of growth have
compared with 9600 MW in 2001. Capacity is expected
been reported in the first half of 2008, supported in
to rise by 60 per cent to almost 26 000 MW by 2010.
particular by expansion in construction and real estate.
The Abu Dhabi Water and Electricity Authority (ADWEA)
More recently the pace of construction has slowed,
accounts for the bulk of this capacity, followed by the
primarily due to the global financial downturn.
Dubai Electricity and Water Authority (DEWA), the
Sharjah Electricity and Water Authority (SEWA) and the
Energy Overview
Federal Electricity and Water Authority (FEWA).
The UAE has a rich natural resource base. It produced
Historically, each service provider has operated as a
131 million tonnes of crude oil in 2007 (3.3 per cent
separate entity, but the levels of regional interconnection
of the world’s total) and was the world’s sixth largest
are increasing. The Emirates National Grid has been
oil exporter in 2006. The country’s proven crude oil
operating contractually between Abu Dhabi and Dubai
reserves stand at 97.8 billion barrels, or slightly less
since 2006. The electricity network in Sharjah was
than 8 per cent of the world’s total reserves.
added to the grid in May 2007. Expanding beyond
In January 2008, the country reported approximately
the UAE, the Gulf Cooperation Council is expected to
6 trillion m3 of natural gas reserves, 3.5 per cent
commission the first phase of its power grid initiative by
of the world’s total. Natural gas has been gaining
the first quarter of 2009.
importance as a local energy source. Households
There is growing interest in projects based on
and industry, including power generation and water
importing electricity. In 2008, Belgium’s Tractebel
desalination plants, are increasingly turning
to gas. Market analyst Business Monitor
DEWA’s installed capacity for 2007 (power only)
Source: ADWEA
International (BMI) reports that gas was
the dominant fuel in 2007, accounting for
63.8 per cent of primary energy demand,
followed by oil at 36.2 per cent.
Rapid development of tourism and real
Jebel Ali power and desalination station D
Jebel Ali power and desalination station E
estate projects, increased industrialization,
Jebel Ali power and desalination station G
expanding agriculture and a growing
Aweer power station H - phase I
population are placing severe pressures
on electricity and water supplies in the
Aweer power station H - phase II
UAE. In August 2008, it was predicted that
Jebel Ali power and desalination station K
the country will need $10 billion to satisfy
energy demand in the next ten years.
The past 12 months have seen major
Jebel Ali power and desalination station L - phase I
Jebel Ali power and desalinationstation L - phase II
developments in the UAE’s stance on
nuclear energy and renewable energy. The
0
200
government has published a comprehensive
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400
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800
MW
1000 1200
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CONNECTING GLOBAL
ENERGY INDUSTRIES
New Delhi, India
2-4 April 2009
www.power-genindia.com
Cologne, Germany
26-28 May 2009
www.powergeneurope.com
Moscow, Russia
28-30 April 2009
www.russia-power.org
Cologne, Germany
26-28 May 2009
www.powergrideurope.com
Bangkok, Thailand
7-9 October 2009
www.powergenasia.com
Las Vegas, NV, USA
10-12 March 2010
www.power-gengreen.com
Cologne, Germany
26-28 May 2009
www.renewableenergyworld-europe.com
Charlotte NC, USA
19-21 August 2009
www.coal-gen.com
Bangkok, Thailand
7-9 October 2009
www.renewableenergyworld-asia.com
Katowice, Poland
1-4 Sept 2009
www.coal-gen-europe.com
Las Vegas, NV, USA
8-10 December 2009
www.nuclearpowerinternational.com
Tampa, FL, USA
23-25 March 2010
www.distributech.com
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Las Vegas, NV, USA
8-10 December 2009
www.power-gen.com
Doha, Qatar
1-4 November 2010
www.power-gen-middleeast.com
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MIDDLE EAST-AFRICA
Engineering and Italy’s Centro Elettrotecnico Sperimentale
UAE
ADWEC forecast of electricity capacities
Source: ADWEA
Italiano submitted their technical conclusions on a
proposed underwater interconnection between Dubai
20000
and Iran for importing electricity into the UAE.
Available capacity
Demand
Required capacity
Surplus/Deficit
grow by 900 MW per annum from 2010 to 2013.
Current available capacity is 8400 MW. In May 2008,
ADWEA announced its five-year strategic plan, focusing
on security of supply, international investment, sewerage
services, and research and development for alternative
and renewable energy.
DEWA currently holds a monopoly to produce and
sell electricity in Dubai. However, the emirate may
open its power generation industry to private foreign
Electricity MW (gross)
In Abu Dhabi, demand for power is expected to
15000
10000
5000
0
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2006
-5000
Investment of $37 billion will be required to double
2007
is increasing by at least 12 to 14 per cent annually.
2006
investment in an effort to meet surging demand, which
generating capacity to 11 100 MW by 2011 and
quadruple projected capacity to 25 000 MW by 2017.
During 2007, FEWA supplemented its installed
capacity of 1251 MW with 3365 GWh of electricity
carried out by South Korea’s Doosan Heavy Industries
and Construction and Fisia Italimpianti.
imported from Abu Dhabi. A contract was signed in
In August 2007, International Power plc announced
early 2008 between ADWEA and FEWA, under which
the signing of a 20-year agreement with the Abu
the former will supply the latter with 2500 MW of
Dhabi Water and Electricity Company (ADWEC) for the
electricity until 2015, a 64 per cent increase on the
entire power and water output from the Fujairah F2
current arrangement.
integrated water and power plant. The $2800 million
Infrastructure Investment
project is expected to yield 2000 MW of power on
completion by the end of 2010.
Significant levels of infrastructure investment have
Other recent developments include the completion
been occurring across the UAE, at the forefront of
of the third phase of Aweer power plant (station H)
which is the Dolphin project, a $4.8 billion initiative to
in 2008 and the ongoing expansion of Abu Dhabi’s
produce and process natural gas from Qatar’s North
Taweelah A1 plant.
Field, and then transport it via subsea pipeline to the
UAE and Oman. The project began in 2007, and the
Future Trends
gas processing plant in Qatar was formally inaugurated
Energy demand in the UAE is increasing rapidly. In Abu
in May 2008. Dolphin is now supplying natural gas to
Dhabi, from a current peak demand of 4790 MW,
all of the UAE and to Oman.
ADWEA is forecasting that the total
In June 2008, Abu Dhabi National Oil Company
system peak demand will rise to 8735
(ADNOC) and Dolphin Energy signed a 25-year
MW by 2010, 10 600 MW in 2012 and
agreement for Dolphin to lease and operate ADNOC’s
14 340 MW by 2020. The power sector
Eastern Gas Distribution System. Dolphin Energy is
is moving quickly to meet surging
developing a new Taweelah to Fujairah gas pipeline
demand and is responding to a policy
(TFP) across the UAE.
shift to strengthen non-oil sectors.
In May 2008, ADWEA announced plans for a
Foreign investment is likely to
1500 MW power plant and a 100 million gallon water
play an increasingly significant role in
manufacturing plant at Al Shuweihat (S2). A contract
ongoing construction. In a speech in
was awarded to GDF Suez for the S2 plant in July 2008.
October 2008, the UAE minister for
Completion of the plant is expected by 2011. S3 looks
the economy, Al Mansouri, highlighted
set to follow close on the heels of this development.
that foreign investment has increased
Work on the Jebel Ali power and desalination plants
by 11 per cent from 2005 to 2006 and
in Dubai continues. The second phase of station L is now
praised the efforts of the government
partially commissioned, following work undertaken by a
in issuing a federal law to support and
consortium of Hyundai Engineering and Construction
regulate foreign investment activities,
Co Ltd, Korea and Fisia Italimpianti, Italy. The first phase
and to enhance the investment
of station M is well under way, with the work being
opportunities in the UAE.
Generation capacity by technology (gross MW), 2003-2007.
Source: ADWEA
5000
4000
3000
2000
1000
0
2004
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2005
Gas turbine
2006
2007
Steam turbine
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