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POWER SECTOR OUTLOOK IN OECD COUNTRIES

POWER SECTOR OUTLOOK IN OECD COUNTRIES. 28 May 2010 Roun d table : Russian Federal Tariff Service Ian Cronshaw , Head, Energy Diversification Division, IEA. OVERVIEW: OECD Markets. The last decade—the role of gas The next decade The competitors - nuclear and coal

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POWER SECTOR OUTLOOK IN OECD COUNTRIES

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  1. POWER SECTOR OUTLOOK IN OECD COUNTRIES 28 May 2010 Roundtable: Russian Federal Tariff Service Ian Cronshaw, Head, Energy Diversification Division, IEA

  2. OVERVIEW: OECD Markets • The last decade—the role of gas • The next decade • The competitors - nuclear and coal • Outlook for Generation costs • Conclusions

  3. OVERVIEW • The last decade

  4. Gas – Main contributor to the 2000-08 growth in OECD electricity generation Source: IEA

  5. Gas demand growth in the power generation sector has slowed down Source: IEA, NGMR 09 Note: OECD countries

  6. OECD Europe electricity generation (1972-2008)

  7. Gas – Main contributor to the 2000-08 growth in OECD Europe electricity generation

  8. WHY GAS?—Many Good Reasons • Low Capex • Short lead times • Flexible, ideal with renewables • Low carbon signature, and • A natural hedge to power prices

  9. The future role of gas in the power generation mix could evolve Summer: Less wind availability Gas is used to replace wind Winter: Increased wind availability Use of gas is minimum Source: Enagas

  10. OVERVIEW • The next decade

  11. What would be the future energy demand path? • How long will it take for demand to rebound? • How quickly will it recover? No investment in power generation and economic recovery lead to increased use of gas for power Business as usual, gas is the fuel of default Slow economic recovery, focus on efficiency and non-CO2 emitting technologies bcm 2000 2009 2020 Source: IEA, NGMR 09

  12. Gas is still the fuel of default in OECD Source: IEA, NGMR 09

  13. OECD Europe 2008-2020 (TwH)WEO reference case

  14. EU27 installed power generation capacity in the 450 Scenario

  15. OVERVIEW • The competitors - nuclear and coal

  16. Planned Generating Capacity Additions – United States 2009-2013 GW

  17. A Nuclear renaissance? • 56 nuclear plants underway • But in Europe and North America? • US loan guarantees • Many nations talking (UK, Italy) • But when would new plants enter service?

  18. North-West European / Asian coal import spot prices and US spot prices

  19. Chinese steam and coking coal imports surged in 2009 China became a net coal importer for the first time in 2009 (104 Mt). Imports trebled to 127 Mt, while exports halved to 22 Mt. Global seaborne hard coal trade was 850 Mt in 2008.

  20. China’s coal imports and exports, 1970-2009, with forecast to 2030 from WEO 2007 Net imports of c.100 Mt by 2015, forecast in WEO 2007, have been reached 6 years earlier.

  21. Queues at ports reflect tight coal market driven by Chinese demand 55 vessels waiting at Newcastle at beginning of February 2010 (down from peak of 60 in December 2009)

  22. OVERVIEW • Outlook for Electricity Generation Costs

  23. ‘Projected Costs of Generating Electricity’ – 2010 Edition Current context is of great uncertainty over future input costs and concerns of confidentiality of commercially sensitive cost data Fossil fuel price assumption based on WEO 2009 ~ 90 $ barrel oil, $11 gas. Data for almost 200 plants in 17 OECD and 4 non-OECD countries (Brazil, China, Russia and South Africa) LCOE methodology Publication date is 25 March.

  24. Key Messages • No technology has a clear overall advantage globally or even regionally. • Looking at detailed country numbers, the study provides a large variety of results. The real added value of the study is the detailed country data • With financing costs at 5%, nuclear, followed by CC(S) -both capital-intensive, low-carbon technologies- are the most competitive solutions • With financing costs at 10%, coal-fired generation, followed by coal with CC(S), and CCGTs are the cheapest sources of electricity • For the first time, on-shore wind is shown to be competitive in cases where local conditions are favourable and system costs are not included

  25. OVERVIEW • Conclusions

  26. Conclusions • Gas is the fuel of Choice in OECD Countries • It dominates plants under construction • Nuclear and coal will struggle to compete in near term • Ambitious renewable goals may lower gas use, but • Even in 450 case, gas is a key transition fuel until after 2020

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