The sheer extent of projected global demand for electricity in the coming decades means coal and gas-fired power will continue to thrive, despite the inroads being made by renewable generation.

That was the most persuasive argument made at the plenary session of the first day of the POWER-GEN Europe conference in Milan on Tuesday. It was one of a number of points made by Paul McElhinney, President and CEO of Power Services for GE Power, during a session chaired by BBC Hard Talk’s Stephen Sackur, and which also included contributions from CEO of Ansaldo Energia, Giuseppe Zampini and Gianfilippo Mancini, CEO of Sorgenia.
Paul McElhinney
“I am an optimist –There are 1.2 billion with no access to power today. There is another 500 million with access to unreliable power- that translates into a global demand of 50 per cent more power,” McElhinney said with reference to the essential nature of fossil generation. Continues Below

Sackur expressed surprise at the consensus by the panel of industry leaders that coal and gas power would persist, rather than give way to renewables. He queried whether that position, which seemed to run counter to the agreement made at COP21 in Paris last year, meant the ambition to keep global temperature rise in check was doomed.

McElhinney responded to provide a view that will be positively received by embattled conventional power interests.

“The technology exists today to significantly reduce CO2 emissions from every coal burning plant in the world. Many of the companies here today have that technology. Regardless of the commitments countries have made to reduce emissions, the world can achieve that using the technology available today. Even 20-30 year old stream plants can be retrofitted to reduce emissions,” he said.

Commenting specifically on coal-fired power, the GE chief noted widespread claims for its demise but depicted an altogether different view.

“The industry forecast is that coal will grow in terms of global power generation. In India and China, a lot of the power will come from renewables, but demand means gas will increase by 50 per cent- and coal (capacity) will be slightly higher than it is today in 20 years’ time.”

“There isn’t enough sun or wind in the world to satisfy demand, so despite top demand growth for renewables set to rise from 4 per cent to 11 per cent, coal and gas will be at 60 per cent 20 years from now.”

McElhinney acknowledged that much of that growth would take place outside of Europe which is currently lagging behind the US and Asia in terms of consumption demand since 2009

“Europe is going through a tough environment and every region goes through its cycles. Having said that there are real signs of the market turning in Europe. It won’t grow rapidly but won’t deteriorate like it has until now.”

Gianfilippo Mancini, CEO of Sorgenia told the gathering of power professionals that conventional power will continue to be crucial to back-boning global economies.

“An example I give is on the 31st of July last year in Italy, a hot day without wind also had the scenario later that day of no sun. Power stations stepped in to provide 70 per cent of generation on that day. It tells us that the way these power stations will work over the next decade will be completely different.”

On the previous day delegates had been treated to a technical tour of the Sorgenia-owned Bertonico-Turano Lodigiano combined cycle gas turbine power plant outside Milan. Sackur noted that the facility was not being utilised to anywhere like its true capacity and asked Mr Mancini if it would be operating in 20 years.

“Yes it will be an essential part of generation in this country for next 15 years while transition continues – it’s still crucial,” Mancini replied, before calling on policy makers to tackle the flawed emissions trading scheme as a means of reducing risks and costs for power providers.

He referred to current policy as ‘schizophrenic’ with huge subsidies going to one side while conventional producers had to carry additional risk.

“A long term strategy with CO2 price is strongly needed- so as to reduce risks and reduce costs. That said there is a paradox and tremendous opportunity for the way we generate electricity –don’t waste a good crisis to make the change that is needed to thrive.”

Later in the discussion, McElhinney noted the advances being made in storage, but said it wouldn’t truly have the necessary influence in the short term. He instead urged delegates to look to the potential of digitisation as a means of positively transforming both the world and their businesses.