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Doing more with less ” how the European power industry can face up to future challenges

Stephen Sackur, presenter of BBC World’s Hardtalk, will moderate the POWER-GEN Europe Plenary Session on 8 June entitled ‘European Power Policy “Can Our Industry Really Deliver?’

Nigel Blackaby, conference director for POWER-GEN Europe 2011, explains some of the key issues that will be aired at this year’s big power industry get-together in Milan and how the industry might handle them.

Nigel Blackaby, Associate Editor

There was a time when the electric power industry was regarded as rather static in nature: a sector in which the pace of change was relatively slow and long-term planning quite straightforward. The trends of recent years have upset this stereotype and mean that the annual gathering of power industry professionals in Milan under the POWER-GEN Europe, Renewable Energy World and Nuclear Power Europe banners has much more to discuss and many new experiences to share.

Whether it is soaring oil prices, unrest in the MENA region, the growing influence of China, volatile commodity prices, faltering climate talks, emerging renewables technologies, the influence of shale gas or the nuclear disaster in Japan, there are a multitude of influences on the business of electricity generation. The opportunity for power equipment and service providers to meet with customers right across the spectrum from nuclear, thermal and renewables is invaluable as we all search for the solutions to meet the current industry challenges.

While traditional energy sources will generate the majority of Europe’s electricity for the foreseeable future, the industry cannot take its position for granted. The economic downturn sparked a significant fall in demand for gas (-6.1 per cent) and electricity (-4.7 per cent) in 2009 and, as a result, the construction of new power plants has slowed. Meanwhile, with governments tightening their belts, the subsidies available to support renewable energy projects have dwindled. Although growth in electricity and gas consumption returned during 2010, driven in some part by the cold weather during 2009″2010, the European power industry is arguably in a weaker position than it was just a few years ago.

The World Nuclear Association’s Stephen Kidd will moderate the Nuclear Power Europe panel discussion entitled ‘Investing in Nuclear After Fukushima’ on 7 June

Despite the recession, there has been continuing pressure from the European Union (EU) for the industry to reduce its carbon emissions. As a result of the regulations set out within the Industrial Emissions Directive, power station owners will have to phase out some of their existing fleet and upgrade other sites over the next ten years. Alongside this are the EU’s 20-20-20 targets, one of which is the reduction of carbon emissions by 20 per cent from their 1990 levels. These factors are going to force many power plants to take a hard look at the ways in which they are reducing their carbon emissions, and the technology available to help them do this more effectively.

A final point to consider is that the amount of electricity generated from traditional power sources is set to grow over the next decade, given growing demand and the range of difficulties facing alternative energy sources. Aside from the reduction in renewable energy subsidies, the nuclear disaster in Japan has meant that some European countries have decided to take older nuclear facilities off-line and suspend nuclear expansion programmes. If this situation endures, it will mean that existing coal and gas fired plants are going to have to increase their output, and new facilities will have to be built, so that the industry can meet any potential shortfalls in electricity generation over the short-to-medium term.

To meet these considerable challenges, the European power industry is going to need to focus on optimizing or retrofitting current sites, and employ new technologies to help further reduce carbon emissions. Making the most of what it already has will provide the European power industry with the best foundation to cope with an evolving regulatory landscape, growing demand for energy, and political pressure to reduce its carbon emissions.

Across Europe, there are numerous plants that have been in service for many years, and that offer great scope for improving the efficiency of their operations. According to a report from the European Bank for Reconstruction and Development, older coal power stations have an energy efficiency of just 30 per cent, a figure that can potentially be improved upon by between 10 and 20 per cent. In light of the uncertain economy and tightening of budgets, improving existing facilities offers plant owners the best value for money when it comes to increasing capacity.

Depending on the site in question, there are two main models plant operators can adopt in order to improve their existing fleet. For those sites that do not need to be shut down as a result of the Industrial Emissions Directive, and which have a longer life ahead of them, optimization of the facility is the best option. This can take many forms, but generally involves improving certain aspects of the site to boost overall efficiency levels.

For example, simply changing the rotor and stator blades within the steam turbines themselves can increase the power being produced by the generator. This particular topic is being addressed during the POWER-GEN Europe 2011 conference by Paola Pirotti, a project engineer at Ansaldo Energia.

Retrofitting existing sites is the other option for improving capacity, especially for older sites that have a limited lifespan. Retrofitting allows operators to keep the existing plant infrastructure but replace certain aspects of it. One example is converting the existing boiler to run on different fuel, or completely replacing older, inefficient turbines and generators with modern equivalents. This option provides operators with the benefits of a new facility, while at the same time cutting out the expense of building a new site from scratch, and reducing the number of planning permits needed.

Such projects will need to play a large part in the policy of the major energy companies in Europe over the next decade if they are to overcome the challenges facing them.à‚ 

Carbon capture and storageà‚ 

As gas supplies start to dwindle, coal is expected to account for 70 per cent of European energy generation by 2030, up from 24 per cent today. However, with the implementation of the Large Combustion Plant Directive, there will be a number of coal fired power stations closing over the next couple of years. The remaining plants will need to reduce their emissions by taking advantage of cutting edge technology ” an issue referred to in the directive as ‘Best Available Techniques’. Currently, carbon capture and storage (CCS) technology offers the best hope for the industry to meet its emission reduction targets. While there are no full scale CCS projects in Europe, the EU is keen to see this technology take off, and has made plans for 12 demonstration projects by 2015. Vattenfall has announced plans to build a CCS demonstration plant in Jàƒ¤nschwalde, in Germany, that should commence operations in 2015. The installation will investigate both oxy-fuel and post-combustion technologies.

Renewable Energy World Europe features “potentially explosive” panel discussions

The EU has also issued the CCS Directive, which has the aim of removing obstacles to the development of CCS projects. While these techniques are still in their infancy, the European power industry must start considering the best way to take advantage of them today. New power stations will need to be CCS ready, allowing the technology to be added at a later date, while existing sites will need to be adapted so CCS technology can be retrofitted.

The industry also faces the challenge of paying for this technology. CCS can increase consumption of coal by 10″40 per cent, and the cost of the technology itself is going to be substantial. According to a report by McKinsey, it will cost around €60″90 ($86″129) per tonne of carbon captured. However, economies of scale come into play, with costs being lower the larger the power station. While the costs may be high, it is something the industry has to factor into its plans for the next decade, whether it passes these costs on to the consumers, absorbs them itself, or relies on any potential government subsidies. An assessment of these costs is being presented by Alstom’s Jean-Franàƒ§ois Leandri in POWER-GEN Europe’s Track 2 on Tuesday.

Nuclear Post-FukUshimaà‚ 

The part of the power industry that has faced the greatest challenge in the last few months is undoubtedly the nuclear power generation sector. Events at Japan’s Fukushima power plant following the tragic earthquake and tsunami are now rated as the second worst nuclear disaster on record and, as referred to earlier, several European countries are backtracking on plans for a nuclear renaissance. Germany has ordered a temporary shutdown of seven of the country’s older reactors pending thorough safety investigations, while making up some of the shortfall by increasing imports from France and the Czech Republic.

Power industry professionals from across the world attend POWER-GEN Europe 2010

The Nuclear Power Europe conference presents an opportunity for the industry to take stock of the situation. Its content links the past, present and future of nuclear in Europe. That future has now to be seen in light of the catastrophic events at the Tepco power plant and, far from shying away from this issue, Nuclear Power Europe features a high-level debate on the first day addressing the implications of recent events for Europe’s nuclear revival. Already confirmed to participate in this discussion is Malcolm Grimston, associate fellow (nuclear policy) of Britain’s world-leading international affairs think-tank Chatham House. A leading authority on nuclear power generation and its role in the future energy mix, Grimston will be central to the discussion. Also confirmed is Allan Baker, global head of power of European financial services giant Société Générale.

“Nuclear power is facing its toughest period in 30 years,” said Tim Probert, conference director. “The addition of Malcolm Grimston and Allan Baker to the discussion session complements Nuclear Power Europe 2011’s incisive and high-quality programme, which includes speakers representing a broad spectrum of interests from across the industry. Nuclear Power Europe provides a forum for industry participants to address the major issues surrounding nuclear power, as it looks to its future role within the energy mix.”

Grimston joins leading industry commentators who will be delivering a number of keynotes and plenary sessions at Nuclear Power Europe 2011 ” including Stefano Saglia, Italian energy minister; Roberto Adinolfi, CEO, Ansaldo Nucleare; Matthias Hartung, CEO of RWE Technology and Stephen Kidd, deputy director general, World Nuclear Association.

The conference also explores the latest work conducted to upgrade and extend the life of Europe’s 163 nuclear reactors currently in operation. Delegates will also be updated on the progress of new Generation III/III+ reactors currently under construction plus have the chance to attend sessions focusing on the supply chain, nuclear skills, licensing and regulation, financing and risk mitigation.

Renewables on course

As the renewables industry becomes more mature it too has to face up to the same economic realities as the remainder of the industry. Over the last year, some of the generous subsidies that have been available to support solar energy have been cut back and a recent UK report has recommended a slowdown in the growth of offshore wind until costs can be brought down. That said, Europe has seen its share of renewable energy almost double in the past decade, from 5.4 per cent to 9 per cent between 1999 and 2009.

When it comes to investment in a competitive market, renewable energy projects must compete with conventional technologies. This topic will be debated in the opening session of the Renewable Energy World Europe conference on Tuesday. With Europe’s 20-20-20 targets topping the industry agenda, organizations of all sizes and types are having to adopt a more strategic approach to renewable energy technologies. Renewable Energy World Europe’s multi-track conference mixes presentations and panel discussion sessions to bring delegates up to speed with all the latest on renewable technologies, strategies and implementation. This year’s joint plenary panel discussion sets out to address European Power Policy and will examine how the industry can deliver on its ambitious clean energy targets.

Other key sessions include ‘Conventional v. Unconventional’, a hotly contested issue brought to the table by two leading energy experts. In what promises to be a potentially explosive debate, Alessandro Clerici, honorary chairman of WEC Italy, and Ingmar Wilhelm, senior VP of Enel Green Power and president of the European Photovoltaic Industry Association, will address how renewable energy projects must compete with conventional technologies such as coal and nuclear, and how they can secure the necessary support and financing to progress in a fiercely competitive market.

“This year’s panel discussions address the hot button issues leading the European energy industry debate,” said David Appleyard, conference director. “Our panel of top-level industry figures will address a broad range of topics in diverse areas such as grid integration, the financing of renewable energy projects, energy storage, and the operation and maintenance of renewable power plants, to name but a few.”à‚ 

Taking the right route now

The traditional power sector in Europe will work alongside the nuclear and renewable sectors to provide the foundation for the region’s energy future. However, for different reasons, all three are likely to undergo major transformation over the next decade in order to provide more power with fewer emissions. Whatever route is taken, it is crucial that it leads the way to a low carbon future, and makes it easier to increase the number of low carbon energy sources being used.

The POWER-GEN Europe, Renewable Energy World and Nuclear Power Europe conferences offer a valuable opportunity to understand in far greater detail the key issues that are driving these changes, the technologies that will enable this transformation to take place and the scope for plant optimization and modernization that will form a key part. The big debate on Wednesday asks the question, ‘European Power Policy ” Can Our Industry Really Deliver?’ Moderated by the BBC’s Stephen Sackur, the plenary session brings together representatives from across the industry to debate this crucial question.

The next few years are going to be pivotal for both traditional and renewable power providers in Europe, and it is critical we make the right choices now so that we don’t limit our options in the future.

About the author

Nigel Blackaby is associate editor of PEi magazine and the conference director for POWER-GEN Europe 2011.

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