Global electricity consumption to hit 20 trillion kWh by 2015
As the world moves into the next century, demand for electricity is expected to increase more rapidly than demand for other forms of energy. Consumption of electricity worldwide is projected to approach 20 trillion kWh in 2015 from a 1995 level of 11.4 trillion kWh, according to the recently released Energy Information Administration report, International Energy Annual 1997.
In the industrialized world, where electrification has been fully achieved throughout all economic sectors, with the exception of remote residential locations, increased demand is fueled by economic growth and growing electrical applications for computers, communications devices and other electronics for home and business uses. The demand growth is tempered by increases in energy efficiency brought on by regulation and technological innovation. The industrialized world is expected to contribute about 3.7 trillion kWh to the total increase of 8.6 trillion kWh by 2015. Another 0.5 trillion kWh is expected to be added by Eastern Europe and the former Soviet Union.
In the developing world, there are many opportunities for the expansion of electrical applications. The marginal benefit of introducing electricity into rural villages is considerable. As countries such as China seek to electrify their rural communities, the demand for new capacity is projected to be large. About 4.3 trillion kWh of the projected total increase of 8.6 trillion kWh in world electricity generation is expected to come from the developing world, where 1995 levels were about 3 trillion kWh.
Many changes in the power business worldwide are in the early phases, according to the report. There are several simultaneous occurrences that have led to far-reaching changes in world markets for electricity. They are:
– Emergence of natural gas as a fuel for electricity generation. Worldwide, natural gas is expected to grow from 16 percent of fuel consumed for electricity generation in 1995 to 23 percent in 2015. Although coal is projected to remain the dominant fuel, projections of ample natural gas supplies and relatively low prices have made it the preferred fuel for many independent power producers around the world. The relative modularity of gas turbines as compared to coal plants, in combination with their low initial capital outlay, gives them advantages in a marketplace driven by competition rather than cost-of-service regulation.
– Lower transaction costs with power trades. As a result of the information revolution, it is now possible for many power market participants around the world to access information on power prices in their own and other regions. While there is little likelihood of a worldwide grid system, there are ample opportunities for regional electricity trades. Canada, US, Mexico and the countries of Europe have been engaged in active electricity markets that offer increased opportunities for electricity trade. The possibility of time-of-use electricity pricing at even the residential retail level exists today more than ever before. Electricity prices are likely to become more homogeneous from one adjacent region to the next as consumers seek out least-cost sources of power.
– Rethinking of large-scale projects such as nuclear power. Public opinion, regulatory pressures, higher construction costs and waste storage problems are creating escalating difficulties in the nuclear power sector. This is creating additional opportunities for smaller scale technologies, such as natural gas. Environmental concerns could hurt the economic attractiveness of other nonrenewable, large-scale generation technologies–particularly coal. Natural gas and small-scale renewables could benefit from tighter environmental controls, especially if new large-scale hydropower projects have undesirable environmental impacts. Small-scale renewable generation may be the most cost-effective way to bring electricity to remote villages that are not near transmission lines.
The structure of primary fuel use for electricity generation differs considerably among the various regions and countries of the world. In the industrialized countries, with the exceptions of Japan and France, the projected trend is away from nuclear power and toward natural gas. Between 1995 and 2015, oil consumption for electricity generation is projected to remain almost flat in absolute terms and to drop slightly in relative terms. Coal-powered generation is projected to decrease in fuel share percentage while increasing in absolute terms by almost 6 quadrillion Btus. Renewable power generation, principally hydropower, is projected to increase in industrialized countries that still have unexploited resources (see figure).
Total electricity generation in Western Europe is projected to grow from 2.3 trillion kWh in 1995 to 3.8 trillion in 2015. Most of the new capacity in Western Europe is projected to be fueled by natural gas, especially combined-cycle gas turbines, and the fuel share for natural gas should increase from about 10 percent to more than 25 percent by 2015. shares for oil, coal and nuclear drop while the share for renewables increases slightly.
Although Japan`s electric power industry is in private hands, the country is divided into only 10 vertically integrated electricity suppliers with local monopoly power and obligations to serve the public interest. Population growth in Japan is expected to be low, but the per capita electricity consumption is projected to increase from about 7 MWh to about 11 MWh by 2015, and total electricity consumption should jump from 865 billion kWh to 1,385 billion kWh in 2015. Although most of Japan`s natural gas is imported, the fuel is expected to see considerable growth in use for electricity generation. Renewables, especially hydropower and geothermal energy, are projected to show strong growth for generation, and both coal and nuclear are projected to grow in absolute terms. An accelerating decline is expected for oil-fired generation.
Electricity consumption in Australia and New Zealand is expected to double from 200 to 400 billion kWh by 2015–a higher growth rate than other developed nations. Inexpensive coal makes it the preferred source for power generation in Australia. New Zealand, however, depends heavily on hydropower.
Slow economic growth is expected to bring slow electricity growth, as the Eastern Europe and former Soviet Union (FSU) region is projected to grow from 1.5 trillion kWh to 2.1 trillion kWh by 2015. The generation mix between the FSU and Eastern Europe is dramatic. Eastern Europe is much more dependent on coal while the FSU is heavily reliant on natural gas. In the next two decades both regions are expected to see a drop in the relative share of coal while natural gas consumption increases. Renewable energy is expected to see a rise in Eastern Europe.
The developing Asia region, including China, India and a handful of other nations, is projected to see the strongest growth in electricity consumption in the world. Total electricity consumption is tagged to jump more than 3 trillion kWh by 2015, a growth rate exceeding 5 percent annually, with China alone accounting for more than half the growth. Electricity demand growth is driven by gross domestic product, which is expected to increase by 6 percent annually. Coal will remain the dominant fuel for the region while relative shares for oil and nuclear power are expected to decline. Natural gas and renewables, especially hydropower, are expected to increase.
Many parts of Africa could see strong electricity demand growth in the coming 20 years. Many countries would like to boost capacity, but political instability is often a hindrance. Electricity consumption on the continent is flagged to grow by 3.9 percent annually through 2015. South Africa is the largest electricity consumer, using almost 50 percent of the total generation.
Demand is expected to grow by 2.1 percent annually to 2015, slowing from the 6.2 percent average annual growth experience so far in the 1990s. Conflicts in the region in the past decade have damaged the electricity infrastructure in several of the countries. Saudi Arabia and Iran have the largest electricity markets, accounting for 51 percent of the total Middle Eastern consumption.
Vigorous growth is projected for Central and South America in the next two decades. Electricity demand is expected to grow by 3.5 percent annually, exceeding 1.1 trillion kWh by 2015. Renewables, mostly hydroelectric power, are the dominant fuel in the region, but future demand growth will be met mainly through natural gas capacity. Strongest growth is predicted in Brazil and Argentina.
The growth rate for generation in the US is only 1.5 percent annually, but in absolute terms the US still dominates the region with about 1 trillion kWh more generation projected by 2015. Canada and Mexico combined are projected to consume 1 trillion kWh total in 2015, and demand in the region as a whole is projected to be 5 trillion kWh or more than one-fourth of the world total. Hydropower is the dominant fuel in Canada, and it is expected to grow in both size and relative importance, exceeding 70 percent of the generation mix by 2015. The dominant fuel in Mexico is oil, which will remain the top fuel but will lose relative share from 50 percent to around 40 percent by 2015 as renewables rise. Coal is and will remain the dominant fuel for electricity generation in the US, although its market share may drop slightly, with natural gas picking up the difference.