Global power demand - Presentation by IEA Executive Director

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Global Power DemandGlobal Power Demand

Maria van der HoevenMaria van der HoevenExecutive Director – International Energy AgencyExecutive Director – International Energy Agency

PRESENTATION TO THE PRESENTATION TO THE GLOBAL SUSTAINABLE ELECTRICITY PARTNERSHIP SUMMITGLOBAL SUSTAINABLE ELECTRICITY PARTNERSHIP SUMMIT31 May 201231 May 2012

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Electricity demand is growing faster Electricity demand is growing faster than fossil fuelsthan fossil fuels

%Growth of energy demand by fuel, New Policies Scenario

base 100 in 2009

Power demand will grow by 84% between 2009 and 2035, mote rapidly than gas, coal and oil

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Electricity demand Electricity demand shows few signs of moderating shows few signs of moderating

World electricity supply and demand by sector in the New Policies Scenario

All sectors see higher demand for electricity, with non-OECD countries accounting for more than 80% of the increase between 2009 & 2035

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

2000 2005 2010 2015 2020 2025 2030 2035

TWh Own Use

Transmission &distribution losses

Other Transport Services Residential Industry

Demand:

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Electricity demand will continue to Electricity demand will continue to grow in all WEO scenariosgrow in all WEO scenarios

Electricity demand in WEO scenarios (2010-2035) TW

h

Source: IEA 2011 – World Energy Outlook

Electricity demand increases by 2.3% per annum in NPS and 1.8% in 450 scenario, leading to a growing share of electricity in final consumption

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Demand growth and replacement of Demand growth and replacement of capacity will drive power investmentscapacity will drive power investments

Non-OECD countries will attract 55% of global generation investmentsand 64 % of T&D investments over the period 2011-2035

Investments in new power plants and network infrastructure and in the New Policies Scenario, 2011-2035 ($billion)

30092891

7019

996

638

717

OECD Americas

Latin America

OECD Europe

OECD Asia

Africa

Asia

NetworksGeneration

Legend:

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2 800

2 900

3 000

3 100

3 200

3 300

3 400

3 500

3 600

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Electricity supplied Electricity supplied excl. non hydro renewables

Europe: sluggish electricity demand is Europe: sluggish electricity demand is compounded with renewables growthcompounded with renewables growth

Electricity supplied in OECD Europe (2000-2011)

TWh

Source: IEA

In Europe, ‘residual’ electricity supply (i.e. net of non hydro renewables)decreased by 6% between 2008 and 2011

Renewable generation (non hydro) 235 TWh

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Securing power during the transition Securing power during the transition will remain a challengewill remain a challenge

The transition to a low carbon economy may undermine the incentives to invest in new capacity in a timely way to ensure security of supply

Cash flows uncertainty

Load factor and price risk

Prices too low during scarcity conditions

Energy policy risk

Low carbon and peak power plants have stable costsbut uncertain revenues in liberalised electricity markets

Deploying renewables reduces market prices and load factors of existing power plants and thus their revenues.

Local acceptance issues, stop and go of renewables policies and uncertain environmental regulations (CO2) can put security of supply at risk as plants need to be replaced

Explicit or de facto price caps reduce prices during peak periods, reducing revenues and leading to underinvestment

Main challenges of market-based investments during the transition period

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468 500

439

339

794743

856

951

6164

587

508

0

200

400

600

800

1000

1992 1994 1996 1998 2000 2002 2004 2006 2008

Electricity Carbon dioxide Emissions Electricity Carbon dioxide Emissions have continued to raise globallyhave continued to raise globally

Carbon dioxide emissions per kWh generated

gCO

2/kW

h

India: 951

China: 743

UE 27: 339

US: 508

Brasil: 64

World: 500

The EU reduced carbon intensity by 100 gCO2/kWh in 20 years but at the global level, it increased from 468 to 500 gCO2/kWh.

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Electricity is the cornerstone Electricity is the cornerstone of climate policiesof climate policies

Hydro

Nuclear

Wind

Geothermal

SolarSolar

GtCO2

Share of power generation (%)

69%

8%

A CO2 emissions reduction policy involves a key role for electricity

Carbon emissions per fuel Low carbon technologies Electrification

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Decarbonisation will require to develop Decarbonisation will require to develop all low CO2 technologiesall low CO2 technologies

Electricity Generation in the 450 ppm scenario

-2,700

+2,800

+8,400

TWh

Scaling-up renewables and developing nuclear are complementary if we want to meet growing demand while decarbonising

Source: IEA 2011 – World Energy Outlook

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Harnessing high shares of variable Harnessing high shares of variable renewables requires flexibilityrenewables requires flexibility

Variable renewable

power plants

DispatchablePower plants

Storage

Inter-connection

DemandSide

FLEXIBILITYVARIABILITY

System contextDemand fluctuates

Unexpected Outages occur

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Thank you for your attentionThank you for your attention

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