Scope and Breadth of Global Power Generation
This lesson includes the following topics:
- The historical importance of steam power.
- Power basics – the watt hour, the key unit of power generation.
- The future growth of power, especially in China and India.
Power 101 – How the global power sector works
Types of power generation:
Thermal Power – including coal, natural gas, oil-fired, and nuclear
Renewables – including hydropower, solar, wind energy and others
Power Plants – Shaping History
Power plants have radically changed the trajectory of progress in our industrialized world.
The power of steam was first harnessed during the Industrial Revolution, and this technique has been used ever since to drive the engines of industry.
Steam-driven power plants have been generating electricity for over 100 years.
In England, the need for electricity on a large scale began with construction of underground and surface trams in the middle of the 19th century.
In the US, electric power generation rose in response to the needs of early large industrial consumers like Eastman-Kodak and General Electric.
Data Sources
To explain the scope of this important industry, this episode makes use of two respected data sources:
The BP Statistical Review of World Energy. The 2018 version is the 67th edition, and
The annual “Electricity Overview” publication from the Paris-based, International Energy Agency, or IEA.
Both documents have comprehensive detail and historical global data on all types of energy; oil, natural gas, nuclear, coal and renewables.
The Watt-Hour
We must also become familiar with the terminology used to measure power consumption and generation.
The common term is a watt, which indicates how much power a device can consume, usually measured over a specific time period.
A watt is relatively small. So, residential and industrial electricity usage is measured in kilowatt-hours, or kWh.
One kilowatt-hour is the energy used to keep a 1,000-watt appliance running for one hour.
Note that the daily energy use in a typical household in the US and Canada is about 30 kWh.
The next step up from a kilowatt is a megawatt – equal to 1,000 kilowatts.
A megawatt hour, or MWh, typically refers to larger-scale industrial electricity usage.
Large power stations are often defined by their maximum output in megawatts.
The industry tends to use megawatts and megawatt hours interchangeably.
Gigawatt hours, abbreviated as GWh, represent one million kilowatt hours. This term is often used to measure the annual contribution by wind and solar, to a countries total energy demand.
Global Power Growth
The demand for electricity grew steadily throughout the 20th Century.
Countries in the Organization for Economic Co-operation and Development, or OECD, are typically more industrialized and economically developed, requiring substantial amounts of power.
The IEA reports that in the developed world, production has leveled off in the last 10 to15 years.
Non-OECD, or “Developing Countries”, lagged behind OECD countries in power usage prior to 2000, but have recently seen a 400% rise in electricity generation.
Some developing countries such as Malaysia and the Philippines still have challenges with the number of users who have access to power, which is driving a large number of power transmission projects.
Let’s now look at China and India, the two major players largely responsible for this massive power demand increase.
China’s Power Progress
In the late 1970s, China embarked on a series of reforms that led to sweeping economic changes.
In short, the agricultural sector of the country was transformed – which accounted for up to 80% of the working population in the 1970s. Business and small industry began to spring up in rural areas as a result of property privatization and capital investment.
Additionally, China’s development plan required sizable power generation investments for a series of huge industrial centers.
In addition to the well-known cities of Shanghai and Beijing, here are two examples:
Guangzhou, where the automobile, electronics and petrochemical industries dominate.
Then there is Shenzhen, China’s Silicon Valley, which is the electronics manufacturing hub of not only China, but the world.
Six of the top ten industrial cities in China have a population exceeding tens of millions — with all required infrastructure adding to power demand.
The Chinese government is now encouraging development of renewable energy – especially wind – to help meet its future power needs.
Finally, the Chinese government is investing heavily in power infrastructure in neighboring countries as part of its “One Belt-One Road” initiative.
India’s Power Progress
With a population of over a billion, India is the major developing country with a huge middle class and rapidly rising per capita income.
India is now the world’s third largest producer of electricity, after China and the US.
Access to electricity for India’s rural population has nearly doubled, just since 2000.
By 2016, 82% of homes had power! A global success story according to the IEA.
It is interesting to note, that India has four of the five most populous cities in the world with the highest cooling requirements in the world.
Air-conditioners are the first appliance people want when they cross a certain income threshold.
In India, air conditioning alone is expected to double the country’s electricity demand in the next 15 years, requiring significant investment in new power plants.
A similar phenomenon occurred with air conditioning growth in China.
The real challenge in India is increasing the reliability and availability of power across its somewhat stressed grid system.
Additionally India has a challenge to meet its environmental commitments as it is reliant on older, coal-fired power plants.
In line with this, India has numerous initiatives underway to develop new sources of wind, solar and hydropower to not only add capacity, but also to replace the 75% of their currently coal-fired power plants.
This policy will exacerbate the problems with the grid infrastructure. As wind and solar renewables cannot provide a constant supply of power, it will require investment in smaller power plants which can run intermittently and smooth out the power load to ensure consistent supply.
Electric Vehicle (EV) Initiatives
In a bid to remove the dependence on gasoline and diesel, the global number of electric vehicles is expected to rise significantly in the future.
As a signatory to the Paris Agreement, India has committed to becoming an all-electric vehicle, or EV, country by 2030.
While this will clean-up much of India’s vehicle air pollution, the success could be offset by the need to continue operating the polluting coal-fired power plants.
Electric vehicles are also a mainstay of China’s “Made in China 2025” plan, designed to make China a leader in high-tech production.
With subsidies and incentives, China far outstrips EV sales in other countries; and China is the largest manufacturer of industrial lithium batteries in the world.
Making Power: Types of Power Generation
Let’s now go into detail on the broad categories of power generation:
Thermal power
Renewables
Thermal Power
Thermal is by far the most common form of power generation.
In the case of non-nuclear thermal power, fossil fuels are burned to generate steam. The power of this steam is then used to drive large generators that create electricity.
Therefore, non-nuclear thermal power plants are also called “fossil-fueled power plants”, or FFPPs, by the industry.
Fossil-fueled power plants are currently the cheapest and easiest way to provide the massive quantities of electricity needed to continue economic progress in developing countries.
Currently, the supply of electricity in these countries comes overwhelmingly from coal-fired plants, and more are being brought online.
In developing nations, coal accounted for almost half of the generation capacity.
Coal is a cheap source of energy with a well-developed mining process and vast transportation infrastructure.
Coal is very plentiful, with large reserves around the world. Although the US and Russia have the most reserves, China is the largest coal producer.
Natural Gas Fired Plants
The second largest category of thermal power plants is fueled by natural gas, with 23% of the world’s power generation capacity.
With increased concerns for carbon dioxide emissions, the number of coal-fired plants will inevitably decrease.
Natural gas is a good alternate fuel. It burns much cleaner than coal and it puts out half the CO2.
Large, natural gas-fired plants number over a hundred worldwide, and there are numerous smaller plants. In the US, coal-fired plants are being converted to burn natural gas.
Major shifts in natural gas supply will continue to contribute to the rise in gas-fired power plants.
First is the success of US shale gas production. This has ensured a healthy supply and a reasonable price for US natural gas for the foreseeable future. Other countries are already experimenting with similar opportunities.
Another result of the dramatic increase in global natural gas supply is an upsurge in LNG availability. LNG, or liquefied natural gas, is created by cooling natural gas to form a liquid for easy and economical transport.
Qatar and Australia are the two major LNG exporters, with the US becoming a global contender. Today, roughly a quarter of global energy needs are met with natural gas, and 10% of this is LNG.
Oil-Fired Plants
Oil-fired power plants operate on a much smaller scale than gas-fired plants, with only 4% of global capacity in 2016.
Technologically, they are much older, with many plants constructed prior to 1980.
They are used mainly in high-demand periods, called “peak loading.” Most are located far from coal-producing areas, like the Middle East.
Nuclear Power
Nuclear Power is another type of thermal power generation.
Growth in nuclear is currently stalled due to the high cost of construction, disposal of waste and safety concerns – legacies of recent high-profile accidents.
Initiatives are underway to standardize design aspects for the industry that could make nuclear power a safer alternative.
As world opinion shifts away from the largeer carbon footprint of fossil-fuels, the nuclear power industry could get a second chance.
Renewable Energy
Renewable energy by definition is self-replenishing, and is seen by many to be the cleanest energy source of the future.
Per the IEA, renewables will have the fastest growth in the electricity sector, providing almost 30% of power demand in 2023, up from 24% in 2016.
During this period, renewables are forecast to meet over 70% of the growth in global electricity generation, led by solar – followed by wind and hydropower.
Renewable Success Stories
There are some renewable power success stories.
The most common and oldest renewable energy source is hydropower. As an example, Canada generates over 60% of its needed power from dams.
Second, are wind farms which are becoming economic in both onshore and offshore applications.
Denmark supplies over 40% of its power from the wind and 83 other countries have substantial wind installations.
Solar Energy
It has been reported that solar electricity costs have fallen 73% since 2010, and could be cut in half again by 2020. China and India have the most solar installations with numerous projects planned for the Middle East.
Geothermal power plants are primarily found in geologically active areas, like the Asian side of the Ring of Fire and the California Geysers field, north of San Francisco.
Additionally, numerous experiments are underway to expand tidal power resources.
Oil companies are also investing heavily in renewables.
It was reported in 2018 that the multinational majors had invested over $44 billion for renewable implementation projects and additional research.
Subsidies Needed
Renewables produce a low carbon footprint, have unlimited supply, and could ultimately help keep fossil fuel prices in check.
However, they are notorious for large up-front capital investments and aren’t currently as efficient as the thermal power options.
Many governments have used subsidies to kick-start their renewable industries, but are now reconsidering that policy.
After committing to massive investments in renewables, Spain has over-extended its budget, and is pulling back by slashing funding for wind and solar.
In Germany, enough renewable energy was produced in 2016 to cover 32% of the country’s electricity generation, a staggeringly large proportion by global standards.
The transformation is placing a heavy burden on its citizens, by a surcharge on their electricity bills. With that surcharge the amount the average German household spends on electricity rose 50% from 2007.
It has been reported that the US is subsidizing renewables at a rate 2 to 3 times that of fossil fuels.
Summary
With continued development, and middle-class advancements in economies like China and India, more power will definitely be required.
As renewables advance and calls accelerate to reduce the use of fossil fuels, the future landscape of power generation is undoubtedly set to change.
However the rate of change and final power mix will be influenced by a significant number of factors.
From our discussion today, you should now understand that:
Steam-driven power plants have been generating electricity for over 100 years.
The Watt is the common term for how much power a device can consume.
China and India are largely responsible for future increases in power demand.
Fossil-fueled thermal power is by far the most common form of generation.
Natural gas is a good and cleaner alternative to coal, and puts out half the CO2.
Oil-fired plants are used mainly in peak loading applications.
Growth in nuclear plants is stalled for numerous environmental reasons.
Renewables will have the fastest growth in the power sector in the next 10 years.
Many governments are reconsidering their subsidy policies for renewables.
There are global renewable success stories across the board in hydro, wind, solar, geothermal and tidal.