WorldPower 2007
London, 04/04/2007
It's a fascinating time to be involved in the electricity sector
It's a fascinating time to be involved in the electricity sector. All around, governments, utility companies and consumers are honing-in on the strategic realities of the power sector: How to produce adequate and increasing volumes of electrons running down wires whilst, at the same time, securing energy dependent fuel supplies and mitigating the climate change impacts of producing them.
2006 began with Russia cutting off gas supplies to the Ukraine and ended with governments and others digesting the ramifications of the International Energy Agency's World Energy Outlook 2006 and the Stern Review on the economics of climate change. Security of supply and environmental concerns now dominate energy markets and political agendas.
In February this year, Working Group I of the Intergovernmental Panel on Climate Change (IPCC) adopted the Summary for Policymakers of the first volume of Climate Change 2007: The Physical Science Basis (also known as the Fourth Assessment Report - AR4). The report assesses the current scientific knowledge of the natural and human drivers of climate change, observed changes in climate, the ability of science to attribute changes to different causes ( as well as projections for future climate change). Produced by over 600 authors from 40 countries it concludes that man-made climate change is a fact. Further reports will be produced throughout 2007 to strengthen the demands for immediate action on carbon abatement measures and the development of policy to ramp-up renewable power sources.
In March, the EU committed itself to reducing CO2 emissions to at least 20% below those of 1990 levels by 2020. A similar binding target was set for the production of renewable energy - which will form at least 20% of the EU's primary energy use.
Debate has also continued on a Kyoto successor - following the UN Climate Change Conference in Nairobi (COP 12) on strengthening the framework for the years following Kyoto's initial commitment period (2008-2012).
The European Commission has also been busy in establishing better control of the EU ETS following its price collapse in 2006 because of the over-allocation of permits. It recently announced real cuts in a number of allocation plans. And in January 2007, both the Energy and Competition Commissioners gave their verdicts on how the EU intends to structure energy policy and regulation into the future. How this plays out remains to be seen.
Meanwhile, the developing world continues its voracious demand for energy, with the IEA forecasting that global energy demand will increase by one half between now and 2030 - an average annual rate of 1.6% (in the Reference Scenario).
Power generation remains the fastest growing energy sector worldwide, both in terms of electricity demand and greenhouse gas emissions. Combined with efforts to improve demand-side efficiency and to moderate the growth in electricity demand, the power sector offers great potential for reducing emissions and improving security of supply.
Overall, the share of electricity in total final energy consumption worldwide is projected to rise from 16% in 2004 to 21% in 2030. Demand grows most rapidly in households. In absolute terms, industry is expected to remain the largest final consumer of electricity throughout the IEA projection period. World electricity generation almost doubles - from 17,408 TWh in 2004 to 33,750 TWh in 2030.
In the OECD, and after more than a decade of energy liberalisation, markets are now at a turning point. Whilst arguably better markets today, many are still far from perfect. Meanwhile, surging developing world demand - particularly in China and India - continues. These large and rapidly developing energy consumers are moving from 'co-operative' to 'strategic' partnerships in order to secure energy supplies, often in inhospitable economic locations.
But one constant remains: A need for the developed and developing world to diversify energy resources, reduce emissions and improve energy efficiency.
Electric power defines the modern economy. That power is derived from a host of sources. The challenge remains to integrate competition and environmental sustainability into a secure energy marketplace.
Guy Isherwood, Editor-in-Chief.
Our thanks to those of you who have assisted us in bringing this crucial marketplace into focus.
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