Future Investment

investment in new power plants The overall global level of investment required in new power plants up to 2030 will be in the region of $11 to $14 trillion. The fleet of power plants in OECD countries is ageing; and this is what will drive investment in new generation capacity. Utilities must choose technologies within the next five to ten years based on national energy policies, in particular market liberalisation, renewable energy and CO2reduction targets. Within Europe, the EU emissions trading scheme may have a major impact on whether the majority of investment goes into fossil fuel power plants or renewable energy and co generation.In developing countries, international financial institutions will play a major role in future technology choices.

It would take $14.7 trillion in global investment volume for the Energy [R]evolution scenario to become reality- approximately30% higher than in the Reference scenario of $11.3 trillion. Under the Reference scenario, the levels of investment in renewable energy and fossil fuels are almost equal, about $4.5 trillion each up to2030, but with an Energy [R]evolution scenario the world shifts about 80% of investment towards renewable energy. Then, the fossil fuel share of power sector investment would be focused mainly on combined heat and power and efficient gas-fired power plants.

The average annual investment in the power sector under the Energy [R]evolution scenario between 2005 and 2030 would be approximately $590 billion. This is equal to the current amount of subsidies for fossil fuels globally in less than two years. Most investment in new power generation would occur in China, followed by North America, Europe, India, and East Asia, including Indonesia, Thailand and the Philippines, would also be ‘hot spots’ of new power generation investment.

fossil fuel power generation investment Under the Reference scenario, the main market expansion for new fossil fuel power  plants would be in China, followed by North America, where the volume required would be equal to India and Europe combined.The Energy [R]evolution scenario would mean far lower overall investment in fossil fuel power stations up to 2030, totaling $2,600billion, compared to the $4,500 billion required under the Reference scenario.

In both scenarios, China will be by far the largest investor in coal power plants. Under the Reference scenario the current growth trend would continue towards 2030, but under the Energy[R]evolution scenario growth slows down significantly between2011 and 2030. In the Reference scenario the massive expansion of coal firing is due to activity in China, followed by the USA,India, East Asia and Europe.

The total cost for fossil fuel investment between 2005 and 2030 is significantly higher under the Reference scenario – around $80.6trillion, compared to $61.8 trillion for the Energy [R]evolution scenario. This means that fuel costs under the Energy [R]evolution scenario would be about 25% lower by 2030 and 50% lower by2050. The investment in gas-fired power stations and cogeneration plants is about the same in both scenarios. However, the finance committed to oil and coal for electricity generation in the Energy[R]evolution is almost 30% below the Reference version.

fuel cost savings with renewable energy The total fuel cost savings in the Energy [R]evolution scenario reach a total of $18.7trillion, or $750 billion per year. This is because renewable energy has no fuel costs (except bio energy).

Under the Reference scenario, average annual additional fuel costs are about five times higher than the additional investment requirements of the Energy [R]evolution. In fact, just the additional costs for coal fuel from today until the year 2030 are as high as$15.9 trillion. This is enough to ‘pay back’ the entire investment in renewable and cogeneration capacity required to implement the Energy [R]evolution scenario, through savings. These renewable energy sources would go on to produce electricity without any further fuel costs beyond 2030, while the costs for coal and gas will continue to be a burden on national economies.