the silent revolution – past and current market developments
The bright future for renewable energy is already underway. This analysis of the global power plant market shows that since the late 1990s, wind and solar installations grew faster than any other power plant technology across the world - about 430,000 MW total installed capacity between 2000 and 2010. However it is too early to claim the end of the fossil fuel based power generation, as at the same time more than 475,000 MW new coal power plants, with embedded cumulative emissions of over 55 billion tonnes CO2 over their technical lifetime.
The global market volume of renewable energies in 2010 was on average, as much as the total global energy market volume each year between 1970 and 2000. The window of opportunity for renewables to both dominates new installations replacing old plants in OECD countries, as well as ongoing electrification in developing countries, closes within the next years. Good renewable energy policies and legally binding CO2 reduction targets are urgently needed.
This briefing provides an overview of the global annual power plant market of the past 40 years and a vision of its potential growth over the next 40 years, powered by renewable energy. Between 1970 and 1990, OECD29 countries that electrified their economies mainly with coal, gas and hydro power plants dominated the global power plant market. The power sector, at this time, was in the hands of stateowned utilities with regional or nationwide supply monopolies. The nuclear industry had a relatively short period of steady growth between 1970 and the mid 1980s - with a peak in 1985, one year before the Chernobyl accident - while the following years were in decline, with no sign of a ‘nuclear renaissance’, despite the rhetoric.
Between 1990 and 2000, the global power plant industry went through a series of changes. While OECD countries began to liberalise their electricity markets, electricity demand did not match previous growth, so fewer new power plants were built. Capitalintensive projects with long payback times, such as coal and nuclear power plants, were unable to get sufficient financial support. The decade of gas power plants started.
Economies of developing countries, especially in Asia, started growing during the 1990s, and a new wave of power plant projects began. Similarly to the US and Europe, most of the new markets in the ‘tiger states’ of Southeast Asia partly deregulated their power sectors. A large number of new power plants in this region were built from Independent Power Producer (IPP`s), who sell the electricity mainly to state-owned utilities. The dominating new built power plant technology in liberalised power markets are gas power plants. However, over the last decade, China focused on the development of new coal power plants. Excluding China, the global power plant market has seen a phase-out of coal since the late 1990s; the growth is in gas power plants and renewables particularly wind.
6.1 power plant markets in the us, europe and china
Electricity market liberalisation has a great influence on the chosen power plant technology. While the power sector in the US and Europe moved towards deregulated markets, which favour mainly gas power plants, China added a large amount of coal until 2009, with the first signs for a change in favour of renewables in 2009 and 2010.
USA: The liberalisation of the power sector in the US started with the Energy Policy Act 1992, and became a game changer for the entire power sector. While the US in 2010 is still far away from a fully liberalised electricity market, the effect on the chosen power plant technology has changed from coal and nuclear towards gas and wind. Since 2005, a growing number of wind power plants make up an increasing share of the new installed capacities as a result of mainly state based RE support programmes. Over the past year, solar photovoltaic plays a growing role with a project pipeline of 22.000 MW (Photon 4-2011, page 12).
Europe: About five years after the US began deregulating the power sector, the European Community started a similar process. Once again, the effect on the power plant market was the same. Investors backed fewer new power plants and extended the lifetime of the existing ones. New coal and nuclear power plants have seen a market share of well below 10% since than. The growing share of renewables, especially wind and solar photovoltaic, are due to a legally-binding target for renewables and the associated renewable energy feed-in laws which are in force in several member states of the EU 27 since the late 1990s. Overall, new installed power plant capacity jumped to a record high, due to the repowering needs of the aged power plant fleet in Europe.
China: The steady economic growth in China since the late 1990s, and the growing power demand, led to an explosion of the coal power plant market, especially after 2002. In 2006 the market hit the peak year for new coal power plants: 88% of the newly installed coal power plants worldwide were built in China. At the same time, China is trying to take its dirtiest plants offline, within 2006~2010, total 76.825MW of small coal power plants were phased out under the “11th Five Year” programme. While coal still dominates the new added capacity, wind power is rapidly growing as well. Since 2003 the wind market doubled each year and was over 18.000 MW30 by 2010, 49% of the global wind market. However, coal still dominates the power plant market with over 55 GW of new installed capacities in 2010 alone. The Chinese government aims to increase investments into renewable energy capacity, and during 2009, about US$25.1 billion (RMB162.7 billion) went to wind and hydro power plants which represents 44% of the overall investment in new power plants, for the first time larger than that of coal (RMB 149.2 billion), and in 2010 the figure was US$26 billion (RMB168 billion) – 4,8% more in the total investment mix compared with the previous 6 year 2009.