Power Sector – Overview and Key

Trends

June 2019

1
Power Sector – Overview and Key Trends

Agenda

• Global Power Trends

• Key Regional Trends
• Coal-based Power
• Gas-based Power
• Nuclear Power
• Biopower
• Solar Thermal Power
• Hydro Power

2
Global Power Installed Capacity Mix

Share of conventional fuels is witnessing a rapid decline in the power mix and this trend will continue in
the long run.
100% 0.2 0.2 0.2 0.2 0.3
10.2 7.4 5.6 5.1 4.9
90%
17.6 16.6 16.1
80% 19.6
22.1
0.8 6.9
70% 3.9 11.0 14.9
0.0
0.5
6.8 8.4
60% 10.0 10.8
4.6 13.4
50% 3.9
27.7 3.2
24.0 25.6
40% 24.0
22.5
30%

20%
31.8 32.1 29.0 26.2 22.4
10%

0%
2000 2010 2018 2023 2030

Coal Gas Oil Wind Solar PV Solar Thermal Hydro Nuclear Biopower Geothermal

• Decommissioning and low capacity addition is expected to reduce the share of coal in the power mix to 22% by 2030 from
the current 29%.
• Gas share will also marginally decline from 25.6% to 22.5% in 2030.
• Solar PV will more than double its share from the current 7% to 15% in 2030.
• Wind power will also witness its share growing from the current 8.4% to 13.4% by 2030.
• Nuclear power is expected to maintain its share at close to 5% of the total installed capacity.

3
Global Power Capacity by Region

The Asia Pacific region contributes slightly less than half of the total installed capacity in the world.
Capacity Addition by Region, 2018-2023
300
8 9 10 12
11 12
37 38 42 36
250 38 34
21 23 23 28
24 26
200 32 37 39
37 40 44

GW
150

100 185 185 178 165 169 165

50

-
2018 2019 2020 2021 2022 2023
Asia-Pacific Europe
Middle East and Africa North America
South and Central America

• Asia-Pacific region contributes almost 46% of the global cumulative installed capacity in 2018. Over the next 5 years, it will
contribute more than 60% of the global capacity addition.
• It is followed by Europe and North America at 21% each. Annual capacity addition for these regions will be in the range of
35-40 GW over the next 5 years.
• The Middle East and Africa region, which presently contributes around 7.4% of the total capacity, is also expected to witness
fast growth, with capacity addition increasing from 21 GW in 2018 to 28 GW in 2023.

4
New Investment in Power Generation

New investment in power generation are witnessing a declining trend since 2016, due to reduction in
fossil fuels capacity addition.
600

500

400
307
US$ billion

295 291 279 318 307 304

300 226 283

200 33
12 18 9 22
18 31 47 47
100 176 168 172 150 164 175
146 132 127

0
2010 2011 2012 2013 2014 2015 2016 2017 2018

Fossil fuels Nuclear Renewables

• New investments have shown a declining trend for fossil fuel-based generation. The investment saw a significant dip of 17%
in 2016.
• The rapidly declining prices of renewable energy (especially solar) are keeping the investment in renewable energy below the
current levels, even with higher capacity addition.
• Investment in nuclear in 2018 is almost similar to that in the previous year.

5
Key Trends - Americas

Gas and renewables will continue to dominate the US power industry.

• Despite Federal support , coal-based power investments have

plummeted in the US. Capacity addition in 2014 and 2015 was
around 700-800 MW annually. The next 3 years (2016-18) have
had less than 100 MW capacity being added in total.
• The forecast for capacity being connected to the grid in the
country over the next 5 years is just over 700 MW (cumulative).
• Coal-based generation stood at 1,119 TWh in 2018, which was
39% below the 2010 level.
• Gas-based generation has grown at a CAGR of 4.3% (2010-18).
Availability of shale gas and decline is gas prices have
contributed to this.
• Around 58 GW of gas-based capacity has been added in the US
over the past 5 years. An average of 8.5 GW of gas-based
capacity is expected to be added every year till 2023.
• There are two nuclear reactor starts expected in the US –
Vogtle 3 and Vogtle 4 in 2021 and 2022 respectively, each of
1250 MW.
• Though the US has the highest installations of solar thermal
power, there are no capacity addition plans over the next 5
years in the region. The country has a current capacity of 1.7
GW, almost one-third of the global capacity.

6
Key Trends - Europe

Coal phase-outs and solar capacity additions are the highlights of the Power sector in Europe.

Coal Phase-out Targets

Country Phase-out by
• Europe’s transition from coal to renewables is accelerating due
to coal and nuclear phase-outs. Generation from coal in 2018 Austria 2025
was 24% below the 2012 level. Denmark 2030
• A number of countries in the region have announced coal Finland 2029
phase-out targets while others are considering it.
France 2021
• More than 45 GW of gas-based capacity has been added in the
region in the last 5 years, with Russia contributing 58% of it. Germany 2038
• Biopower growth is primarily coming from the UK, through Ireland 2025
both coal to biomass conversion and greenfield projects. The Italy 2025
country added 3 GW biopower capacity in the last 5 years.
Netherlands 2029
• Nuclear capacity addition has been happening primarily in
Russia. The country added 5 GW in the last 5 years. Russia, Portugal 2030
Belarus, France, Finland, Slovakia and the UK are countries
Sweden 2022
which will see nuclear capacities getting connected to the grid
till 2025. UK 2025

7
Key Trends – Asia Pacific

Power sector in the region characterized by heavy reliance on coal along with a significant push for
renewables.

• Over the past 5 years, China has contributed 61% of global coal
capacity addition, followed by India at 18%.
• Coal capacity addition in both these countries has seen a sharp
decline since 2016.
• Gas is playing an important role in south-east Asia - Indonesia, Change in Coal-based Capacity Added to
Malaysia, and Thailand are replacing their oil-fired plants with the Grid (GW)
gas-fired plants. China is adding 7.5 GW of gas-based capacity Country 2015 2018 2021
annually since 2017 and the same level is forecast till 2023.
China 54.0 36.2 17.3
• China has added 26 GW of nuclear power capacity in the last 5
years. S Korea and India follow with close to 2 GW each. India 23.1 6.4 7.9
• China will continue to add more than 6.5 GW nuclear power
capacity per year till 2023. India, Japan, Pakistan and S Korea
are other countries in the region that will add nuclear capacity.

8
Key Trends – Middle East and Africa

Gas-based capacity witnessing an upturn in the region; Middle Eastern countries are installing large
scale solar capacities.

• Gas-based capacity addition has been witnessed in a number of

MEA countries. Egypt has added 17.3 GW while Iraq has added
12.3 GW between 2014 and 2018. Algeria and UAE have added
4.3 GW each during this period.
• Nuclear power capacity is coming up only in UAE (Barakah 1, 2,
3 and 4 of 1.4 GW each).
• South Africa saw addition of 400 MW of solar thermal during
the last 5 years. Morocco also saw the addition of 360 MW of
solar thermal.
• A number of countries including Egypt, Israel, Morocco, Saudi
Arabia, South Africa and UAE have upcoming solar thermal
capacities.
• Geothermal capacities of 150 MW to 200 MW are expected to
come up per year in Kenya over the next 5 years.

9
Coal-based Power Capacity Addition

Capacity addition for coal-fired power is on the decline since 2016.

100 93
90
80 77 75
70
61
60 55 56
52
GW

50 46 44
42
40
30
20
10
-
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

• Capacity addition in coal-based power is estimated at around 55 GW in 2018. In the same year, 22.7 GW is expected to have
been decommissioned, leading to a net capacity addition of around 32 GW.
• Capacity addition is expected to stay above 50 GW in 2019 and 2020 after which, it will decline to levels between 41 GW and
46 GW.
• A total of 87 GW coal-based capacity is expected to be decommissioned between 2019 and 2023. Of this, 23 GW will be
decommissioned in the US alone. Stringent environmental regulations are among the leading factors for the retirements.
• The reliance of growing economies like India and China on coal has been decreasing. In early 2017, China had announced
cancellation of more than 100 coal-fired power plants. India’s coal-based capacity additions have declined significantly.
• China has a self-imposed cap of 1100 GW of operational capacity till 2020.
• Smaller countries in the Asia-Pacific region such as Vietnam, Indonesia and Philippines have shown increased emphasis on
coal-fired capacity additions.

10
Coal-based Power - Capacity Addition by Region

Asia Pacific will drive the coal-fired capacity additions, but there is a declining trend in this region also.
3.0
2.0
1.0
-

0.4 60
0.3 40
0.2
0.1 20
- 0

0.8 6.0
0.6 4.0
0.4
0.2 2.0
- -

Note: All capacity data above is in GW

11
Coal-based Power – Key Drivers and Inhibitors

Key Drivers and Inhibitors

Drivers
• Reliance by Asian countries, which are seeing
the highest demand growth for power
• Affordability and availability
• Use of supercritical technology, clean coal
• New coal plants under construction in India,
Indonesia, Pakistan, Bangladesh, Philippines
and Vietnam

Inhibitors
• Climate change commitments
• Emission control norms
• Policy goals to phase out coal generation by
many European countries
• Declining cost of renewables
• Abundant supplies of natural gas

12
Gas-based Power Capacity Addition

Gas-fired power capacity addition is expected to remain almost stable over the next 5 years
80

70 71
70

60
54 54
51
50 47 48
46
45 44
GW

40

30

20

10

-
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

• Gas-based power has increasingly been finding favour as a substitution for coal. The switch from coal to gas accounts for
almost one-fifth of the rise in gas demand.
• The US and China are the largest drivers for gas-based capacity addition, with more than 44% of global capacity addition
coming from these two countries alone. In the next five years, close to 16 GW per year will be added by these countries.
• The MENA region is also witnessing significant gas-based capacity addition to reduce oil burn for power generation.
• Gas fired power plants are supporting variable renewable power in Europe due to their ability to ramp up and down in short
intervals.

13
Gas-based Power - Capacity Addition by Region

Asia Pacific and North America are expected to see the most gas-based capacity addition over the next
five years. 6
4
2
-

20 20
15 15
10 10
5 5
- -

3.0 15
2.0 10
1.0 5
0.0 -

Note: All capacity data above is in GW

14
Gas-based Power – Drivers and Inhibitors

Key Drivers and Inhibitors

Drivers
• Abundant supply of natural gas, shale gas
discoveries
• Switch from coal to gas
• Ability of natural gas-based power plants to
provide grid balancing
• Low emissions from gas-based generation

Inhibitors
• Climate change commitments
• Declining cost of renewables
• Gas price fluctuations

15
Nuclear Power Capacity Addition

Nuclear power generation capacity addition to remain subdued – capacity addition per year to stay in
the range of 11 GW to 15 GW over the next few years.

25

20
20
17
16 16 16
15 15
15 14 14
12 13
GW

11 11 11
10 9

6
5 3

2023
2014

2015

2016

2017

2018

2019

2020

2021

2022

2024

2025

2026

2027

2028

2029

2030
• The year 2018 witnessed 9 reactor startups, which was 8 less than scheduled.
• Globally, there are 415 reactors presently operating (10 more than a year ago), while 49 are under construction- this number
being the lowest in a decade.
• Nuclear power development is dominated by China, which contributes 50% to the upcoming capacity between 2019-2023.
• Time and cost overruns are a major concern for this sector, with nearly two thirds of global constructions behind schedule.
• Countries including Germany, Belgium, Italy, Switzerland and Taiwan have announced nuclear phase-outs.

16
Nuclear Power - Capacity Addition by Region

Capacity addition to be driven primarily by the Asia Pacific region

6
4
2
-

2.0 15
1.5 10
1.0
0.5 5
- -

2026
2018
2020
2022
2024
2026
2028
2030

2018
2020
2022
2024

2028
2030
1.5 3
1.0 2
0.5 1

- -
2018
2020
2022
2024
2026
2028
2030

Note: All capacity data above is in GW

17
Nuclear Power – Drivers and Inhibitors

Key Drivers and Inhibitors

Drivers
• Cleanest among the conventional power
plants
• Large-scale capacity addition possible
• Considered to be an important power source
to ensure energy security
• High average life

Inhibitors
• Safety concerns post Fukushima
• Time and cost overruns on a number of
plants under construction
• Superior economic performance by
renewables and natural gas
• Phase-out announcements in Europe
• Technology transfer

18
Biopower Capacity Addition

Biopower capacity is expected to witness capacity additions of around 7 GW per year till 2023, driven
by countries such as China and India.

10.0 9.4
9.0

8.0 7.6 7.7

7.3 7.0
6.9 6.9
7.0 6.5 6.6 6.7

6.0
GW

5.0

4.0

3.0

2.0

1.0

-
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

• The biopower market is largely policy dependent, as generation from biopower is not as competitive as generation from
fossil fuels in most countries.
• Several countries are switching from fossil fuels to biomass, including wood-based biomass, for three reasons: to ensure
security of energy supply, to avoid the volatility of fossil fuel prices, and to mitigate climate change.
• China is set to have the largest capacity additions each year with more than 2 GW planned to be added annually. About a
third of the global capacity addition during the period 2019-2023 is set to be from installations in China.

19
Biopower - Capacity Addition by Region

Europe has been the largest biopower market for a long time; however it is expected to be overtaken
by Asia Pacific soon. 2.0
1.5
1.0
0.5
0.0

0.4 6
0.3
4
0.2
0.1 2
0.0 0

2018

2019

2020

2021

2022

2023
0.4 0.4
0.3 0.3
0.2 0.2
0.1 0.1
0.0 0.0

Note: All capacity data above is in GW

20
Biopower – Drivers and Inhibitors

Key Drivers and Inhibitors

Drivers
•Government support in terms of renewable energy
mandates and financial incentives
•Carbon neutral non-intermittent power generation
•Coal to biopower conversion
•Large range of feedstock can be used
•Captive power provides a new source of income across
the value chain
•Effective waste management

Inhibitors
•Feedstock cost and supply uncertainties
•High capital and operating costs
•Emissions higher than other renewable energy sources
•Efficiency dependent on feedstock characteristics

21
Solar Thermal Power Capacity Addition

The CSP market will remain a niche market in the overall renewable energy space, which will be
dominated by solar PV and wind.
1,600

1,400 1,350 1,350

1,165
1,200
1,006
1,000
813 801
MW

800
601
600

400
264
222
200 115

-
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

• The CSP market has been historically limited to a few countries such as the US and Spain.
• The sector has witnessed slow growth in the last 4-5 years due to high capital costs, competition from PV, lack of
government support, etc.
• There were over 117 active CSP projects, with a cumulative capacity of 5.6 GW by the end of 2018. There are 28 projects
under construction and expected to come online in the next2-3 years, and another 65 at the permitting stage.
• CSP with storage is gaining prominence due to the ability to provide stable, scalable and reliable power.
• Countries such as China, Chile, Morocco, Saudi Arabia, the United Arab Emirates (UAE), South Africa and Egypt will likely
register the largest deployment of CSP in the future.

22
Solar Thermal Power - Capacity Addition by Region

APAC and MENA regions will contribute the largest upcoming capacity of solar thermal.
300
200
100
0

100 1000

50 500

- 0

150 800
100 600
400
50 200
0 0

Note: All capacity data above is in MW

23
Solar Thermal Power – Drivers and Inhibitors

Key Drivers and Inhibitors

Drivers
• R&D expected to lead to improved
energy efficiency and reduction in cost
• Thermal storage addresses grid
integration challenges and makes solar
power reliable
• Hybrid CSP/PV for economic viability

Inhibitors
• High capital costs
• Competition from solar PV
• Lack of government support

24
Hydro Power Capacity Addition

Steady growth in hydro power capacity addition expected over the next five years, with capacity
addition reaching more than 33 GW in 2023

45
40
40
35
35 34
32
31 31
29
30
26
24
25
GW

20
20

15

10

-
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

• Global hydro power capacity is estimated at 1,247 GW in 2018.

• Almost all the years from 2007 to 2016 witnessed a capacity addition of more than 30 GW. However, capacity addition
declined to 20 GW in 2017.
• Driven by a strong pipeline of projects, the capacity addition is expected to increase from 26.4 GW in 2019 to 33.5 GW in
2023.

25
Hydro Power – Capacity Addition by Type

Pumped storage capacity addition expected to grow significantly by 2023

35

3.9
30
3.5 3.7
3.3 5.2
25 3.1 4.5
4.7 5.9
2.7
4.1
20 2.0
GW

15
24.4
21.4 21.1 22.4
10 19.5 19.3

0
2018 2019 2020 2021 2022 2023

Large Hydropower Pumped Storage Small Hydro

• Most of the hydropower capacity addition is dominated by large hydro, with more than 80% share.
• Pumped storage, which presently stands at 8% of the hydro power capacity addition, would increase its share to 15% by
2023.
• Small hydro capacity addition is expected to witness moderate growth.

26
Hydro Power - Capacity Addition by Region

Asia Pacific region is expected to contribute more than 70% of the capacity addition.
6
4
2
0

2.0 20
1.5 15
1.0 10
0.5 5
0.0 0

4 2.0
3 1.5
2 1.0
1 0.5
0 0.0

Note: All capacity data above is in GW

27
Hydro Power – Drivers and Inhibitors

Key Drivers and Inhibitors

Drivers
• Clean, affordable and reliable energy
• Non-intermittent unlike other renewable
sources
• Flexible source of generation with
peaking capabilities
• Pumped hydro provides large scale
storage capabilities

Inhibitors
• High capital costs
• Construction risks
• Time and cost overruns, permits and
approvals
• Large-scale submergence (dam-based
hydro power)

28
Thank you

29