New analysis from Frost & Sullivan - Global Prospects for Coal-Fired Power Generation - finds that over the next 25 years, the world will become significantly more dependent on electricity produced from various sources, including coal, to meet its energy needs. Global electricity generation is expected to grow from 21,224 Terawatt hours (TWh) in 2010 to 33,370 TWh in 2030. Coal will continue to hold an increasing share in the energy mix of emerging countries since it is one of the most affordable sources of energy with abundant reserves across the world and particular concentration in the United States, Russia, China, Australia and India.
The analysis finds that China is expected to have unprecedented growth with about 945 GW and 1,040 GW of total coal-fired capacity in 2020 and 2030, respectively. India, on the other hand, will have 201 GW and 267 GW of coal capacity in 2020 and 2030, respectively. Domestic power demand and capacity shortages will be the key market drivers for both countries.
“North America and the European Union will continue to be key markets for coal due to large units of capacity decommissioning, which means large MW capacity orders as replacements,” noted Frost & Sullivan. “However, prospects for coal-fired power generation in Europe and North America are currently looking bleak due to the threat of tougher regulations, uncertainties over future carbon prices and the development of carbon capture and storage (CCS), rising engineering procurement and construction (EPC) costs, and low gas prices.”
These factors deter investors from investing in new plants across North America and the EU. In Asia, the opposite trend can be observed, with massive investments continuing in new plants with substantial potential for major upgrades to existing plants, some of which are less than a decade old. The coal boom in Asia is projected to continue for the next decade.
“China, India, and the rest of Asia are the key focus areas for coal-fired investment in the coming decade,” explained the Frost & Sullivan study. “Strong projected electricity demand growth and low production costs make the region attractive for both domestic and global participants.”
Indonesia and Vietnam will emerge as major countries fuelling demand for coal-fired generation. Japan and Korea will offer limited prospects while Australia, which is rich in fossil fuel, will experience strong growth. Increasing domestic demand and need to replace ageing capacity will accelerate demand in Russia as well. However, reliance on gas and oil in the Middle East, on hydroelectric power in South America and poor infrastructure and political stability in Africa will limit the prospects for coal-fired power generation in these regions.
In Europe and North America, activity will predominantly be focused on investment in the existing base. New coal investment will be minimal until the investment climate becomes more certain.
“In general, financing issues for large coal-fired plants are likely to recede as electricity demand across emerging geographies recovers,” said Frost & Sullivan. “Order levels for steam plants in Europe will pick up in a few years as capacity needs to be replaced in some countries that are affected by closures mandated by the Large Combustion Plants Directive. Order levels will increase again as the technical and commercial viability of CCS is proved.”
Overall, development of environmentally friendly technologies, such as ultra-supercritical technology, CCS, and coal upgrades will contribute to the global demand for coal-fired generation.