Smart Power Generation

The future of electricity production

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Electricity Production Today

Electricity production has almost doubled in the last 20 years.

	1990 (%)	2000 (%)	2010 (%)
Coal	37.4	39.5	41.61
Gas	14.6	18.4	21.46
Oil	11.3	6.8	4.45
Nuclear	17.1	16.6	12.75
Hydro	18.15	17.25	15.69
Wind	0.03	0.24	2.16
Solar	0.01	0.01	0.22
Geothermal	0.3	0.3	0.33
Other	1.1	0.9	1.33
Total (TWh)	11,822	14,772	20,629
Enough to power (billion homes)	1.0	1.3	1.9

Global electricity production has almost doubled in the last 20 years.

1990 TOTAL

Coal

Gas

Oil

Nuclear

Hydro

Wind

Solar

Geothermal

Other

Electricity Production Tomorrow

How much electricity are we going to need?

Source	Low Growth Scenario 2020	Low Growth Scenario 2030	High Growth Scenario 2020	High Growth Scenario 2030
Coal	36.61%	19.55%	38.87%	46.60%
Gas	20.54%	20.49%	20.68%	21.52%
Oil	2.35%	1.3%	3.67%	1.70%
Nuclear	14.51%	18.37%	11.20%	11.10%
Hydro	16.81%	18.68%	14.24%	13.74%
Wind	5.22%	10.98%	5.89%	4.84%
Solar	1.17%	4.52%	2.58%	1.30%
Geothermal	0.54%	1.01%	0.73%	0.5%
Other	2.24%	5.10%	2.13%	2.70%
TOTAL	26,503 TWh	30,392 TWh	31,611 TWh	35,467 TWh

CO₂ and Climate Change

The correlation between global CO₂ emissions and climate change is striking.

Global surface temperature change*

-0.08°C

Total global CO₂ emissions

4 Billion metric tons

Trees needed to offset CO₂

1.1 Billion acres

Global surface temperature change*

-0.16°C

Total global CO₂ emissions

7 Billion metric tons

Trees needed to offset CO₂

1.9 Billion acres

Global surface temperature change*

+0.03°C

Total global CO₂ emissions

15 Billion metric tons

Trees needed to offset CO₂

4.1 Billion acres

Global surface temperature change*

+0.36°C

Total global CO₂ emissions

22 Billion metric tons

Trees needed to offset CO₂

6.0 Billion acres

Global surface temperature change*

+0.63°C

Total global CO₂ emissions

30.6 Billion metric tons

Trees needed to offset CO₂

8.3 Billion acres

*Change in global surface temperature relative to 1951-1980 average temperatures

Consequences of climate change

+1

°C

Increase in storms and irregular weather patterns. In some places winters become shorter, while in others they become colder.

+2

°C

Small mountain glaciers disappear, threatening water supplies in several areas, while elsewhere an estimated
3 million people a year are affected by coastal flooding.

+3

°C

Falling crop yield, particularly in developing regions. Extensive damage caused to coral reefs.

+4

°C

Significantly less water is available in many areas, including the Mediterranean and southern Africa.
A rising number of species face extinction.

+5

°C

Rising sea levels threaten major cities while extreme weather events – storms, forest fires, droughts, flooding, and heat waves – occur more frequently worldwide.

Current technologies

Providing the energy the world needs is no easy task. Take a closer look at how we produce most of our energy today.

Coal
Nuclear
Gas turbines
Oil
Solar PV
Reservoir Hydro
Run-of-river Hydro
Wind
Gas engine

How it works

Coal power plants burn pulverized coal at high temperatures in order to boil water and produce heat energy in the form of steam.
The steam is used to drive a steam turbine, which generates electricity by electromagnetic induction.

Pros

Coal is readily available in large quantities, and has a low and steady price – at least for the next couple of decades
Plants can be constructed with very large capacity – up to several GW at one site
Plants can be designed to co-fire biomass, reducing the power plant’s overall CO2 output
Generally very reliable
Ultra-supercritical plants can reach efficiency levels close to 45%

Cons

Carbon-intensive, producing as much as 1kg CO2 per kWh
High investment costs mean plants are usually built with as large capacity as possible
Small capacity plants are usually not very profitable
Long construction time of three to five years
Plants require large infrastructure and logistics for coal transportation either by rail or by ship
Can’t rapidly respond to changes in demand

Into the future

Coal power plants currently dominate electricity generation worldwide, producing over 40% of the world’s electricity. Coal will continue to play an important role for decades to come, especially in providing base load. However, its reliance on finite resources and its impact on the environment put increasing pressure on reducing the reliance on coal for power generation.

How it works

At the heart of a nuclear power plant are radioactive uranium rods. These rods release neutrons that collide with uranium atoms, causing nuclear fission. The intense heat produced by nuclear fission boils water, creating the steam needed to drive a steam turbine, which generates electricity by electromagnetic induction.

Pros

Produces a vast amount of energy from a very small amount of fuel
Virtually carbon free
Very reliable, especially for base load
Very competitive generation costs

Cons

Extremely high investment costs mean plants need large capacity to be economically viable
Politically sensitive
Very long approval and construction process
Produces highly radioactive waste that requires long-term management and storage – up to 1,000,000 years
Lacks dispatchability – can’t respond quickly to changes in demand

Into the future

While some countries are discontinuing their nuclear power programs, others are continuing to add nuclear capacity to meet current, and impending, energy demands. Nuclear power has a central role in many low-carbon transition programs worldwide. Recent events in Fukushima, Japan, have highlighted the volatility of nuclear power and negatively affected its reputation.

How it works

Compressed natural gas is combusted at high temperatures, releasing hot gases that drive a turbine. The turbine generates electricity by electromagnetic induction. A combined-cycle gas turbine can also use the excess heat to boil water, producing steam to drive a steam turbine, thereby achieving an even higher level of efficiency.

Pros

Combined-cycle method produces half the CO2 per kW compared to coal
Proven base load technology
New H-series gas turbine plants can reach efficiency levels of up to 60%

Cons

The cost of generating base load power is higher compared to coal or nuclear
Simple-cycle gas turbines offer relatively low efficiency of 30-40%
Combined-cycle plants often consume large quantities of water
Not as carbon intensive as coal but still produces CO2
Start-up time of combined-cycle plants is too slow for dynamic system balancing tasks

Into the future

Recent technological developments have made shale gas more accessible, so the number of gas power plants is set to rise. Gas is considered a transition fuel, enabling a move toward low-carbon power systems. Combined-cycle gas turbines are highly efficient – good for low-carbon base load applications but gas turbines don’t offer adequate dispatchability for dynamic system balancing.

How it works

Oil can be combusted to produce mechanical energy, which is used to turn a generator. Alternatively, combusted oil can be used to boil water, producing steam that drives a steam turbine. Both methods produce electricity by electromagnetic induction.

Pros

Oil, in its crude and refined forms, has a good energy-to-weight ratio, making it easy to transport to remote locations
Power plants can be constructed quickly and with relatively low capital costs

Cons

Burning oil produces high volumes of CO2
Oil contains other harmful substances including sulfur, vanadium, and nickel
Reserves are finite, and the majority of oil comes from just a few locations worldwide
Oil is already more expensive than other fossil fuels and that cost is set to rise substantially due to declining reserves and an increasing number of vehicles raising demand

Into the future

The role of oil in electricity generation will decline, with the transport sector consuming the vast majority of extracted oil. In remote regions and islands without a gas infrastructure, oil will continue to play a role beyond simply powering transport. Oil may also continue to play a back-up role for gas power plants in regions with gas supply issues.

How it works

Solar photovoltaic (PV) cells made of semiconductors convert sunlight directly into electricity. When light strikes the cell, some of the energy is absorbed, knocking electrons loose and allowing them to flow freely. The electrons are then forced to flow in a specified direction, producing an electrical current.

Pros

Harnesses an abundantly available energy – light
No waste or emissions
Ideal for hot, sunny climates where power for cooling is needed throughout the day

Cons

Doesn’t work in the dark, and can have a greatly reduced output when cloudy
Very expensive
PV output drops to zero as the sun sets, which typically coincides with the early evening demand peak and creates a balancing problem

Into the future

Solar PV, along with wind power, is seen as one of the main solutions for generating an increasing proportion of energy from renewable sources. With many regions setting targets for renewable energy and providing subsidies for investments, a major expansion in solar PV is expected.

How it works

Dams are constructed in narrow sections of valleys, downstream of a natural basin. The dam controls the flow of water, driving hydro turbines that generate electricity by electromagnetic induction.

Pros

Takes advantage of gravity to generate a lot of power from the rapid, controlled descent of water
Reservoir hydro is dispatchable, making it ideal for base load
Can also be used for load following
Depending on reservoir size, water can be stored for future needs making it the perfect carbon-free balancing solution for wind power during low-wind conditions

Cons

Extremely high capital costs – dams with significantly large capacity take years to plan and construct
Difficult to find suitable locations for new plants
Construction approval is a major challenge – construction could displace residents and dramatically affect the local environment
Only a solution for areas where suitable infrastructure exits

Into the future

Reservoir hydro is currently the most widely integrated renewable energy source, yet most suitable locations that can tolerate the environmental impact have already been utilized. New sites tend to be remote, requiring significant investments in new roads and transmission lines, while gaining approval is often very difficult because of the environmental impact.

How it works

The natural kinetic energy of flowing river water is used to power hydro turbines, generating electricity by electromagnetic induction. After the water has passed through the turbine, it returns to the river downstream.

Pros

Smaller run-of-river hydro plants have minimal impact on the local environment
Harnesses the natural flow of water to produce power
Carbon free
Can be used as a peaking or base load power plant, depending on the natural conditions

Cons

As the water flow is natural and unregulated, it usually has less potential energy
Power output can’t be regulated with much effect, making it generally unsuitable for load following or wind balancing
Closing down the plant for extensive periods of time is not an option as the river needs to flow
Larger plants often raise environmental concerns due to the diversion of water from rivers

Into the future

Run-of-river hydro is a clean source for base load power, especially if the flow is consistent and predictable. Increasing the number of run-of-river hydro plants is especially challenging in industrialized countries, as most suitable sites have already been used and gaining permission for new plants is difficult.

How it works

Wind turbines convert the kinetic energy of wind into mechanical energy using a wind turbine. Wind rotates the turbine blades, generating electricity by electromagnetic induction.

Pros

Harnesses the naturally occurring power of wind
Produces no waste or emissions
Can be used as a local solution for remote areas not connected to the grid
In the case of onshore wind farms, the land below the turbines can still be used for farming

Cons

Relies on wind speed, which is notoriously intermittent
A 30% drop in wind speed – from 10 m/s to 7 m/s – reduces turbine output by 60%
The capacity factor of a typical farm is between 20-30%, new grid connections are usually needed, and power systems need adequate balancing power ready
Onshore farms are often near the coast where land has a premium price, while offshore farms require even more investment

Into the future

Wind power is set for strong growth globally. The EU target of generating 20% of all electricity from renewable sources by 2020 means installing 200 GW of additional renewable capacity. The reliability constraints of wind power, combined with a lack of dispatchability, mean there will be challenges in incorporating continuously increasing wind capacity into existing power systems.

How it works

Gas is combusted inside the engine, converting the fuel into mechanical energy. This energy turns a generator that produces electricity by electromagnetic induction.

Pros

Highest simple-cycle efficiency of any technology – levels of up to 45-50%
Competitive installation costs even for small 50 MW plants
Rapid construction time – plants with a capacity of 300 MW can be constructed in 12 months
Flexible plant sizing enables power plants to be installed directly in load pockets
Most agile thermal-power technology available

Cons

Slightly higher primary NOx emissions than gas turbines
Slightly lower efficiency in combined-cycle mode than an equivalent gas turbine
Multiple units require more personnel than gas turbine installations
Not as carbon intensive as coal but still produces CO2

Into the future

Recent technological developments have made shale gas more accessible, so the number of gas power plants is set to rise. Gas is considered a transition fuel, enabling a move toward low-carbon power systems. Gas engines offer the opportunity to build agile plants able to combust gas with a high level of efficiency, provide competitive power during peak load periods, and the highest level of dispatchability for dynamic system balancing.

Challenging firm beliefs

The world is a changing place and yesterday’s beliefs are being challenged – even in the energy industry.

Myth 01
Myth 02
Myth 03
Myth 04

Bigger is better – economies of scale ALWAYS make sense.

Explanation

When constructing steam turbine power plants for base load applications, it is generally believed that a bigger plant will have higher efficiency and lower specific capital costs.

The Facts

Power plants, especially gas and coal, are increasingly finding that demand for their capacity is falling. This is usually due to a preference for renewable output when it’s available, as well as increasing fluctuations in demand. The average capacity factor of CCGT plants in Spain – where there is a large amount of wind capacity – is 29%, while in the USA it’s 40%.

Large plants typically need to be installed outside load pockets, near a water source for adequate cooling. This often leads to increased capital investments to strengthen the grid – a cost usually picked up by the state or grid authority and not included in the original budget estimates.
Power plants designed to cover peaking and balancing need to be able to start and stop quickly. Rapid changes in wind power output pose new challenges for power systems, typically requiring 10-minute reaction times. Start-up times of large steam turbine power plants can take from several hours to several days.

"Bigger-is-better" thinking still holds true in base load generation – for example a coal power plant close to a harbor can optimize its fuel logistics. But in systems where full base load is not continuously required, especially when wind power capacity is to be utilized as much as possible, a new approach will be needed.

Power plants only generate revenue when dispatching.

Explanation

In energy markets, power plants compete for positions in the dispatch queue and for opportunities to produce electricity. If your energy doesn’t get dispatched, you lose money.

The Facts

In "energy-only" markets, energy producers only get paid for what they produce. While these markets will remain, new market mechanisms are already emerging:
- Capacity markets – emerging especially in Europe and the USA to ensure adequate returns on investment in dynamic plants, specifically for balancing power systems with a lot of renewable capacity.
- Peaking tariff markets ¬– enabling construction of efficient, localized peaking capacity within load pockets.

Ancillary services markets – rewarding fast start up and rapid load changing capabilities. Such markets are already widely in use in the USA.
In these new markets, a power plant’s capability to enter and leave the system quickly is a significant part of its value, as is the ability to vary the load rapidly.
In power systems with significant renewable capacity, dynamic power plants will continue to provide a high level of value when not actually operating as they enable the installed wind and solar capacity to be fully utilized.

The myth holds true in many current "energy-only" markets. But new markets are emerging that will reward power plants for having different values.

Wind farms located over a wide geographical area will balance each other’s output.

Explanation

Strong winds that pass over one region will eventually pass over another, so there will always be wind-power output. A “super grid” can move energy between regions to balance the system.

The Facts

The largest European wind farms are currently located in Denmark, Germany, and the Netherlands. Although Western and Northern Europe have the most favorable on-shore wind conditions, having large wind farms located in the same region means they can’t balance each other.

Spain has recently seen a boom in its wind capacity. Comparing the power output from wind farms in Germany, Denmark, and Spain reveals some interesting facts:
- As a low-pressure front sweeps across Europe, it produces similar wind conditions over large areas, simultaneously.
- The wind farms in Germany, Denmark, and Spain all experience high output due to the increased wind speed.
- This sudden high output is excess to demand. Selling it to another region is not possible as they also have too much power.

It is true that wind farms will balance each other from time to time, but it simply isn’t possible to predict when it will or won’t happen.

Solar PV systems will produce electricity when it is needed.

Explanation

As people's natural rhythm is based on the solar cycle, it is believed solar PV systems will produce energy when it is needed most.

The Facts

Peak load times often occur in the early evening when people return home, switch on lights, and turn on appliances. In many countries the sun is setting at this time, meaning generation from solar PV ceases exactly when the power need is highest.
Solar PV can produce great quantities of electricity, but only in areas with large amounts of daylight. For many heavily populated parts of the world there is simply not enough daylight for solar energy to be a solution. In northern climates like Canada, where peak load occurs during dark winters, solar PV will contribute very little to the grid.

In regions with long days, intense sunlight, and a need for cooling applications, the myth holds true – solar PV is an ideal solution.

Different Needs, Shared Challenges

Whether a developing nation with ambitions of economic growth, or an industrialized region moving towards a low-carbon economy, the challenges of future electricity production are shared.

Affordability
Reliability
Sustainability

EU
India

Decarbonization is likely to increase the cost of electricity. Intermittent renewable capacity, such as wind and solar PV, will need to be installed in large quantities – these technologies are quite capital intensive as they have a low average annual capacity factor of 20-25%.
Intermittent renewables are going to require a fully dispatchable backup for times of low output. A power system with significant share of renewable generation could easily have a total capacity of double the annual peak load.
Grid investment is needed – the aging power system infrastructure will eventually need to be replaced and remote renewable sources, such as off-shore wind farms, will need integration.
These immense capital costs will ultimately be passed on to end users – electricity prices in the future are set to rise steeply.

Quick Fact:

The EU needs to invest at least €1000 billion into its power systems in the next decade.

The approach in India has been cost efficiency – large coal plants designed for base load transmit power throughout the nation using their strong grid network. There has been little investment in peak load capacity.
The continually growing demand for power means that India is constantly playing catch up – finding capital, getting permission, and then building more plants can take over five years, in which time the market has changed and more investment is again required.
The nation's capacity deficit has resulted in a daily pattern of load shedding. To ensure they always have power, citizens have invested heavily in battery-inverters and backup generators – money that could have covered the cost of installing adequate peak load capacity.
Most coal reserves are located in the northeast. Constructing power plants close to this fuel source would require a massive amount of investment in grid infrastructure to transmit the power to the consumers in the cities.

Quick Fact:

Indians have spent €15 billion on inverters and small backup generators – enough capital to construct 25 GW of capacity to cover the whole load curve.

The integration of wind power brings reliability challenges. Wind is a clean and valuable source, so maximizing its use is vital, but sometimes there is no wind and at other times too much. Rapid changes in wind conditions are going to require other power plants to ramp up and down with increasing pace.
Lack of control over wind speed means production can peak when there is low demand. This increased output takes a share of the load from other power plants, forcing them to alter or stop their output. Northern Europe has already seen negative electricity prices due to the inability of steam power plants to temporarily reduce output.
As more wind capacity is introduced, the average demand for power from existing plants will fall. This will result in unused capacity that is typically not suitable for fast system balancing as they weren't designed to increase or decrease production rapidly according to demand.
Without plants that can dynamically balance grids during rapid fluctuations in supply and demand, the crucial balance between generation and load may be lost, meaning entire networks could trip and cause major blackouts.

Quick Fact:

To reach renewable capacity targets by 2020 and maintain system reliability, the EU will need to install 100 GW of new dynamic balancing power.

India has adequate base-load capacity, but currently there isn't enough installed capacity to match the daily peak load, resulting in blackouts which typically last a few hours per day. To maintain stability, an undesirable method of system balancing is used called load shedding – cutting power to parts of the city so that demand doesn't exceed available supply.
Installing additional capacity in the form of coal plants would not solve the peak-load deficit. Coal plants take too long to build and aren't able to rapidly match generation to a fluctuating demand. The grid would also need additional investment to be able to transmit short-term daily peak loads over long distances, which will drive costs up even further.
Solving the present peak-load deficit is not simply a static challenge. By providing more energy, industries have a better opportunity to grow and people have more energy to power more appliances. A per capita rise in energy consumption would again lead to a need for more capacity – increased energy powers growth, and growth requires more power.

Quick Fact:

The value of lost load has been estimated as over 5% of India's GDP.

It is generally believed that human activity has led to a rise in global CO2 emissions, resulting in a negative impact on our climate. Electricity generation and transportation are two significant sources of CO2.
The EU has set challenging targets for reducing CO2 emissions by 2020. The 20-20-20 policy means a 20% reduction in CO2 emissions, a 20% increase in energy efficiency, and producing 20% of all power from renewable energy sources.
Integrating large amounts of renewable generation capacity will introduce new challenges for power systems, most significantly those of system balancing. The existing capacity mix was not designed to cope with such challenges, and enabling maximum penetration of renewable energy into current power systems is going to require some additional dynamic capacity right from the start to ensure power is always available.

Quick Fact:

The EU will need to install 285 GW of wind power by 2020 in order to reach the target of 20% energy from renewable sources.

India is under pressure from the international community to put a cap on its CO2 emissions. This is very challenging for a nation experiencing industrial-scale growth and needing rapid expansion of the existing power system. They quickly need to provide people with affordable and reliable power, but renewables aren't currently able to provide this.
The biggest sustainability challenge facing India is whether they can learn from western experience and design an efficient, reliable, and affordable grid right from the start – the type of system Europe is aiming for now. This will save time and money in the long term, yet will need the support of western countries and the introduction of new technologies. Ultimately the challenge is how well they are able to achieve the level of economic and social development they need without polluting the planet.

Quick Fact:

Optimizing India's generation capacity has the potential to reduce CO2 emissions by over 100 million metric tons a year by 2017.

Wind and solar power are essential for low-carbon energy generation, yet alone can’t provide enough affordable, reliable, and sustainable electricity.

Successfully integrating renewable energy is going to require a dynamic, flexible, and efficient solution for system balancing.