World Energy Outlook 2013 – power sector requires $17tn investment through 2035

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The International Energy Agency’s latest annual World Energy Outlook 2013 released yesterday projects that the power sector requires a global investment of $17 trillion from 2013 through 2035 – or $740 billion per year – to satisfy rising electricity demand and to replace or refurbish ageing infrastructure.

Of this almost $10 trillion is required for new generating capacity, of which almost two-thirds are renewables, primarily wind, hydropower and solar PV. The balance, $7.1 trillion, will be required for the transmission and distribution networks – two-thirds of it in non-OECD countries, principally for the installation of new lines, while the balance in OECD countries will be principally for refurbishment and replacement of existing assets.

Overall, the length of T&D lines globally is envisaged to expand from some 69 million km in 2012 to 94 million km in 2035, with more than 85% of this expansion at distribution level and almost half of it in China and India alone.

Some other facts and figures from the World Energy Outlook 2013, which presents an important annual update on the energy sector and its direction:

  • Global energy demand will grow to 2035, potentially up by one-third from 2011, with more than 90% of this growth from emerging economies, led by China, then India and after 2025, Southeast Asia
  • World electricity demand increases by more than two-thirds over the period to 2035, representing over half of the increase in global primary energy use, again led by China, India, Southeast Asia and the Middle East
  • Energy costs can be vital to the competitiveness of energy-intensive industries, particularly where energy accounts for a significant share of total production costs and where the resulting goods are traded extensively, such as the chemicals, primary aluminium, cement, iron and steel, pulp and paper, glass and glass products, and refining sectors
  • Countries can reduce the impact of high prices by promoting more efficient, competitive and interconnected energy markets – in particular the cost differentials between regional gas markets could be narrowed further by more rapid movement towards a global gas market
  • A renewed focus on energy efficiency is taking hold and is set to deliver benefits that extend well beyond improvements in competitiveness – however, two-thirds of the economic potential to improve energy efficiency is likely to remain untapped in the period to 2035, primarily in buildings and power generation
  • Residential electricity prices increase in nearly all regions, along with rising fossil fuel prices, but electricity should become more affordable over time in most regions as income levels increase faster than household electricity bills.

“Major changes are emerging in the energy world in response to shifts in economic growth, efforts at decarbonization and technological breakthroughs,” commented IEA executive director Maria van der Hoeven on the Outlook. “We have the tools to deal with such profound market change – those that anticipate global energy developments successfully can derive an advantage, while those that do not risk taking poor policy and investment decisions.”

The outlook also includes an in-depth focus on Brazil, anticipating the country is set to become a major exporter of oil and a leading global energy producer. It estimates the energy system requires an average $90 billion per year investment to meet the growing demand.

Picture: Maria van der Hoeven, Executive Director, IEA

By Jonathan Spencer Jones