Global Power Industry Webinar in Review: Renewables Making Leap, but Traditional Forms of Energy Remain

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Researched by Industrial Info Resources (Sugar Land, Texas)--In this week's webinar on the outlook for the global Power Industry, Britt Burt, Industrial Info's vice president of research for the Power Industry, and Shaheen Chohan, vice president of Global Analytics, discussed the trends and drivers of the industry and how things are shaping up for the rest of the year and into the future. Among the topics discussed were the impact of COVID-19, renewable energy's march forward and the future of coal-fired generation across the world.

Industrial Info is tracking more than 51,000 active power projects, valued at about $5.57 trillion. Burt said Industrial Info researchers have identified about 400 projects, valued at $80 billion, which have been affected by the COVID-19 pandemic. Among the projects most affected are grassroot and unit addition projects, especially in the wind and solar sectors, where supply chain disruptions and labor force curtailments have been a problem. The primary impact of the pandemic has been a drastically reduced demand in power. The decline in the U.S. has been about 6-7%, while areas such as South America and parts of Europe have been much higher. This has resulted in some projects being pushed out. Burt said, "All indications are that electricity demand is going back to our mundane 1% growth in the United States, and I think it's going to creep back across the world as we move forward."

In addition to capital projects, some planned maintenance has been affected. Burt said, "We're seeing outages being delayed somewhat, non-essential work. The scheduled maintenance work to the baseload units has pretty much progressed as planned, but the non-essential work to gas turbines and things like that have been pushed out to next year."

U.S. & Canada
Burt said the biggest question in the U.S. power market is whether the Production Tax Credit (PTC) for wind and the Investment Tax Credit (ITC) for solar will be extended past this year. "What has happened," said Burt, "is that the IRS stepped in and added a year to the safe harbor provision for wind developers, so rather than being required to have their wind capacity be online and operating at the end of this year to get the full tax credit, that's been extended out for about a year." Burt said extensions of the PTC and ITC possibly could be added to a future stimulus package; he noted that in the previous package, politicians had introduced the extensions, but those provisions did not make it into the final bill.

South America & Mexico
Burt said the majority of high-probability projects in this region were in Mexico and Brazil. Brazil's power purchase auctions for renewable generation were delayed due to the pandemic. Chile is doing away with coal, which will be replaced by renewables and other forms of generation.

Europe
Burt said that there is a fairly sizable amount of natural gas-fired capacity moving forward in Europe, but when compared with renewables, particularly wind, it is smaller. Burt said parts of Europe were planning to obtain 80% of power generation from renewables by 2050, resulting in substantial renewable development, particularly for offshore wind where available.

South Asia
South Asia has traditionally been a very coal-reliant market, but this is dissipating somewhat, thanks to the addition of solar and small hydro capacity, especially in India. "But they're still heavily dependent and reliant on coal," said Burt, "and I don't see that in the near term going away." Construction of transmission infrastructure for new power sources is challenged in the region, regardless of the fuel source, Burt said. "It's a region where demand for electricity isn't the problem. There's just a lot of other challenges, whether it's financial, whether it's environmental regulations (or) infrastructure constraints that just keep things at a slow pace in terms of moving forward."

China
China is seeing a massive buildout in solar, wind and hydro capacity. Burt said, "They certainly have the technology and equipment to support wind and solar projects. A lot of the wind is moving to the offshore wind developments as opposed to onshore wind developments. Solar has actually slowed down a little bit in China." Burt said he expected coal-fired development to remain in the country for some time. "As far as gas, it's the matter of not having the availability of natural gas; a lot of that's dependent on LNG [liquefied natural gas], and I think we'll see that gain more traction as we move down the road."

Southeast Asia
This region is heavy in grassroot project development, and the region remains highly reliant on coal. When questioned about this, Burt said, "It's because of the availability of the fuel itself at an affordable price, so it just makes sense. Every country in the region continues to set forth plans to move more away from coal-fired generation ... but they have a very high availability of coal at an affordable price, so it makes sense to use coal as well."

Conclusion
Burt said in general, he expected energy storage projects, including pumped storage hydropower capacity, to gain traction throughout the world, especially as renewables continue to be developed with such strength, and that there was a bright outlook for distributed energy and microgrid projects. While the COVID-19 pandemic has had an impact on the industry, Burt said he expects things to get back to near normal in the future. Globally, wind and solar are the leading forms of renewable energy, but there is potential for other sources. Despite the shift toward renewables, Burt said he doesn't see coal and nuclear generation going away anytime soon. "We're just moving at a steady step away from those."

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.