The lowering of the forecast is primarily due to restraints on new coal-fired power plant construction in Europe and the U.S. due to concerns about global warming. In April it was estimated that expenditures of $2.5 trillion would be made for new plants. It is now estimated that expenditures for new plants will be only $1.5 trillion, but that there will be substantial investment in upgrading existing plants to meet environmental and efficiency goals.
Small coal-fired plants in the U.S., which would have been retired and replaced by new plants, will now be upgraded to meet environmental regulations and improve efficiency. A plant with 30 percent conversion efficiency operating 6000 hours per year can greatly improve generation with a slightly higher efficiency and longer yearly campaign.
China will add 350,000 MW during the period, accounting for more than half the total additions. Europe will not increase generating capacity, but will replace most of its inventory of plants with new super critical plants. Therefore, its investment in coal firing will be high. In fact, a significant percentage of the 160,000 MW of retired units in the next 13 years will be in Europe.
India will be the second leading country in terms of coal-fired generating additions. It will add more than 100,000 MW of coal-fired capacity by 2020.
There are a number of important variables which potentially will change the forecast again. However, most of these variables are likely to result in upward rather than downward changes in the forecast. One possibility is that the average citizen will not deem the global warming threat as severe enough to warrant doubling electricity rates.
There are some unique new ways to make coal plants green including CO2 sequestration, by-product HCl production, co-firing of biomass and use of waste heat for ethanol production which could make coal generation more popular.
The fact that oil prices soared above $90/barrel and the reality that the major energy resources for the U.S., China, and India are coal means that for these and many other countries, coal remains the most cost effective option for power generation.
McIlvaine also forecasts the costs and markets for wind, solar and other renewable forms of power. While there are promising niches for each of these technologies, there is no likelihood that any of these technologies will compete with the big baseload requirements.
Nuclear power remains a viable alternative. However, due to the rapidly growing electricity demand, the world will need more coal and nuclear power as well as contributions from the renewable sector. It should be noted that even though China will have twice the coal-fired capacity of the U.S. in 2020, it will only have half the capacity per capita.