In light of recent disruptions in the sector, as well as sharply rising tariffs, electricity remains a hot topic in South Africa. There is an especially heated debate currently under way about what would be the lowest-cost generation mix, particularly in light of the country’s weaker demand-growth trajectory, as well as its climate commitments.
As South Africa mulls over its options, a new report by the International Energy Agency (IEA), titled ‘World Energy Investment 2016’, offers useful insight into the global trends in power-related investment. It shows that global electricity-sector investment rose 4% to a record $682-billion in 2015, with power generation accounting for over 60%, or $420-billion, of total electricity investment.
It also highlights that investment in renewables-based generating capacity accounted for more than two-thirds of power generation and that, for the first time, the renewables- based capacity added generated more than enough electricity to cover global electricity demand growth in the year.
Of the renewables investment, wind power comprised the largest share of total investment in 2015, at 37%, followed by solar PV at 34%. Hydropower accounted for over 20%, while other sources (bioenergy, solar thermal electricity, geothermal) made up nearly 10%.
The report states that an analysis of electricity investments indicates a “major shift” in investment towards low-carbon sources of generation. “At $288-billion in 2015, or over 40% of the total, renewables are firmly established as the largest source of power investment,” the authors state.
By contrast, fossil-fuel generation investment fell 8% to $111-billion last year, the lowest level in over five years, owing to fewer gas-fired capacity additions. “While gas power expanded in the US, weak fundamentals and insufficient market design in Europe and underdeveloped infrastructure in developing countries have constrained investment globally.”
Interestingly, the report also notes that nuclear capacity additions, which rose to over 10 GW, reached their highest level in over two decades, representing investment of $21-billion. At 8 GW, China accounted for most of the additions in 2015, as well as most of the over 65 GW in construction globally at the end of the year.
“Nuclear power represents a major component of the [Chinese] government’s strategy in building a low-carbon energy system, benefiting from a preferential regulated tariff. During 2016 through July, 3.9 GW more nuclear capacity came on line; another 23 GW is under construction.”
Russia, meanwhile, added one new plant, with a capacity of 0.9 GW, in 2015. In addition, Russia’s draft energy strategy envisions an increase in the share of nuclear power in total generation from 17% in 2015 to between 19% and 21% in 2035.
In the US, the first new reactor in two decades was connected to the grid in 2016. However, while around 5 GW remain under construction, all in southeast states with regulated, single-buyer markets, six reactors with a combined capacity of over 5.7 GW are due to close during the period 2017 to 2019.
Electricity networks investment also grew to over $260-billion in 2015, while investment in electricity storage worldwide in 2015 totalled over $10-billion, compared with an average of $8.5-billion between 2010 and 2014.
Also worth highlighting is the fact that there was $1-billion worth of grid-scale battery investment during the year. “Grid-scale battery investment . . . remains relatively small, at only 0.4% of networks’ spending, but has grown tenfold since 2010.”