Despite the huge drive towards renewables, traditional power sources will continue to play a significant part in the global energy mix.
Contrary to perception coal is far from dead, with coal power plants still supplying 39% of the world’s power in 20151.
Although China is taking action to limit coal imports and close small and inefficient mines, new modernised mines and coal-fired power stations are still being built. The government is targeting output of 3.9bn tonnes of coal in 2020, up from 3.75bn tonnes in 2015, although it has also set targets to cut coal overcapacity by half a billion tonnes over the next few years.
In Western nations low prices and increasing carbon taxes have made it uneconomical to run coal-fired plants. For instance the UK wants to eradicate coal power completely by 2025, while the EU recently announced it would bar coal-fired plants from access to ‘capacity mechanisms’ that guarantee back-up power reserves.
Natural gas remains a good source of energy for economic, operational and environmental reasons, and as such will continue to increase its share of the global energy mix, growing at 2% per year until 20201. The fact that it is a low-risk, lower carbon alternative to other fossil fuels – plus the fact that gas plants can be built relatively quickly – means gas is an attractive choice for new power generating plants.
Consumption of natural gas worldwide is projected to increase from 120 tcf (trillion cubic feet) in 2012 to 203 tcf in 20402, while natural gas consumption in the electric power sector is forecast to increase by 2.2% a year until 2040.
The industrial and electric power sectors together account for 73% of the total increase in world natural gas consumption, and will account for 74% of total natural gas consumption through to 2040.
Despite the fallout from the 2011 Fukushima nuclear disaster in Japan – Germany is shutting down all its nuclear power stations by 2022 in response – the global industry continues to grow.
For instance, mainland China has 21 nuclear power reactors under construction and plans to double its nuclear capacity3 by 2020-2021. The country has become largely self-sufficient in reactor design and construction, as well as in other aspects of the fuel cycle.
Saudi Arabia announced earlier this year that it would also be making a “significant” investment in nuclear energy. It said it was in the early stages of feasibility and design proposals for the country’s first commercial nuclear power stations with capacity of 2.8GW.
In the UK, EDF Energy is planning to build the country’s first new nuclear power station for a generation at Hinkley Point, while France is building a new nuclear plant at Flamanville with pioneering EPR technology which is designed to be safer than for any other nuclear facility ever built. However, this new technology has been beset by cost overruns and delays to construction.
1 International Energy Agency
2 US Energy Information Administration: International Energy Outlook 2016
3 World Nuclear Association
Some of our recent deals
Clearwater International advises Greenray Energy Solutions Ltd on its growth focussed refinancing
Clearwater International has advised Greenray Energy Solutions Ltd (Greenray), a provider of after-market servicing to the industrial gas turbine and steam turbine market, on a major refinancing, with funding provided by HSBC. Founded in 1981, Greenray supplies parts, maintenance services and technical support to turbine machinery owners and operators in over 30 countries worldwide. Offering 24/7 support with guaranteed response times ensures clients can rely on the dedication and performance Greenray provide, in what can be frequently challenging environments. Read more about this deal.
Via Venture Partners invest in Q-Star Energy
ATP’s investment fund – Via Venture Partners – has invested in Q-Star Energy via the holding company All NRG, which also consists of VB Enterprise and Apro Wind. The new combined group is one of Denmark’s largest companies within oil, gas and wind turbine installations and related services sector. With approximately 1,000 employees and a turnover of more than €70m, All NRG is a key player in the market which provides service to energy companies like Vestas, DONG, Maersk and Siemens. Read more about this transaction.