Mini nuclear power is no joke

Global Electricity Demand Surge strains power markets, fuels price volatility, and boosts coal and gas generation as renewables lag, driving emissions, according to the IEA, with grids and clean energy investment crucial through 2024.

Key Points

A surge in power use that strained supply, raised prices, and drove power-sector CO2 emissions to record highs.

✅ 6% demand growth in 2021; largest absolute rise ever

✅ Coal up 9%; gas +2%; renewables +6% could not meet demand

✅ Prices doubled vs 2020; volatility hit EU, China, India

Global electricity demand surged above pre-pandemic levels in 2021, creating strains in major markets, pushing prices to unprecedented levels and driving the power sector’s emissions to a record high. Electricity is central to modern life and clean electricity is pivotal to energy transitions, but in the absence of faster structural change in the sector, rising demand over the next three years could result in additional market volatility and continued high emissions, according an IEA report released today.

Driven by the rapid economic rebound, and more extreme weather conditions than in 2020, including a colder than average winter, last year’s 6% rise in global electricity demand was the largest in percentage terms since 2010 when the world was recovering from the global financial crisis. In absolute terms, last year’s increase of over 1 500 terawatt-hours was the largest ever, according to the January 2022 edition of the IEA’s semi-annual Electricity Market Report.

The steep increase in demand outstripped the ability of sources of electricity supply to keep pace in some major markets, with shortages of natural gas and coal leading to volatile prices, demand destruction and negative effects on power generators, retailers and end users, notably in China, Europe and India. Around half of last year’s global growth in electricity demand took place in China, where demand grew by an estimated 10%, highlighting that Asia is set to use half of global electricity by 2025 according to the IEA. China and India suffered from power cuts at certain points in the second half of the year because of coal shortages.

“Sharp spikes in electricity prices in recent times have been causing hardship for many households and businesses around the world and risk becoming a driver of social and political tensions,” said IEA Executive Director Fatih Birol. “Policy makers should be taking action now to soften the impacts on the most vulnerable and to address the underlying causes. Higher investment in low-carbon energy technologies including renewables, energy efficiency and nuclear power – alongside an expansion of robust and smart electricity grids – can help us get out of today’s difficulties.”

The IEA’s price index for major wholesale electricity markets almost doubled compared with 2020 and was up 64% from the 2016-2020 average. In Europe, average wholesale electricity prices in the fourth quarter of 2021 were more than four times their 2015-2020 average, and wind and solar generated more electricity than gas in the EU during the year.  Besides Europe, there were also sharp price increases in Japan and India, while they were more moderate in the United States where gas supplies were less perturbed.

Electricity produced from renewable sources grew by 6% in 2021, but it was not enough to keep up with galloping demand. Coal-fired generation grew by 9%, with soaring electricity and coal use serving more than half of the increase in demand and reaching a new all-time peak as high natural gas prices led to gas-to-coal switching. Gas-fired generation grew by 2%, while nuclear increased by 3.5%, almost reaching its 2019 levels. In total, carbon dioxide (CO2) emissions from power generation rose by 7%, also reaching a record high, after having declined the two previous years.

“Emissions from electricity need to decline by 55% by 2030 to meet our Net Zero Emissions by 2050 Scenario, but in the absence of major policy action from governments, those emissions are set to remain around the same level for the next three years,” said Dr Birol. “Not only does this highlight how far off track we currently are from a pathway to net zero emissions by 2050, but it also underscores the massive changes needed for the electricity sector to fulfil its critical role in decarbonising the broader energy system.”

For 2022-2024, the report anticipates electricity demand growing 2.7% a year on average, although the Covid-19 pandemic and high energy prices bring some uncertainty to this outlook. Renewables are set to grow by 8% per year on average, and low-emissions sources are expected to serve more than 90% of net demand growth during this period. We expect nuclear-based generation to grow by 1% annually during the same period.

As a consequence of slowing electricity demand growth and significant renewables additions, fossil fuel-based generation is expected to stagnate in the coming years, and renewables are set to surpass coal by 2025 with coal-fired generation falling slightly as phase-outs and declining competitiveness in the United States and Europe are balanced by growth in markets like China, where electricity demand trends remain a puzzle in recent analyses, and India. Gas-fired generation is seen growing by around 1% a year.

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Ontario Electricity Demand Drop During COVID-19 reflects a 1,000-2,000 MW decline as IESO balances the grid, shifts peak demand later, throttles generators and baseload nuclear, and manages exports amid changing load curves.

Key Points

An about 10% reduction in Ontario's load, shifting peaks and requiring IESO grid balancing measures.

✅ Demand down 1,000-2,000 MW; roughly 10% below normal.

✅ Peak shifts later in morning as home use rises.

✅ IESO throttles generators; baseload nuclear stays online.

It’s as if the COVID-19 epidemic had tripped a circuit breaker, shutting off all power to a city the size of Ottawa.

Virus-induced restrictions that have shut down large swaths of normal commercial life across Canada has led to a noticeable drop in demand for power in Ontario and reflect a global demand dip according to reports, insiders said on Friday.

Terry Young, vice-president with the Independent Electricity System Operator, said planning was underway for further declines in usage and for whether Ontario will embrace more clean power in the long term, given the delicate balance that needs to be maintained between supply and demand.

“We’re now seeing demand that is running about 1,000 to 2,000 megawatts less than we would normally see,” Young said. “You’re essentially seeing a city the size of Ottawa drop off demand during the day.”

At the high end, a 2,000 megawatt reduction would be close to the equivalent peak demand of Ottawa and London, Ont., combined.

The decline, in the order of 10 per cent from the 17,000 to 18,000 megawatts of usage that might normally be expected and similar to the UK’s 10% drop reported during lockdowns, began last week, Young said. The downward trend became more noticeable as governments and health authorities ordered non-essential businesses to close and people to stay home. However, residential and hospital usage has climbed.

Experts say frequent hand-washing and staying away from others is the most effective way to curb the spread of the highly contagious coronavirus, which poses a special risk to older people and those with underlying health conditions. As a result, factories and other big users have reduced production or closed entirely.

Because electricity cannot be stored, generators need to throttle back their output as domestic demand shrinks and exports to places such as the United States, including New York City, which is also being hit hard by the coronavirus, fall.

“We’re watching this carefully,” Young said. “We’re able to manage this drop, but it’s something we obviously have to keep watching…and making sure we’re not over-generating electricity.”

Turning off generation, especially for nuclear plants, is an intensive process, as are restarts and would likely happen only if the downward demand trend intensifies significantly, amid concerns over Ontario’s electricity getting dirtier if baseload is displaced. However, one of North America’s largest generators, Bruce Power near Kincardine, Ont., said it had a large degree of flexibility to scale down or up.

“We have the ability to provide one-third of our output as a dynamic response, which is unique to our facility,” said James Scongack, an executive vice-president with Bruce Power. “We developed this coming out of the 2008 downturn and it’s been a critical system asset for the last decade.”

“We don’t see there being a scenario where our baseload will not be needed,” he said, even as some warn Ontario may be short of electricity in the coming years.

The province’s publicly owned Ontario Power Generation said it was also in conversations with the system operator, which provides direction to generators, and is often cited in the Ontario election discussion.

One clear shift in normal work-day usage with so many people staying at home has been the change in demand patterns. Typically, Young said, there’s a peak from about 7 a.m. to 8 a.m. as people wake and get ready to go to work or school. The peak is now occurring later in the morning, Young said.

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Electricity Investment Surpasses Oil and Gas 2016, driven by renewable energy, power grids, and energy efficiency, as IEA reports lower oil and gas spending, rising solar and wind capacity, and declining coal power plant approvals.

Key Points

A 2016 milestone where electricity topped global energy investment, led by renewables, grids, and efficiency, per the IEA.

✅ IEA: electricity investment hit $718b; oil and gas fell to $650b.

✅ Renewables led with $297b; solar and wind unit costs declined.

✅ Coal plant approvals plunged; networks and storage spending rose.

Investments in electricity surpassed those in oil and gas for the first time ever in 2016 on a spending splurge on renewable energy and power grids as the fall in crude prices led to deep cuts, the International Energy Agency (IEA) said.

Total energy investment fell for the second straight year by 12 per cent to US$1.7 trillion compared with 2015, the IEA said. Oil and gas investments plunged 26 per cent to US$650 billion, down by over a quarter in 2016, and electricity generation slipped 5 per cent.

"This decline (in energy investment) is attributed to two reasons," IEA chief economist Laszlo Varro told journalists.

"The reaction of the oil and gas industry to the prolonged period of low oil prices which was a period of harsh investment cuts; and technological progress which is reducing investment costs in both renewable power and in oil and gas," he said.

Oil and gas investment is expected to rebound modestly by 3 per cent in 2017, driven by a 53 per cent upswing in U.S. shale, and spending in Russia and the Middle East, the IEA said in a report.

"The rapid ramp up of U.S. shale activities has triggered an increase of U.S. shale costs of 16 per cent in 2017 after having almost halved from 2014-16," the report said.

The global electricity sector, however, was the largest recipient of energy investment in 2016 for the first time ever, overtaking oil, gas and coal combined, the report said.

"Robust investments in renewable energy and increased spending in electricity networks, which supports the outlook that low-emissions sources will cover most demand growth, made electricity the biggest area of capital investments," Varro said.

Electricity investment worldwide was US$718 billion, lifted by higher spending in power grids which offset the fall in power generation investments.

"Investment in new renewables-based power capacity, at US$297 billion, remained the largest area of electricity spending, despite falling back by 3 per cent as clean energy investment in developing nations slipped, the report said."

Although renewables investments was 3 per cent lower than five years ago, capacity additions were 50 per cent higher and expected output from this capacity about 35 per cent higher, thanks to the fall in unit costs and technology improvements in solar PV and wind generation, the IEA said.

COAL INVESTMENT IS COMING TO AN END

Investments in coal-fired electricity plants fell sharply. Sanctioning of new coal power plants fell to the lowest level in nearly 15 years, reflecting concerns about local air pollution, and emergence of overcapacity and competition from renewables, with renewables poised to eclipse coal in global power generation, notably in China. Coal investments, however, grew in India.

"Coal investment is coming to an end. At the very least, it is coming to a pause," Varro said.

The IEA report said energy efficiency investments continued to expand in 2016, reaching US$231 billion, with most of it going to the building sector globally.

Electric vehicles sales rose 38 per cent in 2016 to 750,000 vehicles at $6 billion, and represented 10 per cent of all transport efficiency spending. Some US$6 billion was spent globally on electronic vehicle charging stations, the IEA said.

Spending on electricity networks and storage continued the steady rise of the past five years, as surging electricity demand puts power systems under strain, reaching an all-time high of US$277 billion in 2016, with 30 per cent of the expansion driven by China’s spending in its distribution system, the report said.

China led the world in energy investments with 21 per cent of global total share, the report said, driven by low-carbon electricity supply and networks projects.

Although oil and gas investments fell in the United States in 2016, its total energy investments rose 16 per cent, even as Americans use less electricity in recent years, on the back of spending in renewables projects, the IEA report said.

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New Zealand Energy Transition will electrify transport and industry with renewables, grid-scale solar, wind farms, geothermal, batteries, demand response, pumped hydro, and transmission upgrades to manage dry-year risk and winter peak loads.

Key Points

A shift to renewables and smart demand to decarbonise transport and industry while ensuring reliable, affordable power.

✅ Electrifies transport and industrial heat with renewables

✅ Uses demand response, batteries, and pumped hydro for resilience

✅ Targets 99%+ renewable supply, managing dry-year and peak loads

As fossil fuels are phased out over the coming decades, the Climate Change Commission (CCC) suggests electricity will take up much of the slack, aligning with the vision of a sustainable electric planet powering our vehicle fleet and replacing coal and gas in industrial processes.

But can the electricity system really provide for this increased load where and when it is needed? The answer is “yes”, with some caveats.

Our research examines climate change impacts on the New Zealand energy system. It shows we’ll need to pay close attention to demand as well as supply. And we’ll have to factor in the impacts of climate change when we plan for growth in the energy sector.

Demand for electricity to grow
While electricity use has not increased in NZ in the past decade, many agencies project steeply rising demand in coming years. This is partly due to both increasing population and gross domestic product, but mostly due to the anticipated electrification of transport and industry, which could result in a doubling of demand by mid-century.

It’s hard to get a sense of the scale of the new generation required, but if wind was the sole technology employed to meet demand by 2050, between 10 and 60 new wind farms would be needed nationwide.

Of course, we won’t only build wind farms, as renewables are coming on strong and grid-scale solar, rooftop solar, new geothermal, some new small hydro plant and possibly tidal and wave power will all have a part to play.

Managing the demand
As well as providing more electricity supply, demand management and batteries will also be important. Our modelling shows peak demand (which usually occurs when everyone turns on their heaters and ovens at 6pm in winter) could be up to 40% higher by 2050 than it is now.

But meeting this daily period of high demand could see expensive plant sitting idle for much of the time (with the last 25% of generation capacity only used about 10% of the time).

This is particularly a problem in a renewable electricity system when the hydro lakes are dry, as hydro is one of the few renewable electricity sources that can be stored during the day (as water behind the dam) and used over the evening peak (by generating with that stored water).

Demand response will therefore be needed. For example, this might involve an industrial plant turning off when there is too much load on the electricity grid.

But by 2050, a significant number of households will also need smart appliances and meters that automatically use cheaper electricity at non-peak times. For example, washing machines and electric car chargers could run automatically at 2am, rather than 6pm when demand is high.

Our modelling shows a well set up demand response system could mitigate dry-year risk (when hydro lakes are low on water) in coming decades, where currently gas and coal generation is often used.

Instead of (or as well as) having demand response and battery systems to combat dry-year risk, a pumped storage system could be built. This is where water is pumped uphill when hydro lake inflows are plentiful, and used to generate electricity during dry periods.

The NZ Battery project is currently considering the potential for this in New Zealand, and debates such as whether we would use Site C's electricity offer relevant lessons.

Almost (but not quite) 100% renewable
Dry-year risk would be greatly reduced and there would be “greater greenhouse gas emissions savings” if the Interim Climate Change Committee’s (ICCC) 2019 recommendation to aim for 99% renewable electricity was adopted, rather than aiming for 100%.

A small amount of gas-peaking plant would therefore be retained. The ICCC said going from 99% to 100% renewable electricity by overbuilding would only avoid a very small amount of carbon emissions, at a very high cost.

Our modelling supports this view. The CCC’s draft advice on the issue also makes the point that, although 100% renewable electricity is the “desired end point”, timing is important to enable a smooth transition.

Despite these views, Energy Minister Megan Woods has said the government will be keeping the target of a 100% renewable electricity sector by 2030.

Impacts of climate change
In future, the electricity system will have to respond to changing climate patterns as well, becoming resilient to climate risks over time.

The National Institute of Water and Atmospheric Research predicts winds will increase in the South Island and decrease in the far north in coming decades.

Inflows to the biggest hydro lakes will get wetter (more rain in their headwaters), and their seasonality will change due to changes in the amount of snow in these catchments.

Our modelling shows the electricity system can adapt to those changing conditions. One good news story (unless you’re a skier) is that warmer temperatures will mean less snow storage at lower elevations, and therefore higher lake inflows in the big hydro catchments in winter, leading to a better match between times of high electricity demand and higher inflows.

The price is right
The modelling also shows the cost of generating electricity is not likely to increase, because the price of building new sources of renewable energy continues to fall globally.

Because the cost of building new renewables is now cheaper than non-renewables (such as coal-fired plants), investing in carbon-free electricity is increasingly compelling, and renewables are more likely to be built to meet new demand in the near term.

While New Zealand’s electricity system can enable the rapid decarbonisation of (at least) our transport and industrial heat sectors, international efforts like cleaning up Canada's electricity underline the need for certainty so the electricity industry can start building to meet demand everywhere.

Bipartisan cooperation at government level will be important to encourage significant investment in generation and transmission projects with long lead times and life expectancies, as analyses of climate policy and grid implications underscore in comparable markets.

Infrastructure and markets are needed to support demand response uptake, as well as certainty around the Tiwai exit in 2024 and whether pumped storage is likely to be built.

Our electricity system can support the rapid decarbonisation needed if New Zealand is to do its fair share globally to tackle climate change.

But sound planning, firm decisions and a supportive and relatively stable regulatory framework are all required before shovels can hit the ground.

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Alberta Electricity Peak Demand surged to 10,638 MW, as AESO reported record summer load from air conditioning, Stampede visitors, and heatwave conditions, with ample generation capacity, stable grid reliability, and conservation urged during 5-7 p.m.

Key Points

It is the record summer power load in Alberta, reaching 10,638 MW, with evening conservation urged by AESO.

✅ Record 10,638 MW at 4 pm; likely to rise this week

✅ Drivers: A/C use, heat, Stampede visitors

✅ AESO reports ample capacity; conserve 5-7 pm

Consumer use hit 10,638 MW, blowing past a previous high of 10,520 MW set on July 9, 2015, said the Alberta Electric System Operator (AESO).

“We hit a new summer peak and it’s likely we’ll hit higher peaks as the week progresses,” said AESO spokeswoman Tara De Weerd.

“We continue to have ample supply, and as Alberta's electricity future trends toward more wind, our generators are very confident there aren’t any issues.”

That new peak was set at 4 p.m. but De Weerd said it was likely to be exceeded later in the day.

Heightened air conditioner use is normally a major driver of such peak electricity consumption, said De Weerd.

She also said Calgary’s big annual bash is also likely playing a role.

“It’s the beginning of Stampede, you have an influx of visitors so you’ll have more people using electricity,” she said.

Alberta’s generation capacity is 16,420 MW, said the AESO, with wind power increasingly outpacing coal in the province today.

There are no plans, she said, for any of the province’s electricity generators to shut down any of their plants for maintenance or other purposes in the near future as demand rises.

The summer peak is considerably smaller than that reached in the depths of Alberta’s winter.

Alberta’s winter peak usage was recorded last year and was 11,458 MW.

Though the province’s capacity isn’t being strained by the summer heat, De Weerd still encouraged consumers to go easy during the peak use time of the day, between 5 and 7 p.m.

“We don’t have to be running all of our appliances at once,” she said.

Alberta exports an insignificant amount of electricity to Montana, B.C. and Saskatchewan, where demand recently set a new record.

The weather forecast calls for temperatures to soar above 30C through the weekend.

In northern Canada, Yukon electricity demand recently hit a record high, underscoring how extreme temperatures can strain systems.

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Texas EV Registration Fee adds a $200 annual charge under Senate Bill 505, offsetting lost gasoline tax revenue to the State Highway Fund, impacting electric vehicle owners at registration and renewals across Texas.

Key Points

A $200 yearly charge on electric vehicles to replace lost gasoline tax revenue and support Texas Highway Fund road work.

✅ $200 due at registration or renewal; $400 upfront on new EVs.

✅ Enacted by Senate Bill 505 to offset lost gasoline tax revenue.

✅ Advocates propose mileage-based fees; limited $2,500 rebates exist.

Plano resident Tony Federico bought his Tesla five years ago in part because he hated spending lots of money on gas, and Supercharger billing changes have also influenced charging expenses. But that financial calculus will change slightly on Sept. 1, when Texas will start charging electric vehicle drivers an additional fee of $200 each year.

“It just seems like it’s arbitrary, with no real logic behind it,” said Federico, 51, who works in information technology. “But I’m going to have to pay it.”

Earlier this year, state lawmakers passed Senate Bill 505, which requires electric vehicle owners to pay the fee when they register a vehicle or renew their registration, even as fights for control over charging continue among utilities, automakers and retailers. It’s being imposed because lawmakers said EV drivers weren’t paying their fair share into a fund that helps cover road construction and repairs across Texas.

The cost will be especially high for those who purchase a new electric vehicle and have to pay two years of registration, or $400, up front.

Texas agencies estimated in a 2020 report that the state lost an average of $200 per year in federal and state gasoline tax dollars when an electric vehicle replaced a gas-fueled one. The agencies called the fee “the most straightforward” remedy.

Gasoline taxes go to the State Highway Fund, which the Texas Department of Transportation calls its “primary funding source.” Electric vehicle drivers don’t pay those taxes, though, because they don’t use gasoline.

Still, EV drivers do use the roads. And while electric vehicles make up a tiny portion of cars in Texas for now, that fraction is expected to increase, raising concerns about state power grids in the years ahead.

Many environmental and consumer advocates agreed with lawmakers that EV drivers should pay into the highway fund but argued over how much, and debates over fairer vehicle taxes are surfacing abroad as well.

Some thought the state should set the fee lower to cover only the lost state tax dollars, rather than both the state and federal money, because federal officials may devise their own scheme. Others argued the state should charge nothing because EVs help reduce greenhouse gas emissions that drive climate change and can offer budget benefits for many owners.

“We urgently need to get more electric vehicles on the road,” said Luke Metzger, executive director of Environment Texas. “Any increased fee could create an additional barrier for Texans, and particularly more moderate- to low-income Texans, to make that transition.”

Tom “Smitty” Smith, the executive director of the Texas Electric Transportation Resources Alliance, advocated for a fee based on how many miles a person drove their electric car, which would better mirror how the gas taxes are assessed.

Texas has a limited incentive that could offset the cost: It offers rebates of up to $2,500 for up to 2,000 new hydrogen fuel cell, electric or hybrid vehicles every two years. Adrian Shelley, Public Citizen’s Texas office director, recommended that the state expand the rebates, noting that state-level EV benefits can be significant.

In the Houston area, dealer Steven Wolf isn’t worried about the fee deterring potential customers from buying the electric Ford F-150 Lightning and Mustang Mach-E vehicles he sells. Electric cars are already more expensive than comparable gasoline-fueled cars, and charging networks compete for drivers, he said.

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