Water Deregulation Report 2008

Water Deregulation Report 2008 – Historical NRG Expert Energy Data Series

Although the absolute figure looks large, the water and waste sector lags sadly behind other the infrastructure sectors in the private investment it receives. By the end of 2006 526 PSP projects worth a cumulative total of $53 billion had been closed in the water and waste sector in developing countries and a further amount in developed countries. This amounted to only 5% of the cumulative global PSP investment total of $1,092 billion between 1990 and 2006. This also included telecommunications (49%), energy (29%) and transport (16%). East Asia and the Pacific region received a total of $25.4 billion, Latin America $22.1 billion, Europe and Central Asia $4.5 billion. Between them Asia Pacific and Latin America received 90% of the entire expenditure in the water and waste sector from 1990 to 2006.

The investment has been fairly uniform over the years with three peaks when very large projects were carried out. In most years between $1 – 2 billion has been spent except for 1993 when expenditure reached $6.6 billion, 1997 when it was $10.2 billion, 1999 when it was $6.5 billion and in 2000 it reached $8.6 billion. In 1993 most of the investment was in Argentina and Malaysia, in 1997 in the Philippines, in 1999 in Chile and in 2000 in Malaysia, Romania and several other countries receiving smaller amounts.

There have also been increases in the number of reversals, especially in Latin America and Africa. 53 PPI projects have been cancelled or were in distress,totalling $16.4 billion by the end of 2006. 53% of this investment ($8,687 million)

was cancelled or in distress in Latin America and 47% ($7,724 million) in Asia Pacific. The cancellations have not all been one sided, they have been instigated either by governments, by popular opposition or by the concessionaires. There is anescalating degree of opposition, mainly regarding privatisation in developing

countries. However, there has also been criticism of private participation in the developed countries, with several notable examples.

Nuclear Power from the NRG Expert Data History Series 2009

In 1965, ten years after Britain commissioned the world’s first commercial nuclear power station at Calder Hall in 1956, global consumption of nuclear energy reached six million tonnes oil equivalent (Mtoe), amounting to 0.15% of the world’s total energy consumption from all sources. This rose steadily to 637 Mtoe in 2005, 6.0% of total consumption. The growth of nuclear power production was exponential in the first ten years after its commercial introduction in 1956, as would be expected for a new energy source. It then slowed down perogressively to 10.9% a year by 1990, and has continued downwards to 1.8% a year.

Nuclear capacity has been operated at much high load factors than thermal or hydro plants, averaging around 80% today. More than one quarter of the world’s reactors have load factors of more than 90%, and two thirds do better than 75%, compared with about a quarter of them in 1990. Some of these figures suggest near-maximum utilisation, given that most reactors have to shut down every 18-24 months for fuel change and routine maintenance.

The first nuclear reactors to be shut down were in the US in 1967 with two more in closing in 1968. In total 118 reactors in 83 stations totalling 38,165 MW capacity has been shut down. Further closures are in the pipeline, either because plants have reached the end of their design lives, they are judged to be safety risks or because political decisions have been taken to abandon nuclear power. The first nuclear reactors to be shut down were in the US, when the CVTR station was closed in 1967, with Elk River and Bonus closing in 1968. Further closures are in the pipeline, either because plants have reached the end of their design lives, they are judged to be safety risks or because political decisions have been taken to abandon nuclear power.

From the Nuclear Power from the NRG Expert Data History Series 2009
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Gas Deregulation Report Global 2002 From the NRG Expert Historical Data Series

The gas sector differs from the electricity sector in that not every country produces or uses gas, natural or manufactured, whereas every country generates and uses electricity. The transport of natural gas requires enormous investment with pipelines covering great distances, sometimes thousands of kilometers, or conversion plants and shipping for liquified natural gas (LNG). 21.7% of gas produced in 2000 was traded internationally, a ratio which is consistent
with the industries manufacturing products in the energy sector.

This report is concerned with the 73 countries which are significant producers or significant consumers of natural gas. 43 of these countries produce natural ags and 66 consume it. 7 of the producing countries are not significant consumers. The natural gas industry is relatively young compared with the other energy industries, coal, electricity, oil or manufactured gas. There are countries covered in this report which are significant producers but are only beginning to consume gas themselves. A few small consumers rely on shipped LNG requiring no high pressure transmission pipeline systems but only low pressure distribution pipes.

There is wide variation in the uses of natural gas and this has a bearing on the opening of markets. There is no point setting up a mechanism to gice free choice to domestic users in a market which hardly has any, where usage is entirely industrial or for power generation.

The liberalisation of the energy markets involves three basic processes; privatisation, unbundling and market deregulation. These may or may not all be applied in one country, depending on the model of liberalisation which is adopted. Privatisation is not the same as deregulation and either of them can be carried out independently.

An industrialised country with a mature infrastructure and strong industrial off-take has different needs from a developing country. Unlike electricity, natural gas is not necessarily available locally. With the switch from town gas, manufactured from coal and distributed locally, to natural gas piped over long distances from the wellheads, the gas industry followed a pattern more similar to the electricity sector. Large-scale transport became a very significant element of the industry. Four large companies supply nearly half the gas used in Western Europe and about half of Europe’s gas is transported through the pipelines of the leading German gas company, Ruhrgas. Liberalisation of the industry has been slower and is currently less advanced than for electricity, although comparable principles of privatisation, unbundling and market opening are being applied.

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Solar PV 2009

Solar PV 2009 – Historical Data Seies. Global investment in renewables grew very fast from $35 billion in 2004 to $148 billion in 2007, averaging over 60% growth a year, but slowed down with only 5% growth in 2008 to $155 billion. $41.3 billion was by company investment through VC/PE (venture capital/private equity), equity in the public markets, corporate of government R&D. $96.6 billion was through asset finance. Renewables were undoubtedly helped by sky high oil prices during much of 2008 but that advantage withered, although oil prices are now rising again.

In 2008 wind was the major target for investment, receiving $52.9 billion and solar the second highest with $31.1 billion, but solar had much the highest cagr with 70% from 2006 to 2008, compared with geothermal’s 57% and wind’s 44%. However, it is the quarterly analysis which tells the story of the effect of the financial crisis. After almost uninterrupted growth from Q1/2004 to Q4/2007, investment started to decline in Q3/2008 and nose-dived in Q4/2008 with $23.9 billion compared with $41.2 billion in Q4/07, and only $13.9 billion in Q1/2009 compared with $28.3 billion in Q1/2008.

Governments have committed some $180 billion to the development of sustainable energy to be invested between 2009 and 2013. Contributions will peak in 2010 and 2011.

The United States and China have both committed by far the largest stimulus packages to sustainable, energy each worth nearly $70 billion from 2009 to 2013. India’s $13.7 billion two-part stimulus programme includes no dedicated funding for renewable energy or energy efficiency measures. Japan follows with $11.7 billion; the long-awaited fourth stimulus package was finally announced in April 2009. South Korea’s official announcement its “Green New Deal” came in January 2009 and is designed to stimulate job creation through green growth. It has been acclaimed as the greenest stimulus package from any major world economy, given that some 80% of the overall $38 billion is dedicated to environmental measures. However, under scrutiny only $7.7 billion will be devoted to “clean energy”, and again, energy efficiency is the key beneficiary. Germany’s two packages, amounting to €80 billion, initially only include two clean energy measures. There is a risk attached to the fiscal stimulus which should be factored in. Feed-in tariffs and fiscal stimulus

programmes depend on governments’ capacity to sell debt, usually in the form of bonds. It has always been assumed that the industrialised countries have an unlimited ability to sell sovereign debt but this is now open to question, as governments load one bond auction after another onto the international debt market, principally China. Already the US, Germany and Britain have experienced failed auctions and Reuters reports that the US government may face difficulty financing the spending to stimulate the economy. Several countries have suffered down-ratings in their credit ratings and others, including the United Kingdom, have been put on negative notice. At the start of the fiscal stimulus packages in 2008/09 in the UK, a former Chancellor of the Exchequer, Lord Howe, who is one of the few people in the world with actual experience of managing a financial collapse (the UK in 1979), warned that the final determinant would not be the government’s desire to pump money into the economy, but its ability to raise the funds in the markets to finance it. All the indicators are that many countries will have to make big savings in their expenditure, which may be an added constraint. Global production of solar photovoltaic cells rose from 47 MW in 1990 to 4,117 MW in 2007 and 6,950 MW in 2008. After several years of supply side pressure supply now exceeds demand, reducing prices and lead times.

In 2005 Japan accounts for 47% of production and five companies dominated the Japanese market. Sharp was the world leader with capacity of 500 MW and had been for nine years, the next largest being Kyocera with 240 MW.

From the NRG Expert Historical Data Series

The Hydrogen Economy in 2007

Continuing our look at historical data, this is a write-up of what the hydrogen economy looked like in 2007.

The energy sectors in both the United States and Europe are on the cusp of immense change. New
technologies are being developed and opportunities for entrepreneurial ideas and innovative approaches
are ripening at a time when capital-intensive, aging energy infrastructure is in need of improvement.
The world currently exists in a carbon economy. 80% of the primary energy which drives the world is
derived from hydrocarbon fossil fuels; oil 35%, coal 24% and natural gas 21% and 11% is contributed by
renewables, almost all renewable biomass. In the last two centuries the volume of carbon consumption
has increased exponentially with the world’s industrialisation.

The carbon economy has given great economic benefits to mankind but it is subject to two limitations.
Although new reserves of hydrocarbons and new technologies to exploit them are being discovered all
the time, these resources are not limitless. Secondly, fossil fuels emit greenhouse gasses and other
pollutants when they are burned and these emissions have reached dangerous proportions.
Alternatives to the carbon economy are feasible although wide scale use is some years in the future. A
hydrogen economy is one such option, in which the sustainable energy supply system of the future
features electricity and hydrogen as the dominant energy carriers. Hydrogen will be produced from a
diverse base of primary energy feedstocks, or from water using renewable electricity in the process.
The use of hydrogen would reduce dependence on petroleum and the pollution and greenhouse gas
emissions caused by carbons.

The development of the hydrogen economy will advance on two fronts. The development of another
technology, the fuel cell, is essential to the exploitation of hydrogen; the two are interlinked. It is important
to understand that hydrogen is not a primary energy source like coal and gas; it is an energy carrier, like
electricity. Hydrogen can be converted to energy via traditional combustion methods and through
electrochemical processes in fuel cells. Initially it will be produced using existing energy systems based
on different conventional primary energy sources and carriers. In the longer term renewable energy
sources could become the most important source for the production of hydrogen.

Fuel cells utilise the chemical energy of hydrogen to produce electricity and thermal energy.
From the NRG Expert Historical Data series
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The water and waste market in the United Kingdom – Historical series 2009

This week’s post will take a look at historical analysis, the below data is a look back in our time machine to 2009 and how the market was viewed at the time.

The water and waste sector in the United Kingdom is divided into three main geographical regions. The industry in the largest area, England and Wales is privatised while in the other two regions, Scotland and Northern Ireland the companies are state-owned and operated. Scottish Water Services was created in Scotland on 31st March 2002 as a state-owned corporate entity operating commercially, incorporating the businesses of the three previous Scottish water authorities. In Northern Ireland the service is an executive branch of the Department of Regional Development.
Each of the three areas has separate regulators.

In 1989 the Government passed legislation that revolutionised the management of the water and wastewater sector in England and Wales. The former Regional Water Authorities were privatised and a national economic regulator, the Office for Water Services (Ofwat), was set up to oversee them.
Very few countries have adopted as radical a privatisation model in the water and waste sector as the UK has done in England and Wales. Most countries that adopt a degree of PSP employ variants of the concession and management contract, in which the state or municipality retains ownership of the assets and contract operational management to a private company.
Water and sanitation services in England and Wales are provided by 10 privately-owned regional water and waste companies and 16 privately-owned water only companies. The companies are obligated by license to provide the essential services within their areas.

Ofwat is the economic regulator responsible for ensuring that they carry out their functions properly and are able to finance them and is also required to protect the interests of customers.
Six companies have 61% of the water market and 70% of the waste market, totaling 66% of the combined water and waste market in the UK. These are:

Thames Water (11.9% of water, 15.4% of waste)
United Utilities (11.8% of water, 14.0% of waste)
Severn Trent (12.1% of water, 12.0% of waste)
Scottish Water (10.& of water, 9.8% of waste)
Anglian (7.5% of water, 11.2% of waste)
Yorkshire (7.4% of water, 7.5% of waste)

The water only companies are much smaller and account for 14.9% of the total UK water market.

Regulation is strict and the companies have to meet standards set by three regulatory bodies.

• The Office of Water Services (Ofwat) is responsible for economic regulation.
• The Environment Agency (EA) is responsible for environmental regulation.
• The Drinking Water Inspectorate (DWI) is responsible for drinking water quality standards.

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Natural Gas and the Environment

It is now recognised that natural gas can play a significant role in reducing energy related pollution. It is the cleanest burning of all fossil fuels, producing the lowest level of pollutants.

The single biggest contributor to the greenhouse effect world-wide is carbon dioxide. Natural gas produces less carbon dioxide than any other energy form derived from fossil fuels (including thermal electricity). No carbon dioxide is emitted during the end use of electricity, but a disproportionate amount is released where electricity is generated from fossil fuels.

Carbon monoxide although not a greenhouse gas in a direct way still contributes to the greenhouse effect interfering with the chemical reactions in the atmosphere. Since natural gas produces little carbon dioxide its carbon monoxide – methane effect is negligible.

Acid Rain (which kills trees, soils and lakes) is caused by burning fuels with high sulphur content; natural gas is free of sulphur and makes negligible contribution to the problem.

Methane, the main constituent of natural gas does contribute CO2 to the greenhouse effect. It is therefore, important that methane emissions should be minimised (losses caused during transport and distribution).

However, although the absorptive capacity of a methane molecule (CH4) is 26-32 times larger than that of a CO2 molecule, the lifetime of a CH4 molecule is far shorter than that of a CO2 molecule. Consequently, the ultimate contribution made by a methane molecule to the greenhouse effect is not 26 – 32 times but only 5-10 times larger than that of a CO2 molecule. Of the 540 million tons of CH4 emissions a year only 10% is attributable to gas transport, the biggest sources are to be found in nature itself; marshes, rice paddies and intestinal gases from cows and termites.

There are estimated to be almost twice the natural gas reserves to oil reserves in the world.

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Development of geothermal energy use

Geothermal energy has been used for thousands of years in many civilisations. It reached a high degree of sophistication in the Roman world. Combined with the formidable water engineering experience of the Romans, it was used extensively for heating and thermal baths. Many of these thermal baths are still in existence, and some are even still in use. The world’s first geothermal power plant was built on a site used by the Romans for thermal bathing over two thousand years ago, and before them by the Etruscans, nearly three thousand years ago.

Modern commercial use of geothermal energy started in the early part of the 19th Century. Geothermal fluids were already being exploited for their energy content. A chemical industry was set up in the zone known today as Larderello in Italy to extract boric acid from the hot waters issuing naturally or from shallow boreholes. The boric acid was obtained by evaporating the hot fluids in iron boilers, using wood from nearby forests as fuel. In 1827, Francesco Larderel, founder of this industry, developed a system for using the heat of the boric fluids in the evaporation process, rather than burning wood from the rapidly depleting forests. Exploitation of the natural steam for its mechanical energy began at the same time. The geothermal steam was used to raise liquids in primitive gas lifts and later in reciprocating and centrifugal pumps and winches, which were used in drilling activity or in the local boric acid industry. The first successful commercial project for generating electricity from geothermal steam was completed in Larderello, Italy in 1904. A 250 kW geothermal power plant began operating there in 1913, and commercial delivery of geothermal electricity to nearby cities started in 1914. By 1942, installed geo-electric capacity had reached 127 MW. The first commercial geothermal power plant using a liquid dominated, hot water reservoir started operation in 1958 in Wairakei, New Zealand. Geothermal electricity production in the United States started in 1960. Today, the US leads the world in geothermal power with over 3 GW of installed capacity.

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The Origins of Hydro Electric Power

The Depression, floods and drastic droughts in the United States of the1930s inspired a ’big dam’ period that included construction of the Grand Coulee Dam on the Colombia River in Washington, the Central Valley Project in California and the Hoover Dam on the Colorado River. The Grand Coulee Dam remains the largest hydro facility in the US, with capacity of 6,480 MW and plans to increase output to 10,800 MW.

In 1933, Franklin Roosevelt signed the Tennessee Valley Authority Act (TVA), which was designed to create a series of dams. The Act aimed to improve navigation on the Tennessee River, provide flood control, plan reforestation and improve marginal farm lands by creating government nitrate and phosphorus manufacturing facilities at Muscle Shoals.

Early hydroelectric power plants were much more reliable and efficient than the fossil fuel fired plants of the day. This resulted in a proliferation of small to medium sized hydroelectric generating stations wherever there was an adequate supply of moving water and a need for electricity. As electricity demand soared in the middle years of the 20th century, and the efficiency of coal and oil fuelled power plants increased, small hydro plants fell out of favour. Most new hydroelectric development was focused on huge ‘mega-projects’. Most of these power plants involved large dams that flooded vast areas of land to provide water storage and therefore a constant supply of electricity.

In recent years, the environmental impacts of such large hydro projects are being questioned. It is becoming increasingly difficult for developers to build new dams because of opposition from environmentalists and people living on the land to be flooded.

http://www.nrgexpert.com/energy-market-research/global-hydropower-report/

Hydroelectric Impact on the Environment – A case study

Idukki hydroelectric project, Western Ghats, India

As a result of development, an environmental disaster occurred with the Idukki hydroelectric project in the Western Ghats of the Indian Peninsula at an altitude of 695 metres above sea level. The reservoir is formed by three dams, an arch dam across the Periyar River, a concrete dam across the Cheruthony River and a masonry dam at Kulamavu, upstream of Idukki. The reservoir covers nearly 60 sq. km and has a catchment of 649 sq. km. Water from the reservoir is channelled down to the underground power house at Moolamattom through an underground tunnel, yielding an average gross head of 2,182 feet (665 metres). The project has an installed capacity of 780 MW with firm power potential of 230 MW at 100% load factor.

The project involved diversion of the waters of the upper part of the Periyar River into the Muvattupuzha River. This caused severe drought in areas downstream of the river in summer and reduced fresh water availability for industries located near the mouth of the river. The fresh water regime of Periyar River was in dynamic equilibrium with the estuarine tidal cycle. The diversion of water upset this equilibrium and this led to saline water intrusion into areas where fresh water was available previously.

After impoundment of the dam, hundreds of tremors had been recorded in the Idukki area, most of which were classified as reservoir induced. So far, these tremors have not caused any serious damage. However, valley slumpings and slope failures became more common in the area following construction of the dam. A major reason for this was the destruction of the forests during and after the construction. The project opened up the inner forests of Idukki district. This accelerated migration to the area, with the work force of around 6,000 itself acting as the nucleus.

The project submerged about 6,475 hectares of evergreen and deciduous tropical forests. The construction of roads, felling of trees and other encroachments led to loss of about 2,700 hectares of forest and hastened degradation of the remaining forests. Much of the degradation of forests that has happened over the years is irreversible. Owing to loss of habitat, some reptilian species like the rare terrapin have become extinct or sparse.

The reservoir attracted some species of birds, but the number of some other species went down. During the 1975-1983 period (the first phase of the Idukki project was commissioned in 1976), dense vegetation cover in the surrounding areas decreased by 56% and sparse vegetation cover by 37%. The area under agriculture increased by 126%, indicating the extent of encroachment that took place over the years.

Though the area of forests enfolded by the reservoir was declared a wildlife sanctuary as a mitigating measure, it did not help much in conserving the larger herbivores. It has even been recommended that the sanctuary be denotified, as the area is not sufficient for meaningful conservation of wildlife.