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You are here: Home / Data and maps / Indicators / Total electricity consumption - outlook from IEA

Total electricity consumption - outlook from IEA

This content has been archived on 12 Nov 2013, reason: Content not regularly updated
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Contents
 

Assessment versions

Published (reviewed and quality assured)
  • No published assessments

Justification for indicator selection

Reducing electricity consumption is a robust way to lower the environmental impacts of electricity generation. This may result from reducing the electricity consumption for related activities (e.g. for lighting, appliances and information and communication technology equipment), or by using electricity in a more efficient way (thereby using less electricity per unit of demand), or from a combination of the two.
However, the type and extent of energy-related pressures on the environment depends not only on the amount of electricity consumed (and thus generated), but on the fuels used for electricity generation, which are predominantly still fossil fuels (see EN27 for more information about electricity production by fuel and its impacts) and how the electricity is produced (see EN06 on the extent to which pollution abatement technologies are used). The efficiency with which electricity is produced also strongly determines the size of the environmental impacts of electricity production and consumption (see EN19 and EN20), as it determines the amount of input fuel required to generate a given quantity of electricity.
The switch from other end-use fuels towards electricity increases the environmental pressure in many cases, as around three units of energy are needed to produce one unit of electricity, due to efficiency losses in electricity generation and transmission. However, if the electricity is generated by high efficiency, low emission technologies, such a switch could also reduce sufficiently the environmental consequences of electricity production. Electricity also offers a route for developing and exploiting non-fossil energy sources such as wind energy and hydropower, which are renewable energy sources that produce electricity directly.

Scientific references:

Indicator definition

Definition: Electricity consumption is based on calculated consumption; this equals the energy supplied minus transmission and distribution losses.

Model used: World Energy Model (WEM)

Ownership: International Energy Agency

Temporal coverage: 2004 - 2030

Geographical coverage: Transition countries, excluding the Russian Federation (Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Estonia, Serbia and Montenegro, the Former Yugoslav Republic of Macedonia, Georgia, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Republic of Moldova, Romania, Slovenia, Tajikistan, Turkmenistan, Ukraine, Uzbekistan, Cyprus, Malta); the Russian Federation; OECD Europe (Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Poland, Portugal, Slovakia, Spain, Sweden, Switzerland, Turkey, the United Kingdom); USA; India; China

Units

tonnes per capita

Policy context and targets

Context description

The indicator shows the trends of electricity consumption which is responsible for a big share of GHG emissions fom Energy Sector. It can be useful to monitor  perfomances of the wide range of policies at pan-european and national level that attempt to influence energy consumption and energy efficiency, electricity generation, and, therefore, extent of environmental impacts.

Global policy context

The major documents that relate to trends of the energy prodution and electricity generation at the global level were developed and presented during the World Summit on Sustainable Development  in Johannesburg (WSSD,2002) in Agenda 21. WSSD, 2002 aims to achieve a sustainable energy future, including diversified energy sources using cleaner technologies. Moreover, there is a number of sub-negotiations and declarations concerning more sustainable ratio in balance between a global energy supply and production of different energy types, as well as more sustainable electricity generation.

Pan-European policy context

The recent pan-european policies concerning different aspects of energy production and electricity generation have been developed under different intenational fora. 

The Committee on Sustainable Energy seeks to reform energy prices and subsidies and ways how to carry out it to meet more sustainable energy production and consumption in the region (UNECE Guidelines).

Kiev Declaration " Environment for europe" (2003) aims at supporting further efforts to promote energy efficiency and renewable energy production to meet environmental objectives.

EU policy context

This indicator can be used to help monitor the success of key policies at EU and Member State level that attempt to influence electricity consumption and energy efficiency.
The EU Action Plan for Energy Efficiency (SEC(2006)1173, 1174 and 1175) ) aims at boosting the cost-effective and efficient use of energy in the EU. It sets a target of 20% reduction of energy-use by 2020, compared to the baseline-projections. This target is also part of the EU Energy Policy for Europe (COM(2007)2). The target of 20% equals a 1,5% improvement in energy-efficiency per year. This regards the total use of energy, including the use of other energy-carriers than electricity.
The power generation sector was responsible for 30.9 % of EU-27 greenhouse gas emissions in 2006 (EEA, 2008). Therefore, the reduction of electricity consumption is also to be seen in the context of reaching the target of an 8 % reduction in greenhouse gas emissions by 2008-2012 from 1990 levels for the EU-15 and individual targets for most new Member-States as agreed in 1997 under the Kyoto Protocol of the United Nations Framework Convention on Climate Change, as well as reaching the proposed target of 20 - 30% reduction of emissions by 2020 as defined in the new EU Energy and Climate Policy package (COM(2008(16-19)).

The Commission's package of legislative proposals regarding energy use and climate change also includes an improvement of the EU Emissions Trading Scheme (with a binding target of 21% emission reduction in 2020 vs. 2005) and binding targets for Member States for emissions which fall outside the EU-ETS. The caps on emissions in the EU-ETS will probably result in a rise of electricity prices of approximately 10 - 15% (European Commission, Impact Assessment  2008). This might have an impact on the demand for electricity. Moreover, other legislative proposals from this package are likely to result in a decrease of the growth of energy consumption.
The Action Plan for Energy Efficiency (COM, 2006)32 sets 10 priority actions. Some of these will mainly affect the use of electricity. One important will be the labelling and setting of minimum energy performance standards for appliances and other energy-using equipment. This will be done by implementing Directives for 14 priority product groups by 2008. These include computers, televisions, standby-equipment, cooling and street lighting. Other priority actions include building performance requirements, facilitating financing of energy investments and raising energy efficiency awareness. Furthermore, it expands on measures to introduce more efficient electricity generation and transmission in order to reduce environmental pressures.
The Action Plan builds on existing EU energy efficiency regulation, such as the Directive 2005/32/EC on the eco-design of Energy-using Products. This directive provides coherent EU-wide rules for eco-design and ensures that disparities among national regulations do not become obstacles to intra-EU trade. However, it does not introduce directly binding requirements for specific products, but defines conditions and criteria for setting, through subsequent implementing measures, requirements regarding environmentally relevant product characteristics, such as electricity consumption. Other existing regulation includes the EC energy label Directive (92/75/EEC) introducing mandatory labels stating the energy efficiency grade for specific household appliances, Directive (96/57/EC) on minimum energy efficiency requirements for household electric refrigerators and freezers, and the Directive 2003/66/EC introducing the new energy classes A+ and A++ for the most efficient appliances.

EECCA policy context

Energy efficiency and energy trade, and, consequently, energy and electricity productions are highlighted in the EECCA Environment Strategy. Moreover, there are negotiations concerning decisions about improvements in hydropower sector in Central Asia (Cooperation Strategy in Asia, 2004)

Targets

 

Related policy documents

Key policy question

Are we consuming less electricity?

Methodology

Methodology for indicator calculation

The Total Energy Production quantifies the development of energy production by Pan-European energy production regions and countries.

For description of the indicator in World Energy Outlook the Electricity Generation indicator can be used  particularly. Electricity Generation shows the total amount of electricity generated by power plants. It includes own use and transmission and distribution losses. Electricity generation is measured in terrawatt hours (TWh).

Therefore, the amount of electricity generation is measured in absolute value, as well as will be presented in the form of a percentage.

The projections are made with the use of the World Energy Model 2004 developed by Internation Energy Agency.

The Electricity Generation is presented as a sub-module in the Power Generation and Heat Plants module and can be calclulated by the followings methodology's aspects.

The Power Generation and Heat Plants module.

The power generation module calculates the following: amount of electricity generated by each type of plant to meet electricity demand (here is included electricity demand, own use and transmission, and distribution losses); amount of new generating capacity needed; type of new plants to be built; fuel consumption of the power generation sector; electricity prices.

Electricity generation is calculated using the demand for electricity and taking into account electricity used by power plants themselves and system losses. New generating capacity is the difference between total capacity requirements and plant retirements using assumed plant lives. The model considers the following types of plants: coal, oil and gas steam boilers; combined-cycle gas turbine (CCGT); open-cycle gas turbine (GT); integrated gasification combined cycle (IGCC); oil and gas internal combustion; fuel cell; nuclear; biomass; geothermal; wind (onshore); wind (offshore); hydro (conventional); hydro (pumped storage); solar (photovoltaics); solar (thermal) and tidal/wave.

Capacities for nuclear power are based on assumptions on government plans or  are influenced by international fossil fuel prices where market conditions prevail.

Fossil fuel prices and efficiencies are used to rank plants in ascending order of their short-run marginal operating costs, allowing for assumed plant availability.

The marginal generation cost of the system is calculated, and this cost is then fed back to the demand model to determine the final electricity price.

The combined heat and power (CHP) option is considered for fossil-fuel and biomass plants. CHP, renewables and distributed generation are sub-modules of the power generation module.

Renewable module

The projections of renewable electricity generation were derived in a separate model. It has been assessed the future deployment of renewable energies for electricity generation and the investment needed for such deployment. For a detail description of this model - developed by Energy Economics Group (EEG) at Vienna University of Technology in co-operation with Wiener Zentrum fur Energie, Umwelt und Klima - see Resch et al. (2004). The methodology is illustrated in Figure C.6 p. 543 in World Energy Outlook 2004.

The model uses a database of dynamic cost-resource curves. The development of renewables is based on an assessment of potentials and costs for each source (biomass, hydro, photovoltaics, solar thermal electricity, geothermal electricity, on- and offshore wind, tidal and wave).

Overview of the World Energy Model 2004 (WEM)

The WEM is a mathematical model made up of five main modules: final energy demand, power generation; refinery and other transformation; fossil fuel supply and CO2 emissions. Figure C1. (World Energy Outlook, 2004, p.532) provides a simplified overview of the structure of the model.

The main exogenous assumptions concern economic growth, demographics, international fossil fuel prices and technological developments. Electricity consumption and electricity prices dynamically link the final energy demand and power generation modules

The IEA's WEM is a principal tool used to generate detailed sector-by-sector and region-by-region projections for the Reference and the Alternative Scenarios. (see definitions of scenarios under section reference scenario). The model has been updated and revised over years and the development process continues.

Key model assumptions for the reference case

The central projections derived from a Reference Scenario. They are based on  a set of assumptions about governmental policies, microeconomic conditions, population growth, energy prices and technology.

Governmental policies and measures

The reference Scenario takes into account only those governmental policies and measures that were already enacted - though not necessary implemented - as of min-2004.   The Reference Scenario does not include possible< potential or even likely future policy initiatives. Major new energy policy initiatives will inevitably be implemented during the projection period, but it is difficult to predict which measures will eventually be adopted and how they will be implemented, especially towards the end of the projection period.

Although the Reference Scenario assumes that there will be no change in energy and environmental policies through the projection period, the pace of implementation those policies and the way they are implemented in practice are nonetheless assumed to vary by the fuel and region. For example electricity and gas market reforms are assumed to move ahead, but at varying speeds among countries and regions. In all cases, the share of taxes in energy process is assumed to remain unchanged, so that retail process are assumed to change directly in proportion to international prices. Similarly, it is assumed that there will be no changes in national policies on nuclear power. As a result, nuclear energy will remain an option for power generation only in those countries that have not officially banned it or decided to phase it out.

Macroeconomic factors
Economic growth is by far the most important driver of energy demand. The link between total energy demand and economic output remains close. Detailed GDP assumptions by region are set out in Table below.

Economic Growth Assumptions (average annual growth rates, in %)


1971-2020
2002-2010 2010-2020 2020-2030 2002-2030
OECD-Europe 2.4
2.4
2.2
1.7
2.1
Transition Economies total
0.7
4.6
3.7
2.9
3.7
- Russia
-1.1
4.4
3.4
2.8
3.5
- Other transition economies
-0.5
4.8
3.9
3.0
3.8
European Union
2.4
2.3
2.1
1.7
2.0
World 3.3
3.7
3.2
2.7
3.2

Population

Population growth affects the size and composition of energy demand, directly and through its impact on economic growth and development. The WEO population growth rate assumptions are drawn from the most recent UN populations' projections contained in World population Prospects: the 2002 Revision. Detailed populations assumptions by region are set out in Table below.

Population growth assumptions (average annual growth rates, in %)


1971-2020
2002-2010 2010-2020 2020-2030 2002-2030
OECD-Europe 0.5
0.3
0.1
0.0
0.1
Transition Economies total
0.5
-0.2
-0.2
-0.4
-0.3
- Russia
-0.3
-0.6
-0.6
-0.7
-0.7
- Other transition economies
0.0
0.0
0.1
-0.1
0.0
European Union
0.3
0.1
0.0
-0.1
0.0
World 1.6
1.2
1.0
0.8
1.0

Energy Prices

As in previous additions of the WEO, average and-user process for oil, gas and coal are derived from assumed price trends on wholesale or bulk markets. Tax rates are assumed to remain unchangeable over the projection period. Final electricity prices are based on marginal power generation costs. The assumed price paths assumed in the table presented below should not be interpreted as forecasts. Rater, they reflect IEA judgment of the prices that will be needed to encourage sufficient investment in supply to meet projected demand over the Outlook period.

Fossil-Fuel Price Assumptions (in year-2000 dollars)


2003 2010 2020 2030
IEA crude oil imports ($/barrel)
27
22
26
29
Natural gas ($/Btu):




   - US imports
5.3
3.8
4.2
4.7
   - European imports 3.4
3.3
3.8
4.3
OECD steam coal imports ($/tonne)
38
40
42
44

Technological development

Technological innovation and the rate of development of new technologies for supplying or using energy are important considerations. In general, it is assumed that available end-use technologies become steadily in use and the overall intensity of energy consumption will depend heavily on the rate of retirement and replacement of the stock of capital. Since the energy-using capital stock in use today will be replaced only gradually, most of the impact of technological developments that improve energy efficiency will not be felt until near the end of the projection period.

The rate of capital-stock turnover varies considerably according to the type of equipment. Most cars and trucks, heating and cooling systems and industrial boilers will be replaced by 2030. on the other hand, most existing buildings, roads, railways and airports, as well as many power stations and refineries will still be in use then. The very long life of this type of energy-capital stock will limit the extent to which technological progress can alter the amount of energy needed to provide a particular energy service. Retiring these assets before the end of their normal lives is usually costly and would, in most cases, require major new governmental initiatives - beyond those assumed in the Reference Scenario. Refurbishment can, however, achieve worthwhile improvements in energy efficiency in some cases.

Technological developments will also affect the costs of energy supply and the availability of new ways of producing and delivering energy services. Power generation efficiencies are assumed to improve over the projection period, but at different rates for different technologies. Towards the end of the projection period, fuel cells based on hydrogen are expected o become economically attractive in some power generation applications ad, to a much smaller extent, also expected to improve, lowering the unit production costs and opening up new opportunities for developing resources. But the Reference Scenario assumes that no new breakthrough technologies beyond those known today will be used before 2030.

The World Alternative Scenario

WEO also considers Alternative policy Scenario to analyze how the global energy market could evolve were countries around the world to adopt a set of policies and measures that they are either currently considering or might reasonably be expected to implement over the projection period. The purpose of this scenario is to provide insights into how effective those policies might be in addressing environmental and energy-security concerns.

Methodology for gap filling

The development and running of the WEM requires access to huge quantities of historical data on economic and energy variables. Most of the data are obtained from the IEA's own databases of energy and economics statistics. A significant amount of additional data from a wide range of external sources is also used.

The parameters of the demand-side modules' equations are estimated econometrically, usually using data fro the period 19971-2002. Shorter periods are sometimes used where data are unavailable or significant structural breaks are identified. To tae into account expected changes in structure, policy or technology, adjustments to these parameters are sometimes made over the Outlook period, using econometric and other modeling techniques. In regions such as transition economies, where most data are available only from 1992, it has not been possible to use econometric estimations. In such cases, IEA results have been prepared using assumptions based on cross-country analyses or expert judgment.

Simulations are carried out on annual basis. Demand modules can e isolated and simulations run separately. This is particularly useful in the adjustment process and in sensitivity analyses of specific factors.

The WEM makes use of wide range of software, including specific database management tools, econometric software and simulation programmes.

Methodology references

  • World energy outlook 2004 IEA (2004) International Atomic Agency (2004) . World energy outlook 2004, OECD/IEA, Paris. Online not available

Uncertainties

Methodology uncertainty

In common with all attempts to describe future market trends, the energy projections presented in the Outlook are subject to a wide range of uncertainties energy markets could evolve in ways that are much different from either the Reference Scenario or the Alternative Policy Scenario. The reliability or WEM projections depends both on how well the model represents reality and on the validity of the assumptions it works under.

Macroeconomic conditions are, as ever, a critical source of uncertainty. Slower GDP growth than assumed in both scenarios would cause demand to grow less rapidly. Growth rates at the regional and country levels could be very different from those assumed here, especially  over short periods. Political upheavals in some countries could have major implications for economic growth. Sustained high oil process  which are not assumed in either of WEM scenarios – would curb economic growth in oil importing countries and globally in the neat term. The impact of structural economic changes, including the worldwide shift from manufacturing to service activities, is also uncertain, especially late in the projection period.

Uncertainty about the outlook for economic growth in China is particularly acute.

The effects of resource availability and supply costs on energy process are very uncertain. Resources of every type of energy are sufficient to meet projected demand through to 2030, but the future costs of extracting and transporting those resources is uncertain – partly because of lack of information about geophysical factor.

Changes in government energy and environmental policies and the adoption of new measures to address energy security and environmental concerns especially climate change, could have profound consequences for energy markets. Among the leading uncertainties in this area are: the production and pricing policies of oil-producing countries, the future of energy-market reforms, taxation and subsidy policies, the possible introduction of carbon dioxide emission-trading and the role of nuclear power.

Improvements in the efficiency of current energy technologies and the adoption of new ones along the energy supply chain are a key source of uncertainty for the global energy outlook. It is possible that hydrogen-based energy systems and carbon-sequestration technologies, which are now under development, could dramatically reduce carbon emissions associated with energy use. If they did so, they would radically alter the energy supply picture in long term. But these technologies are still a long way from ready to be commercialized on a large scale, and it is always difficult to predict when a technological breakthrough might occur.

It is uncertain whether all the investment in energy-supply infrastructure that will be needed over the projection period will be forthcoming. Ample financial resources exist at a global level to finance projected energy investments, but those investments have to compete with other sectors. More important than the absolute amount of finance available worldwide, or even locally, is the question of whether conditions in energy sector are right to attract the necessary capital. This factor is particularly uncertain in the transition economies and in developing nations, whose financial needs for energy development are much greater relative to the size of their economies than they are in OECD countries. In general, the risks involved in investing in energy in non-OECD countries are also greater, particularly for domestic electricity and downstream gas projects. More of the capital needed for energy projects will have to come from private and foreign sources than in the past. Crating an attractive investment framework and climate will be critical to mobilizing the necessary capital. 

Data sets uncertainty

Major challenge is a reliable input data energy statistics. The statistics of IEA which provide a major input to the WEO, cover 130 countries worldwide. Most time-series begin in 1960 for OECD counties and in 1971 for non-OECD countries. Recently, however, maintaining the very high caliber of IEA statistics has become increasingly difficult, in many cases because national administrations have faced growing problems in maintaining the quality of their own statistics. Breaks in time series and missing data have become frequent in some countries. The lapses compromise the completeness of IEA statistics. They could seriously affect any type of analysis, including modeling and forecasting.

The projections from WEO should not be interpreted as a forecast of how energy markets are likely to develop. The Reference Scenario projections should rather be considered as a baseline vision of how the global energy system will evolve if governments will take no further action to affect its evolution beyond that which they have already committed themselves to.

Rationale uncertainty

In common with all attempts to describe future market trends, the energy projections presented in the Outlook are subject to a wide range of uncertainties energy markets could evolve in ways that are much different from either the Reference Scenario or the Alternative Policy Scenario. The reliability or WEM projections depends both on how well the model represents reality and on the validity of the assumptions it works under.

Further work

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General metadata

Responsibility and ownership

EEA Contact Info

Anita Pirc Velkavrh

Ownership

No owners.

Identification

Indicator code
Outlook 028
Specification
Version id: 1

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Classification

DPSIR: Pressure
Typology: Performance indicator (Type B - Does it matter?)

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