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Utility Week 25th October

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Markets & Trading Renewables spearheads growth in European capacity Capgemini's European Energy Market Observatory, released earlier this month, shows the changing generation mix in Europe. Despite a number of conventional plants being decommissioned in 2012, generation capacity grew, stimulated by renewables. Net EU generation capacity rose 3.3 per cent in 2012, boosted by the growth of renewables. Wind and photovoltaic new-build represented 64 per cent of the additional 44.9GW connected to the grid over the year, with respectively 11.9GW (26 per cent) and 16.8GW (37 per cent). Gas-fired power stations accounted for 10.5GW (23 per cent) of capacity added. Even though gas generation remained unprofitable during most of 2012, some countries, such as Germany and the Netherlands, completed and commissioned CCGT projects started a few years ago. Meanwhile, decommissioned generation capacity rose by 67 per ent, from 9.5GW in 2011 to 15.8GW in 2012. Old gas-fired power stations were closed in Belgium, Hungary, the Netherlands and the UK. Driven by EU environmental legislation, the increasing loss of capacity is mainly due to coal and oil-fired power plant closures: 8.6GW were taken out of the grid in 2012. In Belgium, France, Germany, Spain and the UK, additional closures were completed in the first half of 2013 or are planned before the December 2015 deadline in the Large Combustion Plants Directive. Overall, the net generation capacity keeps increasing but decommissioned dispatchable capacities are mostly replaced by non-dispatchable capacities, which endangers EU network ability to meet peak demand. Renewables capacity brought wholesale prices down and pushed utilities to take shortterm actions on their generation portfolio. The share of renewables sources (excluding hydro) in the EU electricity mix reached 19.2 per cent in 2012, up from 16.7 per cent in 2011. Hydro power generation was abundant in Nordic markets and several solar and wind generation records were broken in western Europe in 2012 and the first half of 2013. Wind power broke a record in Portugal in Q1 2013, producing 27 per cent of total renewable generation (including hydro), and a world record for solar instantaneous power output was set up by Germany in July 2013, rising above 23.9GW. But in a context of stagnant electricity consumption, growing renewables has led to a decreasing residual electricity market in Europe. In fact, utilisation rates of CCGT were below 20 per cent in most European countries in the first six months of 2013. Source: European Energy Market Observatory, Capgemini Map of generation capacities projects in MW (as of May 2013) Country profile: South Korea South Korea was the world's tenth largest energy consumer in 2011 and due to its lack of domestic reserves it is one of the top energy importers in the world. The country has no international oil or natural gas pipelines, and relies exclusively on tanker shipments of liquefied natural gas (LNG) and crude oil. •  It has a large refining sector, but relies on crude imports for nearly all of its oil needs. •  It is the second-largest importer of liquefied natural gas in the world. •  Conventional thermal power accounts for more than twothirds its electricity generation. South Korea imports -  2,207,000 barrels of petroleum a day -  1,670 billion cubic feet of natural gas -  138.165 million short tonnes of coal* Nuclear problems South Korea relies heavily upon nuclear generation and it has the sixth-highest nuclear generation capacity in the world. However, air conditioning and lighting in all public offices has recently been banned, as the reserve margin fell below 4m kW, more than 20 per cent below the level considered safe by the energy ministry. The government ordered the suspension of three reactors after it was claimed that safety certificates for the reactors were forged. *All figures from the US Energy Information Administration, last updated on May 30, 2013 UTILITY WEEK | 25th -31st October 2013 | 29

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