New electricty era

The global electricity industry is changing fast - and Britain leads in the experience and expertise needed in making and managing the changes.

Deregulation, privatisation and new technology in generating and distributing power are creating a new electricity era. From Berlin to Brazil, the systems behind the switch are being improved.

The evolution, pioneered in Britain and then begun in Europe and Australia, is now reaching into North and South America. California - which has the seventh largest economy in the world - is emulating the UK by opening its electricity markets and most American States are likely to follow.

Canada is following and Japan, always late to re-structure, is taking its first steps towards allowing independents to challenge established power producers.

The EU aims for one third of its electricity system to be a free market within five years. Already five EU members (UK, Holland, Spain, Sweden and Finland) are close to complete liberalisation.

Over the last ten years New Zealand has been replacing monopoly with competition - and the recent private power failure in Auckland revealed flaws still to be solved.

In Australia the most populous region, New South Wales, will next year decide for or against the privatisation of power already in place in most of the continent. In NSW, as in the State of Queensland, there is strong opposition to aspects of electricity system reforms.

NSW plans to float the State's six electricity distributors and achieve the privatisation of the State's entire A$67 billion power industry over six years. South Australia and Victoria chose trade sales to privatise their electricity assets. But floats of the NSW generators are favoured.

South-East Asia and India are seeking private investors for decentralised power production, though they want to keep overall regulation.

Five South American nations are making changes from public to private control, and seven Central American countries are creating a common grid.

Among the former Communist economies, Poland will start to privatise this year and Russia's power monopoly plans to sell half its system and link its grid westwardhe EU.

In the most open economies the combination of power privatisation and new technology is beginning to extend to local generation.

Generators are becoming small enough, cheap enough and efficient enough for on-site production.

"Street corner" generation eliminates transmission costs and particularly suits local enterprises with stable demands. For example, housing and office blocks, medical centres and fast-food outlets needing generation capacity between 40 KW and 75 KW can order it off-the-shelf for between US$25,000 and US$35,000.

Asia is a vast market for such small-scale generators because of the predominance of smaller enterprises and their need for reliable, local supply. Malaysia cancelled a US$4 billion hydro project (involving long-distance transmission) as soon as financial collapse struck a year ago. Indonesia also cancelled big-ticket generators.

The continuing economic crisis in South-East Asia will probably bring an evolution from centralised to local generation.

Worldwide, scale as well as structure is changing. Power generation capacity is likely to increase as much in the next 30 years as in all of this century.

Coal is likely to remain the main fuel for power well into the next century, although local conditions and global politics will decide the pace of change to other sources.

Australia, China, India, US and South Africa have huge coal reserves to burn locally and export.

Natural gas, plentiful in Australia, US, North Africa, Norway and some former Soviet States, will gradually increase market share, even in the US where coal plants now provide half of the electricity production. More new gas-fuelled generators are being built in EU and US than new coal-fired plants.

Gas is cleaner than coal in terms of the climate-changing emissions of carbon dioxide. These have to be reduced over the next decade under the "global greenhouse" agreements signed in 1997 by the industrial nations.

The abundance, cleanliness and relative cheapness of gas is pushing coal aside in UK/EU generation. The EU coal industry is non-competitive with gas, and with coal imports, and will decline as its subsidies phase out and the "greenhouse" targets press in.

COPYRIGHT 1998 First Charlton Communications Pty Ltd.
COPYRIGHT 2000 Gale Group