Renewables and natural gas are fuelling a decline in coal consumption

For the first time, in 2018 natural gas overtook coal to become the leading source of fuel for electricity production in the OECD countries, accounting for 27.4 % of the mix compared to 25.4 % for coal. (Figures 1 and 2). The finding comes from The latest International Energy Agency report Key Electricity Trends 2018. Meanwhile, the combined contribution of all renewable sources produced the same figure, 27.4 % of electricity generation, led by hydro at 13.8 %, then wind (7.0 %) and solar (3.0 %).

The bulk of the increase from 2017 to 2018 occurred in the United States of America. While generation from non-renewable sources is growing strongly in the USA, particularly from natural gas, renewable energy generation is growing quickly in Europe, a reflection of policy efforts to decarbonise its electricity mix. The same is true in OECD Asia Oceania, where non-renewable electricity generation fell by 12.4 TWh, especially in coal and oil, while generation from renewable energy technologies grew considerably (+24.5 TWh).

OECD net electricity production grew by 1.9% (+195.2 TWh), reaching 10,682 TWh driven primarily by natural gas, which increased by 156.4 TWh (+5.6%), up to 2,928 TWh. The share of coal continued the decrease that started in 2014, falling to 2,710 TWh. Overall, fossil fuels generated an additional 41.4 TWh compared to 2017.

All sources of renewable generation increased in the OECD during 2018. The largest increases for renewable technologies were wind (+51.9 TWh, +7.5%) and solar (51.8 TWh, +18.9%). Other renewable sources also increased but by more modest amounts: +25.9 TWh from hydro, +12.0 TWh for combustible renewables and +2.3 TWh from geothermal. (Figures 1 – 3).

Note that the term ‘Other renewables’ in Figure 3 includes geothermal, tide, wave, ocean and other non-combustible sources. In addition, generation not specified elsewhere is included in this section. ‘Other combustibles’ includes oil, combustible renewables and non- renewable combustibles (apart from natural gas and coal).

Coal power

The use of coal for power generation is decreasing in most OECD countries, with a total decrease in the OECD of 104.6 TWh in 2018 compared to 2017 (-3.7 %), down to 2,710 TWh.

Large reductions were observed in the United States (-62.5 TWh, -5.0 %), Japan (-12.7 TWh, -3.7 %), Germany (-11.6 TWh, -5.0 %) and the United Kingdom (-5.6 TWh, -25.5 %). In contrast, Turkey increased its electricity production from coal by 15.2 TWh (+16.5 %) – a switch from gas to coal that goes against the more common trend of coal-to-gas. (Figure 4). 

Gas consumption

Of all sources of power generation, natural gas increased the most, up by 156.4 TWh (+5.6 %), to 2928 TWh in 2018 – natural gas is now, for the first time, the leading source of electricity in the OECD. The main source of this growth was the United States, adding 188.9 TWh of additional generation from gas-fueled plants; followed by Korea with +34.3 TWh (+28.7%). However 21 of the 35 OECD countries actually decreased gas consumption for power generation, including Turkey (-17.6 TWh, -16.9%), Australia (-11.1 TWh, -20.2 %), and Japan (-10.5 TWh, -2.7 %). (Figure 4)

Nuclear power resurgence

In 2018, nuclear generation increased by 11.6 TWh in the OECD (+0.6 %) compared to 2017, reaching 1868 TWh. More than two- fifths (43.2%) of all OECD nuclear generation during 2018 was from the United States, with a further one-fifth (20.7 %) from France. All other countries generating nuclear power had just single-digit shares.

Growth in nuclear power generation was highest in Japan (+19.7 TWh, +71.0 %), which restarted 4 more nuclear plants in 2018; and France (+14.1 TWh, +3.7 %), which had higher availability of its nuclear facilities compared to 2017. More modest increases were seen in Switzerland (+5.1 TWh, +26.1%) and Sweden (+2.7 TWh, +4.4 %). In Switzerland, one nuclear plant came back online at the beginning of 2018, and the maintenance period of another was shorter than in 2017. In the case of Sweden, nuclear became the top source of electricity in 2018, surpassing hydro, which had been the most important source since 2014.Conversely, Korea and Belgium saw their nuclear production decrease in 2018. Belgium’s nuclear production fell by a third, compared to the average over the last ten years, as a consequence of a major nuclear outage due to maintenance and safety-related concerns. This situation began in March and reached its most critical point in October, when six of the seven nuclear reactors of the country were off grid. This marked the lowest month of nuclear generation since 2001. In the case of Korea, the decrease in nuclear generation was due to new maintenance regulations. Nuclear generation also decreased in Spain (-2.4 TWh, -4.2 %) and the United Kingdom (-4.8 TWh, -7.5 %) due to maintenance outages. (Figure 5).

Hydro power

Hydro generation grew in the OECD during 2018 by 25.9 TWh, or +1.8 %. Southwest Europe went back to usual levels of hydro generation in 2018 after a very dry 2017, which curtailed generation. Hydro generation in Spain, Portugal, Italy and France rose strongly, with Spain and Portugal almost doubling last year’s hydro production.

The two main hydro generators of the OECD, Canada and USA, saw a decrease in generation: -9.1 TWh (-2.3 %) and -10.7 TWh (-3.3 %), respectively. In the United States, although 2018 was the wettest year since the early 1980s, there was a clear difference between the eastern part of the country (significantly above average precipitation) and the western (lower than average precipitation and drought in the south-west). As the majority of US hydro capacity is located in the northwest, electricity output decreased compared to last year. Meteorological events also explain the decline in Canada, with the highest impact in hydro generation seen in Manitoba and British Columbia. (Figure 6).

Solar energy

Solar saw the highest relative increase in 2018 compared to 2017 out of all electricity sources, increasing from 274.0 TWh to 325.8 TWh, or +18.9 %. Leading this growth were the United States (+18.2 TWh, +25.2 %), Japan (+12.9 TWh, +21.8 %) and Germany (+6.9 TWh, +17.4 %). Most OECD countries had double digit growth rates, with some even higher, showing the strong push in some countries in favour of this technology. In contrast, Spain and Italy decreased solar generation by 12.6 % and 7.8 % respectively, owing to lower-than-average solar irradiation in 2018 despite increases in capacity. (Figure 7).

Wind power

In 2018, wind generation supplied 744.6 TWh, 7.5 % more than in 2017, led by the United States (274.8 TWh), Germany (114.1 TWh), the United Kingdom (56.6 TWh) and Spain (49.7 TWh).

Wind supplied 18 % of the power generation in Germany, the United Kingdom and Spain. The largest increases came from the United States (+20.6 TWh, +8.1 %), Germany (+7.9 TWh, +7.5 %) and the UK (+7.0 TWh, +14.1 %).

As wind flows depend on pressure gradients and air temperature, wind generation was affected by extreme weather events in 2018, such as the summer heat wave affecting Europe, which led to a continent-wide generation drop in July; electricity output was lower than in the same period in 2015, even with the large capacity increase in the three years in between. Very high peaks of generation were seen in January and March. The difference between the highest and lowest monthly generation levels was one of the highest on record, with the minimum electricity output at just 38.3 % of the maximum. (Figures 8 and 9).

Renewables vs non-renewables

Total renewable technologies accounted for 71.8 % of the increase in generation in the power sector during 2018, continuing a trend that has seen renewables increase their share in the OECD electricity mix by 9.8 % since 2008, now reaching 27.4 %. (Figure 10).

Combustible renewables

Combustible renewables grew by 12.0 TWh (+4.2 %) in the OECD, generating 298.9 TWh of electricity in 2018. The main countries using these fuels for electricity generation are the United States (63.8 TWh), Germany (52.0 TWh) and the UK (33.3 TWh). In terms of share, Denmark and Finland produce around 18% of their electricity from renewable combustibles, the highest shares in the OECD. Significant increases in generation from combustible renewables in 2018 were seen in Germany (+4.2 TWh, +8.9 %), France (+3.4 TWh, +48.6 %) and United Kingdom (+2.9 TWh, +9.7%).

Geothermal

Geothermal generation grew by 4.9%, to 49.3 TWh in the OECD. Turkey accounted for half of the total OECD growth in this technology (1.4 TWh, +26.7 %). The other main contributors were Iceland (+839.8 GWh, +16.2 %) and the USA (+531.8 GWh, +3.4 %).

Electricity trading

Germany and France remain the top electricity exporters of OECD Europe, but the gap between them has narrowed as France increased its nuclear production and increased its exports by 15.3 TWh in 2018 compared to 2017, up to 76.6 TWh. Other significant exporters are Switzerland (31.9 TWh) and Sweden (30.8 TWh). Italy was again the main electricity importer of OECD Europe by far, bringing in 47.2 TWh, followed by Germany (31.7 TWh), Switzerland (29.6 TWh), Austria (28.1 TWh) and Netherlands (27.0 TWh). (Figure 11).

Looking at net electricity trade, 20 of the 27 countries in OECD Europe decreased their net electricity exports in 2018 compared to 2017. The status of ‘net importer/exporter’ of OECD Europe countries remained the same as 2017 with two exceptions: Latvia went from being a net exporter to becoming net importer in 2018, as hydro generation (its main source of electricity) fell heavily due to the intense drought affecting the country. Switzerland went from net importer to net exporter as nuclear generation rose. In 2018, 15 countries in OECD Europe were net importers and 11 were net exporters (Iceland has no trade partners for electricity).

France was the top net exporter in OECD Europe in 2018 (63.3 TWh), regaining the top spot after Germany (48.5 TWh in 2018) led for 2 years, followed by Sweden (17.3 TWh), Czech Republic (13.9 TWh) and Norway (10.1 TWh), all of which had more than 80 % of their electricity mix based on hydro and/or nuclear power.

On the other hand, the main net electricity importers were Italy (43.9 TWh), Finland (19.9 TWh), the UK (18.3 TWh) and Belgium (17.3 TWh, almost three times the value of 2017).