London (Platts)--12Nov2012/750 am EST/1250 GMT

The International Energy Agency has cut its 2011 projections for growth in installed nuclear power capacity by 10% to 580 gigawatts in 2035 in its latest World Energy Outlook issued Monday, Fatih Birol, chief economist of the Paris-based agency told a news conference in London to present the report.

In aggregate, world nuclear capacity in the WEO's New Policies Scenario is about 50 GW lower than last year's prediction, Birol said.

At the start of 2011, a total of 30 countries operated 441 nuclear reactors, with a gross installed capacity of 393 GW, 83% of which is in OECD countries, according to the WEO.

The New Policies Scenario -- one of three scenarios in the 2011 report -- details the impact of existing and planned policies, "when implemented cautiously," on key energy trends to 2035 in demand, supply, trade, investment and emissions.

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The other two scenarios are the Current Policies Scenario, which assumes no change in current energy policy, and the 450 Scenario, which prescribes strong policy action to limit climate change.

The anticipated role of nuclear power has been "scaled back," the IEA said in an executive summary ahead of presentation of the report, as countries have reviewed policies in the wake of the 2011 accident at the Fukushima Daiichi nuclear power station.

Japan and France have recently joined the countries with intentions to reduce their use of nuclear power, the IEA said, while its competitiveness in the US and Canada is being challenged by relatively cheap natural gas.

Growth in nuclear power production is also expected to decrease by 10% compared with the agency's forecast in 2011.

Nuclear power output will rise from 2,756 terawatt hours in 2010 to about 4,370 TWh in 2035, an increase of almost 60%, according to the report.

Correspondingly, the share of nuclear power in total generation falls to 12% from 13%, it said.

In its 2011 World Energy Outlook, the IEA said nuclear power output was expected to rise by more than 70% between 2010 and 2035, with China, Korea and India leading the growth, according to the agency's reference scenario.

The reference nuclear growth forecast is part of the New Policies Scenario.

In its 2011 report, the IEA said that under an alternative "low nuclear" scenario that it added as a "special" case to account for a possible post-Fukushima shift away from nuclear power, the global share of nuclear power in total generation would drop from 13% in 2010 to just 7% in 2035.

In its latest report, the IEA says that while nuclear output still grows in absolute terms -- driven by expanded generation in China, Korea, India and Russia -- its share in the global electricity mix falls slightly over time.

"Shifting away from nuclear power can have significant implications for a country's spending on imports of fossil fuels, for electricity prices and for the level of effort needed to meet climate targets," the IEA said in the executive summary.

"The world's demand for electricity grows almost twice as fast as its total energy consumption, and the challenge to meet this demand is heightened by the investment needed to replace ageing power sector infrastructure," it said.

Of the new generation capacity that is built to 2035, around one-third is needed to replace plants that are retired, it added.

Half of all new capacity globally is based on renewable sources of energy, it said, although coal remains the leading global fuel for power generation.

The growth in China's electricity demand over the period to 2035 is greater than total current electricity demand in the United States and Japan, it said.

China's coal-fired output increases almost as much as its generation from nuclear, wind and hydropower combined, it said.

Average global electricity prices increase by 15% to 2035 in real terms, driven higher by increased fuel input costs, a shift to more capital-intensive generating capacity, subsidies to renewables and CO2 pricing in some countries, it said.

There are significant regional price variations, it said, with the highest prices "persisting" in the European Union and Japan, well above those in the United States and China.

--Claire-Louise Isted, claire-louise_isted@platts.com
--Edited by Jeremy Lovell, jeremy_lovell@platts.com

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