The largest regions in terms of electricity consumption are North America and Europe. The company states that electricity consumption will continue to grow in these regions, but at a lower level than in other regions, resulting in the forecast that their share of the overall market will decline.
Frost & Sullivan's 360 Degree Perspective of the African Power and Energy Industry report states that electricity consumption is forecast to grow fastest in the developing countries and regions, such as China, India, the Middle East, Latin America, Africa and the rest of Asia.
Substantial investment in the power sector is needed globally to substantiate growth in the oil exploration, commodity mining and reconstruction industries, states Frost & Sullivan.
Additionally, the United Nations predicts that the world population will rise from 6.
4-billion in 2004 to 8.1-billion by 2030, implying that there will be a global increase in electricity demand.
The company adds that the trend towards urbanization and migration to cities in many developing countries exerts increased pressure on the power grid and forces governments to invest in the electricity sector to meet growing demand.
"The power infrastructure is undeveloped in many countries, so governments have initiated rural electrification projects to ensure that a higher percentage of the population has access to electricity," states Frost & Sullivan.
Electricity production requires high capital outlay, which many developing countries lack. Frost & Sullivan says that it is estimated that generating 1 000 MW costs over $1-billion, which means that erecting power plants is costly. Substantial assistance is required from international institutions and the private sector to build a power station and low electricity tariffs often reduce a power company's revenue streams.
The company comments that bureaucracy, corruption, burdensome approval procedures, rigid labour laws and lengthy delays in bidding and construction processes affect investment in the power industry in many countries.
"Political problems and violence also affect the power industry in some countries by discouraging meaningful private sector investment," reports Frost & Sullivan.
Frost & Sullivan reports that the global energy market is challenged by three interlocking issues that make current energy markets attractive, but also complex. These are increasing fuel costs, environmental issues and growth in the global energy demand.
The company has predicted a timeline for the significant market issues from 2010 to 2030.
It predicts that 2010 through to 2020 will see oil passing $100 a barrel, continued acceleration of coal-fired power, rising world oil prices dampening the demand for liquid fuel, the acceleration of natural gas and the resurgence of nuclear energy. From 2020 to 2030, it expects growth of natural gas will be kept in check by high gas prices and coal will fuel almost 45% of energy consumption, following growth in India and China.
Global energy demand is likely to grow strong in all regions and later growth may be dominated by India and China. There could be a long-running boom in Russia after deceleration and maturation takes place in the European Union. From 2020 onwards, developing economies will account for over 40% of electricity demand and global energy demand will almost double its 2000 level.
Concerning environmental issues, Frost & Sullivan predicts that China is likely to overtake the US as the world's largest emitter of carbon dioxide (CO2). This would be followed by an accelerated investment in carbon capture and renewable energy usage in Europe increasing to 20%. Nearing 2025, stationary fuel cells will probably contribute to electricity generation and by 2030 global CO2 emissions are likely to reach 40 Gt, compared to the 8.38 Gt emitted from the burning of fossil fuels in 2006.
Challenges facing the global power and energy market include environmental concerns and permits, workforce scarcity, raw materials pricing and availability, the availability of natural gas, increasing natural gas prices, and forging capacity and prices.
Frost & Sullivan states that a shortage of skilled labour and engineers is creating a bottleneck where a large amount of engineering input and customisation is required. Experienced and trained engineers, as well as specialised skills from a small number of equipment manufacturers, are required to design, construct and commission a large plant.
The construction of fuel-fired power plants is significantly delayed by the increase of pricing and delivery times of raw materials. These factors hinder the ability to estimate the scheduling and costs during the engineering phase, thereby significantly increasing the exposure to risk.
The relatively low availability of natural gas and security of supply from countries such as Russia is a challenge, as it is causing some concern about relying on natural gas as a source of fuel. The increasing price of gas is also causing some companies to reconsider investments in combined cycle gas turbine plants owing to higher running costs.
Frost & Sullivan states that, although Africa represents only 7% of the estimated spend on electricity projects to 2030, the continent will still be influenced by global developments.
The global skill shortages are already affecting the growth of the African electricity industry, as developed countries can afford much higher salaries and can therefore attract more scarce skills.
The growing demand for generation equipment is expected to increase lead times and delay projects in Africa. The increased demand for energy sources, such as oil, gas and coal, would have positive and negative implications for the continent.
There could be a positive increase of revenues, as Africa has rich energy resources. Conversely, the increased cost of the commodities will also increase the cost of electricity.
The company adds that the increased awareness of environmental issues will drive the implementation of greener projects.
The consultancy states that fossil fuel power is likely to continue to dominate and will grow dramatically in the next 20 years.
Global primary energy demand could increase by over 50% between now and 2030, while world electricity demand could increase by 60% over the same period. Frost & Sullivan explains that over 70% of this increase comes from developing countries, led by China and India.
CO2 emissions could reach as much as 40 Gt in 2030, a 55% increase on the current level.