OECD Nuclear Energy Agency / L'Agence pour l'énergie nucléaire

Joint IEA/NEA Workshop

Security of energy supply for electricity generation

24 May 2005
Paris, France

Background

The world’s resources of fossil fuels are concentrated in relatively few countries and a large part of these resources is located in non-OECD member countries (e.g. a large and increasing share of Europe’s gas supplies comes from Russia and Algeria). This makes security of energy supply a major objective of all OECD member countries, where the intention is to diversify the energy dependence among several types of sources and suppliers.

After the oil crises in 1973/74 and 1979/80 the tendency was to base electricity generation more on domestic fuels or fuels from OECD countries, such as lignite and coal but also gas from OECD sources and quasi-domestic fuels like nuclear fuels which could easily be stored for several years. The recently increasing use of gas for electricity generation has reinforced the debate on the security of gas supply for power generation as the increase in gas demand will largely be met by imports from non-OECD member countries.

At the same time, the liberalisation of electricity markets creates a new framework for energy policies. In fact, in competitive electricity markets, decisions to choose technology, fuel and fuel suppliers are made on private economic grounds, within the limits of government regulation. If these markets fail to properly address the geopolitical risk of supply disruptions they should be supported through effective policy actions. Such policies should be justified on the basis of comprehensive cost-benefit analysis and they should be designed to have the least distorting effect on liberalised markets.

The International Energy Agency (IEA) and the NEA jointly organised a workshop to identify and discuss the concept of security of energy supply in the power sector, the implications for technology choices and the role of governments in addressing the related issues, particularly in the context of liberalised electricity markets.

Workshop outline

The workshop addressed the following issues:

The concept of security of energy supply applied to the power sector, both from a pure economic perspective and in terms of political realities in the context of competitive electricity markets.
The impacts on technologies and fuel choices of the security of energy supply approach and its related implemented policies.
The policy options available to governments to address the security of energy supply for power generation in the context of liberalised markets.

Workshop chair

David W. Pearce, Emeritus Professor of economics at the University College London, chaired the workshop. Professor Pearce has a strong record of academic achievements and publications in the field of the environmental economics and in particular on the health consequences of energy externalities.