Menu
Menu
Menu
The EU has just kick-started the debate on setting ambitious climate targets for 2040. While a mindful milestone between the agreed 2030 decarbonisation agenda and net zero by 2050 would provide clarity and investment signals about the way forward, Europe should not lose track of the present, Kristian Ruby from Eurelectric
Elevate your listening experience, try our app – iOS / Android
The views expressed are those of the author and do not necessarily reflect the position of FORESIGHT Climate & Energy
Falling Russian imports, higher renewable targets, new energy suppliers and the latest technological developments have shifted Europe’s decarbonisation scenarios
Today, EU countries are going through real challenges to deliver on their climate ambition for 2030. The only way to come even close to any 2040 target is to unleash the right enablers for industry and society to deliver on such ambition here and now.
In the near term, nurturing societal acceptance of the energy transition is key.
This means convincing society to embrace change, to gradually switch their heating systems and vehicles, and to accept new wind turbines and big solar plants within the beautifully shaped wheatfields of Europe.
It also means building a robust electricity system with an expanded and digitalised grid to better adapt to extreme weather and ensure reliable power across Europe.
And it surely means delivering the right market design and financial framework for investments to make it all happen. It is important that the debate about where we want to be seventeen years from now does not divert attention from achieving speed and scale here and now.
WALKING THE TALK AND ELECTRIFYING THE WALK
Europe’s energy system is changing rapidly and the power sector is at the centre of this shift. The electricity industry has taken significant steps to reduce its emissions by leading the decarbonisation of transport, buildings and industry via clean and renewable electrification.
Direct electrification is the most efficient and effective way to achieve society’s decarbonisation by replacing fossil fuels with carbon-neutral power generation, producing carbon-neutral fuels and reducing total energy demand thanks to higher energy efficiency.
Provided we choose the most cost-efficient pathway, around 60% of final energy consumption will be supplied by direct clean and renewable power by 2050, versus 23% in 2020. All technologies will contribute to this electric ramp-up with special reference to wind and solar.
RENEWABLES FIRST BUT NOT ONLY
In the next seven years, around 605 gigawatts (GW) of additional renewable capacity will have to be deployed in the EU. Biomass, wind, solar and hydro, which represented 50% in 2020, could reach 81% of the total installed generation capacity by 2030 and up to 84% by 2050.
To square such targets, the rollout of solar and wind have to significantly accelerate compared to historical growth rates, to reach 90 GW of installed capacity per year.
Renewables, however, will not do the job alone.
As Europe moves into a future where society relies more on electricity, electricity must be reliable. We need a system capable of connecting renewables with endusers but also able to balance itself wherever sufficient renewable electricity is unavailable via storage, demand side response, or firm and flexible capacity.
Nuclear will continue to provide a complementary share of the EU’s decarbonised electricity in the context of increased electrification. In absolute terms, nuclear capacities will see a 5% increase in the amount of electricity generated.
In addition, as natural gas will be phased out soon after 2040, renewable hydrogen and bio-based fuels will also play a complementary role in hard-to-abate sectors where direct electrification is not an option, such as in heavy industry and heavy transport.
All types of generation will have to be backed up by a resilient distribution grid and a higher number of interconnectors to be safely delivered across Europe. Getting this system in place requires unprecedented investments and a clear business case to unlock them.
A MARKET FIT FOR NET ZERO
Annual investment in generation, as well as distribution, should accelerate. Investments in generation capacity should amount to €100 billion per year until 2040 to decarbonise the power sector, paired with grid investments of approximately €38 billion per year until 2030, up to €65 billion per year until 2050.
The electricity market reform, currently discussed in the European Parliament and Council, is a key example of why it is important to keep our eyes on the here and now. Ideally, this reform can help catalyse investments and spur innovation in storage and the next wave of decarbonised power generation technologies.
To do so, the market reform proposal currently under debate should manage to strike a balance between the short-term market price signals and long-term hedging and contracting instruments.
However, it is crucial to steer clear of measures that would compromise investor certainty. A botched reform could jeopardise our ability to reach the 2040 targets.
The expropriation of existing assets, re-regulation and the prolongation of market-distorting emergency measures send detrimental signals to investors.
The inframarginal revenue cap, now discussed in Parliament and Council, is a case in point as it proved to be toxic for new investments in clean technologies. In 2022 power purchasing agreement decreased by 21% compared to the previous year and only €17 billion were invested in wind energy, the lowest figure since 2009.
It is, therefore, crucial to avoid risky measures that could destroy investor certainty and derail Europe’s journey to climate neutrality.
REPowerEU has set the course for our society’s decarbonisation, we must stay laser-focused on delivering our immediate targets and move forward towards 2040 with a pragmatic mix of ambition and realism.
If you have a thoughtful response to the opinions expressed here or if you have an idea for a thought leadership article regarding an aspect of the global energy transition, please send a short pitch of 200 words outlining your thoughts and credentials to: opinion@foresightdk.com.
Welcoming the recently agreed EU 2030 climate and energy targets, Kristian Ruby, Secretary General of Eurelectric argues for a regulatory framework able to smoothly integrate greater amounts of renewables and electrification
Around 50% of the shift from fossil fuels to renewable forms of energy has been a digitised transition to 2020, says Energinet, Denmark's power system operator. As the world digitises further, the already vast volumes of data will only increase in mass. Advances in Artificial Intelligence technology and machine learning tools provide ways of processing this tsunami of data into a new world order
An interconnected transmission grid in Europe would result in lower prices and greater levels of clean energy. But several nations are falling behind on export capacity leading to some member states looking beyond the Union’s borders
Our guest this week is Kristian Ruby, secretary-general of Eurelectric, to discuss what role the energy market can play in shutting off Russian influence, what that means for energy consumers across Europe and the energy transition
The energy transition is not simply a matter of replacing fossil fuels with zero-carbon alternatives. It will also be marked by a radical change in our relationship with energy and the spread of technologies like heat pumps and electric vehicles that can yield significant efficiency gains even before traditional energy savings measures come into play
Clean energy technology is becoming more efficient and powerful, while more money than ever is seemingly flowing into renewables. But administrative barriers thrown up by red tape and permitting bottlenecks threaten to put a damper on the energy transition
Following yet another round of COP negotiations in Sharm El-Sheikh, Egypt, only limited progress again was made in the global effort to keep global warming limited to 1.5C. This week, the team discusses the value of these negotiations in the quest to avoid catastrophic climate change
This week's special live recording of Watt Matters comes from Eurelectric's offices in Brussels, where the team is joined by Ditte Juul Jorgensen and three trade association chiefs to discuss ways Europe's electricity market is dealing with the shocks of the past 12 months while securing and stabilising the sector for the future
Finding the most efficient way to pay for the energy transition is not an easy affair—but lawmakers worldwide seem to be increasingly converging on contracts for difference as the mechanism of choice to fund emerging technologies
Grids need to accommodate a host of new and variable low-carbon assets, but who should manage how they operate and what they get paid remains a thought exercise despite the changes already happening
Tired of waiting for big energy companies to procure clean energy, energy communities are clubbing together to take advantage of the low prices renewable energy offers
Seeking cheaper alternatives to expensive and time-consuming physical upgrades, grid operators are increasingly turning to digital solutions. While some projects are already underway, slow-changing regulatory frameworks mean the rollout is sluggish
Europe’s electricity industry is decarbonising at an increasing pace, with the rise of renewables and drop in coal-based power generation. But progress on the ground will be bigger once the remaining barriers are removed, argues Eurelectric’s Kristian Ruby
Leave a Reply