The views expressed are those of the author and do not necessarily reflect the position of FORESIGHT Climate & Energy
Simple reforms can help support clean domestic energy supplies in Europe
The past year has made it very clear—only indigenous renewable energy will deliver real security of supply for Europe. The supply of fossil fuels has proven yet again to be unreliable and a source of economic and social instability.
The “weaponisation” of gas imports from Russia has, as the European Commission’s consultation on reform of the electricity market highlighted, led to an “endangering of security of supply”.
While Europe frantically seeks to replace Russian gas supplies with those from other countries, dependency on this geopolitically volatile fossil fuel remains. Reopening coal mines is the ultimate short-term solution and Europeans know this—as demonstrated by the unrest around the demolishment of the German town of Lützerath for a new lignite plant.
This is in part down to an undercooked discussion around the depth and breadth of all renewables available in the energy mix. The Electricity Market Reform debate is a key opportunity to address the blind spot on secure, predictable, dispatchable and baseload renewable electricity sources such as ocean, concentrated solar, geothermal and hydropower.
Whilst the Commission’s consultation document correctly concludes that more needs to be done to support “alternatives to gas to keep the electricity system in balance” it overlooks specific barriers to mass deployment of secure, predictable, and dispatchable renewable electricity.
Addressing these must be central to market reforms. This is the only way to genuinely ensure adequacy, grid and system stability as well as the higher shares of variable renewable generation capacity in the energy mix.
RESILIENT AND RENEWABLE
Concentrated solar, geothermal, hydro and ocean energy technologies are the optimal, local, cost-effective and secure solutions to address the role currently fulfilled by fossil gas—dispatchable back-up generation for“when the wind doesn’t blow and the sun doesn’t shine”.
Concentrated solar plants and geothermal energy can generate electricity 24/7; the tides flow to the moon’s cycle every day and are predicable 100 years in advance; waves continually heave and surge in our seas and oceans; and hydropower plans are ready to dispatch at a moment’s notice
These technologies are also the cheapest forms of electricity storage, especially for periods beyond six hours. Combined with effective demand-side signals and variable renewable, they form the bedrock of a resilient, zero-carbon and low-cost renewable electricity system.
Secure and predictable renewable electricity requires four enhancements from the electricity market reform. Firstly, adequate financial rewards for grid and system stability must be factored into the Contracts for Difference (CfDs) for electricity production, storage and grid and system balancing services.
Auctions should include elements concerning firmness, security of supply and system integration to capture the market welfare increase and synchronous electricity production can help realise. Secure and predictable renewable electricity should also be incentivised to participate in the short-term and flexibility markets.
Secondly, the European Sovereignty Fund must also be used to financially de-risk upfront construction costs of key predictable and dispatchable renewables in all Member States to ensure each electricity network has adequate grid-supporting capacity within its vicinity.
Thirdly, capacity payments for secure and predictable renewable electricity should receive harmonised funding directly from the Connecting Europe Facility as well as the soon-to-be-established European Sovereignty Fund as they provide backup services to the entire European grid for the benefit of households, businesses and industry.
Furthermore, capacity markets must have a hierarchy for awarding capacity payments based on renewable-based sources of stability, the stability with additional system costs such as batteries and fossil sources when the above have been harnessed.
Finally, the way in which these investments are made requires the same type of coordination and collective purchasing applied to gas in the EU Energy Platform. The mandate of this Platform must be reformed through the Electricity Market proposals.
These simple reforms make the 45% renewable energy target attainable but also directly replace Europe’s reliance on imported fossil fuels overnight. The climate, energy and cost-of-living crises can be addressed in the coming months. It is vital that lawmakers seize this moment.
The Alliance of Secure, indigenous & Predictable Renewable Electricity (ASPIRE) was formed by Donagh Cagney from Ocean Energy Europe, Berenice Crabs from ESTELA, Sanjeev Kumar from the European Geothermal Energy Council; and Anton Schleiss and Mark Morris from ETIP Hydropower Europe
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