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EU electricity supply from RES off course for 2030 – so is it more nuclear or gas?

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EU electricity supply from RES off course for 2030 – so is it more nuclear or gas?

by Tom Idle and Matthew James

January 15, 2019

Last year’s strong reported performances for the share of clean energy in the UK and German energy mixes paint a rosy picture. It is the result of billions in investment and strong signals from Brussels and the COP series. Looking more broadly across the EU though, the share actually decreased by 17% from 2016 to 2017. Furthermore, due to lack of investment stretching back as far as 2011, the rate of growth has dropped significantly putting RES off course for its 32% share by 2030. That, coupled with a substantial increase in electricity demand on the near horizon, leaves an even bigger gap for other technologies like nuclear and gas – even existing coal – to fill.

Power generated by renewables topped coal in Germany for first time in 2018, an important milestone for its clean energy policy. Also in 2018, 40% of its electricity was generated by wind, solar, biomass and hydroelectric sources – up 4.3 percentage points on the previous year. With the substantial increase in demand that’s expected in coming years stimulated by the transition to EVs that’s great news.

Data from the Fraunhofer research group shows that the majority of clean power came from onshore and offshore wind systems (20.4% of total output) and solar (8.4%), the installed capacity of which expanded by 3.2 gigawatts (GW) to 45.5GW last year.

Bruno Burger, author of the Fraunhofer study, said: “We will not fall below the 40% in 2019 because more renewable installations are being built and weather patterns will not change that dramatically.” Whilst a fair conclusion, it does not show how this will be maintained in the longer term bearing in mind how much more electricity will be needed.

And in the United Kingdom…

It is a similar situation in the UK where overall power generation fell to its lowest level since 1994. A third of electricity came from renewables in 2018. Wind (accounting for 17% of the total power generated), solar (4%) and the burning of plant material and biomass (11%) are taking an increasing share of the overall power mix. Low-carbon supplies (including nuclear) made up a record 53% of the total in 2018.

Wind power capacity was up 16% on 2017, producing some 58 terawatt hours of electricity – nearly 3.5 times as much as the 17TWh coming from coal. In fact, coal now makes up a record low of just 5% of the UK’s total energy production, with gas use also down to 39%.

As you can see in the graph, the sharp decline in coal is being matched by growth in electricity from gas since 2015. Mitigated by a strong performance by wind. To continue development of clean energy supply and use, wind will have to perform even better as demand increases over the next decade stimulated by increased popularity of electric heating and vehicles especially. Otherwise the UKs reliance on gas will only become even heavier. Of course, nuclear should play a major role here, unlike Germany, but it is predicted that the UK will need 3 Hinkley C-type plants, not one, to meet demand. And Hinkley C has still not come online.

Portugal, Sweden and Latvia performing well

Elsewhere in Europe, Portugal managed to produce more renewable electricity than it consumed in early 2018 and now predicts renewables (solar mainly) will satisfy its mainland electricity needs by 2040.

Within the EU, the top countries measured in terms of the share of energy from renewable sources measured as a percentage of gross final energy consumption are Sweden, Finland and Latvia, the Baltic state having invested heavily in biofuels, biogas, and hydropower.

Elsewhere in the EU28

It is a mixed picture across the rest of the continent and there is a danger that these pockets of good news are masking the reality that the rate of renewables deployment is faltering. Across the EU, renewable energy production share continues to vary widely between countries – from more than 30% of gross final energy consumption in places like Austria, Finland, Denmark, Latvia and Sweden to below 9% in the Netherlands, Belgium, Luxembourg and Malta.

The amount of clean energy being produced within the EU-28 increased overall by 66.6% between 2006 and 2016 – an average rate of increase of 5.3% a year. However, by 2016, the latest year for which data is available, the share of renewables in gross final energy consumption across Europe stood at just 17%.

Yes, such a trajectory is likely to see the EU meet its 2020 goal of producing 20% of total power by renewables. But the pace of new capacity being deployed has certainly slowed in recent years. According to European Environment Agency estimates, with the share of renewables has only increased marginally – from 17.0 % to 17.4 % – between 2016 and 2017.

To get to the 2030 goal of producing 32% of power from clean energy will demand a much greater effort, with constant annual deployment increases of around 1.2 percentage points a year between now and then. That’s almost twice the 0.7 percentage points growth rate seen between 2005 and 2016.

“Meeting the 2030 goal of producing 32% of power from clean energy demands constant annual deployment increases of around 1.2 percentage points – much greater than the 0.7 percentage points growth rate seen between 2005 and 2016″

Drop in investment

While Germany and the UK appear to be keeping pace with their Scandinavian and Baltic neighbours at the moment it is not a trend that is likely to continue. The two largest economies showed a sharp decrease in overall clean energy investment in 2017 – 26% and 56% drops respectively.

Cost of renewable tech keeps falling

Globally, renewables, and solar in particular, have become phenomenally cheap in recent years, driven by oversupply from China. This could ensure these forecasts are met. However, the EU’s antidumping legislation – the protectionist tariff domestic governments impose on foreign imports said to be priced below fair market value – has seen many countries failing to benefit from cheap Chinese renewables technology and falling prices. Although the European Commission has moved to scrap such tariffs, this has already hampered solar deployment efforts in particular.

Maybe the UK’s exit from the EU could be an opportunity for them to build new trade deals with the Chinese to help speed up deployment but that’s no consolation for the other 27

Meeting the 2030 goal will require investment of around €62 billion a year according to the International Renewable Energy Agency (Irena). But European investment in renewables is in decline. Data from Bloomberg New Energy Finance shows that investment in renewables in the EU fell 50% between 2011 and 2017, to €46 billion. “In Europe right now we have the lowest investment in over a decade,” says Stefan Gsänger, general secretary of the World Wind Energy Association. To compare, investment in renewables in China, with ready access to its own, cheap technology, hit $126.6 billion (€110.5 billion) in 2017, its highest figure ever and no less than 45% of the global total.

Investment in renewables in the EU fell 50% between 2011 and 2017

Mind the gap

According to International Energy Agency (IEA) predictions, European energy production from coal is set to more than halve by 2040 – from 237 megatonne of coal equivalent (Mtce) in 2017, to 93 Mtce. There are similar predictions for oil (from 4 million barrels per day, to 3), and natural gas (from 291 billion cubic metres (bcm), to 203 bcm).

Despite evidence published by the Energy Watch Group and LUT University demonstrating that it is possible for Europe to transition to being powered 100% by renewables by 2050 and that it would create more jobs and be more cost effective than the present fossil fuel-led system, the squeeze on national economies is stopping Governments from persuading voters that investment in new infrastructure is in their interest. It warns “the energy transition is not a question of technical feasibility or economic viability, but one of political will” to the extent that even its own share targets is under threat as things stand.

The move away from coal is exactly what’s prescribed. It makes it unavoidable that other technologies and sources of energy will be brought in to replace it but what and how is far from clear. Demand will not stay static for long and the increase will be sharp. The transition to electric vehicles on its own will see to that. Without renewed investment in renewables infrastructure – capacity, integration techniques and storage – we cannot expect the sector to meet the 32% share target. Instead, we will be relying even more heavily on nuclear and gas to meet our targets. It makes the cases for both worth examining very carefully.

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Related articles:

January 14, 2019 by Matt Wald Nuclear – critical choice for 2050

December 13, 2018 by Gaurav Sharma Opposition to Nord Stream 2 misses market fundamentals

More background

Transformation of Europe’s Power System (McKinsey report) 

 

RES market share to reach almost 80% to achieve 1.5 degrees

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ENERGY WATCH #4 - December 20, 2018

RES market share to reach almost 80% to achieve 1.5 degrees

by Tom Idle

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The European Commission has just published its annual scenarios report including its projection as to when greenhouse gas emissions need to drop to net zero. For the past four years, the average global de-carbonisation rate showed a 2.6% per year drop. Even the best performing economy in 2017 in terms of carbon intensity reduction – China – only achieved a drop of 5.2% (source: PwC). This won’t get us to 1.5 degrees. What’s needed is a strategy that includes the implementation of renewable energy sources on course for 78% of total power. That will enable the de-carbonisation rate to rise to 9% per year, which is required. EPW considers the implications to the power sector of staying within the scientifically preferred 1.5 degrees of average temperature rise.

Tensions were running high even before the latest UN climate talks had started following the publication of the Intergovernmental Panel on Climate Change’s (IPPC) latest scientific report challenging the current ambition of global efforts to reduce greenhouse gas (GHG) emissions.

For many years, limiting global warming to within no more than a 2 degree rise in average temperatures, based on pre-industrial levels, was a de-facto target for negotiators to work towards.

Now, the IPPC – backed up by the views of 70 scientists – says that 2 degrees of warming is not a “guardrail up to which all would be safe”. Instead, the world should “push the defence line as low as possible” and aim to limit warming to 1.5 degrees.

The special report highlighting the likely impacts of 1.5 degrees warming, received short shrift from the US, Russia, Kuwait and Saudi Arabia, among others, whose negotiators merely ‘noted’ its existence, refusing to ‘welcome’ it. Saudi Arabia’s senior negotiator Ayman Shasly said: “We all know it will cost the world a great deal of cost and all elements to achieve 1.5 degrees. The storyline of the entire report shows that it is achievable, it’s doable, let’s all do it together, which is not fair. What is the equity in this? Where is history in this?”

The European Commission’s Joint Research Centre’s (JRC) latest analysis, also launched at COP 24, provides some of the answers in assessing the likely differences between meeting a 2 degree and a 1.5 degree rise.

Right now, emissions and energy consumption trends show we are not on track to meet either of the goals. But JRC’s Global Energy and Climate Outlook 2018 predicts that to hit the 1.5 degree goal, global GHGs have to drop to net zero by 2065, and by 2080 to meet the 2 degrees target – both of which are technically possible and at relatively low cost to the overall economy. “While this clearly would come with increased investment needs, the overall costs would be equivalent of less than one week of economic activity lost for a given year. The economy would grow, decoupled from greenhouse gas emissions,” it claims.

Comparisons made as to the economic impacts across regions between the Nationally Determined Contributions (NDC) and the 2 degrees scenarios it lays out shows that long-term decarbonisation goes hand-in-hand with high, yearly per capita consumption growth rates in fast-growing, low and middle-income countries.

Achieving higher ambition levels than the NDCs – which leaves the likes of Saudi Arabia and the US so nervous – “can be done at relatively low costs,” argues the report. “While GDP and consumption are expected to decline relative to the NDC scenario in 2050, investment will increase to build the capital stock required for a low emission economy.”

To achieve this, the global energy system and energy consumption patterns will need to undergo a “profound and accelerated transformation” to reach global annual decarbonisation rates of 6.1% per year and 9.0% per year during the period 2015 to 2050 for 2 degrees and 1.5 degrees respectively. During the five year period to 2016, this figure was 1.9% a year.

Central to mitigation efforts would be an expanding use of renewables and an increasing role of electricity in the energy being consumed. The analysis suggests that greater use clean energy sources will account for 27% of the required emission reductions, non-CO2 abatement for 20%, improved energy efficiency for 17%, and electrification of final energy demand and land use both for 10%.

In its scenario presentation for a 2 degree limit:

  • GHGs from the power sector would fall from 24% of the total in 2015 to just 11% in 2050
  • Almost a quarter of electricity was renewable in 2015 (23%); above a quarter would be non-renewable in 2050 (29%);
  • fossil fuel share (without carbon capture and storage) in power generation would drop from 61% in 2015 to 7% in 2050;
  • coal power generation would decrease by a factor of 9 over 2015–2050.

Should total installed power generation capacity increase from 6.5 TW globally in 2015 to about 9.7 TW in 2030 and 17.8 TW in 2050, as the report projects, so too will capital equipment demand. Total investments required in the energy sector for supply and energy transformation, including fossil fuel production, power, hydrogen and biofuels, would reach US$24 trillion during the 2010 to 2030 period and US$40 trillion over 2030 to 2050 in the 2 degrees scenario. Such investment still represents around 6-7% of total investment levels of the economy during the projection periods. The share was 7% during the 1990-2015 period, according to JRC.

Hitting the 1.5 degree limit demands a “deeper transformation” of the economy and the energy system. The analysis suggests that in terms of global GDP, the 1.5 degree scenario leads to a reduction of 1.3% relative to the NDC scenario. “In 2050, investment is 0.1% higher than in the NDC scenario, but a faster transition earlier on increases investment to 2.2% above the NDC scenario value in 2025,” it says, highlighting that the costs will vary from country to country. For example, India is one of the regions where the difference between achieving the 2 degree and 1.5 degree goal is more pronounced, largely because of the non-CO2 emissions impact of its agricultural sector, the abatement of which could be costly.

Clearly, JRC sees the power sector as an essential piece of the global decarbonisation puzzle, not just for its technological diversity but also its “strong and relatively quick reaction to climate policies”.

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Return to global growth – implications for emissions targets

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ENERGY WATCH #3 - December 7, 2018

Return to global growth – implications for emissions targets

by Tom Idle

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The latest emissions figures reveal a break in a five-year decline and the link to improvements in productivity is being made. As the world returns to GDP growth in the wake of the 2008 crash, decoupling pollution from economic success is the key challenge in meeting the terms of the Paris climate deal.

According to OECD predictions, global economic growth is slowing more than had previously been forecast. Figures show that worldwide growth will slow from an estimated 3.7% this year to 3.5% in 2019 and 2020. In fact, the escalation of ongoing trade wars and rising interest rates could cut global GDP growth by as much as 0.8% by 2021.

However, despite “darker clouds” looming over many economies, as the International Monetary Fund puts it, economic growth of any size has often spelled bad news for the environment. The correlation between greenhouse gas emissions (GHGs) and economic growth has long been a bone of contention for policymakers grappling with the trade-off.

A five-year decline broken

Several years of stagnant emissions growth in the wake of the 2008 economic crash apparently giving a false sense of security on GHG output. Commentators were excited by a potential widespread decoupling of emissions and economic growth. The news that 2014’s global GHGs were the same as those in 2013, even though the global economy grew by 3.3%, had the The Economist describing the development as “remarkable” especially as “it happened without either a climate-change treaty or global carbon price”.

But the news that emissions from the world’s most advanced economies rose slightly this year, breaking a five-year decline, which points to a general reversal of this trend, may have them eating their words. It leaves “considerable uncertainty” as to whether the 2014-2016 slowdown was driven primarily by short-term economic factors, according to the UN Environment Programme.

A ‘worrisome’ trend

IEA figures show that energy-related carbon dioxide emissions in North America, the EU and other nations in Asia Pacific increased by around 0.5% in 2018. Yes, this is lower than the increase in global economic growth, but as the IEA says, it is “worrisome” for governments charged with delivering on the promises made as part of the Paris deal to limit global warming to within a 2-degree rise by 2050.

Figures released just on Tuesday by Global Carbon Project (GCP) further paint a bleak picture, pointing to the 2% increase in emissions from fossil fuels and industry in 2018, taking global fossil CO₂ emissions to a new record high of 37.1 billion tonnes.