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Smart Energy International spoke with Eurelectric to find out more about their research into how best to achieve decarbonisation goals aligned with the Paris Agreement.

Paul Wilczek, manager distribution and market facilitation and Henning Häder, manager energy policy, climate and sustainability at Eurelectric, talk us through their extensive scenario planning, weighing variable emissions targets and cost factors against realistic ambitions.

Smart Energy International spoke with Eurelectric to find out more about their research into how best to achieve decarbonisation goals aligned with the Paris Agreement.

Paul Wilczek, manager distribution and market facilitation and Henning Häder, manager energy policy, climate and sustainability at Eurelectric, talk us through their extensive scenario planning, weighing variable emissions targets and cost factors against realistic ambitions.

Eurelectric decarbonisation study

The study is a follow-up to the Eurelectric Vision, signed in December 2017 at CEO level. This fundamental statement reasserts their industry’s firm commitment to the Paris Agreement, to power the European Union’s (EU) economy with carbon-neutral energy, pursuing all efforts to fully decarbonise the electricity mix well before mid-century.

To fulfil this pledge, Eurelectric commissioned a study with McKinsey & Company to examine three different decarbonisation and electrification scenarios towards 2050. All these scenarios consider the full decarbonisation of the power sector, but they differ on the ambition level for Europe as a whole.

Wilczek and Häder lay out the three possible scenarios. The first scenario foresees 80% carbon emissions reductions by 2050, in line with the EU’s commitment under the Paris Agreement.

The second scenario envisages a 90% reduction while the third looks into even higher targets with up to 95% cuts on the carbon dioxide (CO2) emissions. The study concludes that all three scenarios can turn into reality, with a price tag lower than previously assumed.

The study reveals a deep nexus between electrification and decarbonisation, concluding that a carbon-neutral society requires that electricity directly covers at least 60% of the total energy consumption. This compares to electrification levels of only 22% today. The increased power demand resulting from this electrification will, in turn, require substantial investments and adaptations of the networks.

Their study shows that investment needs are significant, reaching €89 billion to €111 billion annually on average. However, influenced by the rapidly decreasing costs of renewables, power prices and carbon abatement costs will be lower than what was previously assumed. Electricity costs would be around €70-75 per MWh – some 30% less than previous European Commission estimates.

Lastly, the study revealed that ramping up the scale and speed of this transition requires unprecedented societal cooperation and focus on customers. While embracing a sustainability-oriented approach that brings together economic, social and environmental considerations, Eurelectric supports a fair energy transition within the EU.

Regional decarbonisation efforts

The Governance Regulation requires the Member States to prepare national climate and energy plans.

While setting out its own pathways, each State contributes to EU climate and energy objectives for 2030, namely to cut greenhouse gas emissions by 40% (compared to the levels of 1990), increase the share of renewables in the energy mix to at least 32% and to improve the energy efficiency by at least 32.5%.

All countries and regions contribute to meeting the EU’s targets in terms of renewables, energy efficiency and decarbonisation.

Over the past two decades, the European power sector has taken significant steps toward decarbonising. As a result, almost 60% of electricity is today generated with carbon-neutral sources. Research shows that by 2045 renewables, including hydropower and sustainable biomass, will represent over 80% of energy supply, and consequently due to a rapid cost decline, increasing capacity factors, and large, untapped resource potentials. The lion’s share will be represented by solar and wind, which will account respectively for 15% and 50% of supply.

This will require significant improvements towards a more flexible energy system, with storage and demand response and the building of transmission grids within and between regions.

Effects on distribution networks

The high penetration of renewables and the electrification of transport and heating and cooling are major game changers. The recent EU legislation on CO2 standards for transportation should also bring more than 40 million electric vehicles (EVs) on the road, which requires deploying EV charging infrastructure.

Last but not least, the uptake of electric heat pumps and solar photovoltaics, together with developments of storage (batteries, demand-side and grid-connected storage) and grid edge technologies are likely to ramp up steeply.

It goes without saying that increased electrification rates will put distribution system operators at the heart of the energy transition.

To deliver, distribution companies have to move way beyond their traditional role of ensuring network connection and reliability.

New tools and business models for DSOs will be critical for the success of the energy transition.

The impact of decentralisation?

Matching supply and demand is becoming more complex as small-scale distributed electricity sources (household solar photovoltaics and onshore wind power) make power generation more dispersed, diversified and difficult to integrate into the network. This requires new tools for network planning to assess where the grid needs reinforcement and to provide adequate power flows management.

The grid will have to become smarter to optimise the value brought by different generators

This article was originally published in Smart Energy International 2-2019.