Making transition work: The next phase of energy in Europe
Written by Giles Dickson, CEO at WindEurope. Giles will be speaking at the upcoming Flame event in May. His session is "How Can Gas Remain Relevant?" on May 10, 2017. Ahead of his session, we reach out to better understand the current climate of energy in Europe and the next phase of energy in Europe.
"With large shares of variable renewables, we need a flexible energy system."
Europe’s energy transition is entering the next phase. After the successful Paris climate agreement, the European Commission proposed a new climate & energy framework that will accelerate the shift towards a competitive low-carbon economy. In 2016, 51% of new power capacity installed in Europe came from wind and almost 30% of the electricity consumed in Europe from renewables. With the EU Clean Energy Package, wind and other renewables will become the backbone of Europe’s electricity system. The increasing electrification of the transport and heating sectors also increases the competition for finite fossil fuels.
The IEA’s latest World Energy Outlook suggests that gas will win the battle with coal. It will grow globally unless policies change drastically. But if politicians really step up their efforts to combat climate change and prevent a 2°C temperature rise, global gas demand will peak in the late 2020s. The future of gas depends on the extent to which it can become clean and remain cost-efficient.
On costs, onshore wind power has become the cheapest form of new power generation in many parts of the world, and offshore wind projects hit record low strike prices last year. Despite the progress, the power market still does not reflect the characteristics of modern generation technologies.
With large shares of variable renewables, we need a flexible energy system. Flexibility will be provided by reforming electricity market and connecting them more effectively, properly valuing demand side response, developing storage and optimising the use of flexible generation assets. The latter offers opportunities to gas, but an energy system in which renewables are balanced by a single technology does not exist. The crucial point is to ensure that the market properly values all types of flexibility. Wind power also contributes to the flexibility by providing grid support services. Gas innovations can become another partner of renewables, particularly when coupling sectors or storing surplus power.