THE ENERGY INDUSTRY TIMES - MARCH 2018
Europe News 7
Energy transition at
risk, new study finds
Siân Crampsie
A new report into the state of the EU
electricity sector has found “worrying
failings” in the energy transition.
The review – published by Sandbag
and Agora Energiewende – notes that
although more electricity was generated
by renewables in Europe in 2017
than coal, emissions reductions have
stalled and the growth in renewables
is markedly uneven.
Wind, solar and biomass generation
surpassing coal is “incredible progress”,
says the report, not least because
coal power generation was more than
twice that of wind, solar and biomass
just five years ago.
In 2017, renewables accounted for
over 30 per cent of electricity generation
in Europe for the first time. However
Germany and the UK have accounted
for 56 per cent of the growth
in renewables in the last three years,
the report says.
“EU renewables growth has been
increasingly reliant on the success
story of wind in Germany, the UK and
Denmark, which has been inspiring,”
said Matthias Buck, Director of European
Energy Policy, Agora Energiewende.
“If all countries in Europe
engage in this, 35 per cent renewable
energy by 2030 is entirely possible.”
The report also notes that electricity
consumption has risen for a third consecutive
year in the EU, reflecting a
revival in Europe’s economy and indicating
that Europe’s energy efficiency
efforts are insufficient.
Power sector carbon emissions for
last year, however, remained unchanged,
the report’s authors have
estimated.
Europe’s current policy on energy
efficiency needs strengthening, Sandbag
has suggested. “With electricity
consumption rising for the third year,
countries need to reassess their efforts
on energy efficiency,” Dave Jones,
Energy Analyst at Sandbag said. “But
to make the biggest difference to emissions,
countries need to retire coal
plants. We forecast Europe’s 258 operational
coal plants last year emitted
38 per cent of all EU ETS emissions,
or 15 per cent of total EU greenhouse
gases.”
Five EU nations – the UK, France,
Italy, the Netherlands and Portugal –
have so far committed to phasing out
coal fired electricity generation.
However, Eastern European countries
“are sticking to coal”, the report says.
The debate in Germany, Europe’s
largest coal and lignite consumer, is
ongoing and will only be decided in
2019.
Overall, wind solar and biomass rose
to 20.9 per cent of the EU electricity
mix, up from just 9.7 per cent in 2010.
The report projects that renewables
could provide a third of Europe’s electricity
in 2018, and by 2020 renewables
may account for 36 per cent of
Europe’s power demand – up from 20
per cent in 2010.
According to WindEurope, a record
15.7 GW of new wind energy capacity
was added to Europe’s grid in 2017.
New wind farm installations were up
20 per cent on 2016 and beat the previous
2015 record of 12.8 GW. Onshore
wind capacity grew by 12.5 GW
and offshore wind by 3.1 GW.
Last year was also a record year for
new investments in future wind farms,
WindEurope said. As muh as 11.5 GW
worth of projects reached Final Investment
Decision: 9 GW in onshore
wind and 2.5 GW in offshore.
However the value of these investments
at €22.3 billion (€14.8 billion
onshore and €7.5 billion offshore) was
19 per cent down on 2016. WindEurope
says that the figures indicate
uncertainty in the industry.
“Despite the strong figures the medium
and longer term outlook for wind
is uncertain,” said Giles Dickson,
WindEurope CEO. “The transition to
auctions has been messier than we
hoped. And crucially we lack clarity
from many governments on their ambitions
for renewables post-2020.
“Countries need to start clarifying
how much wind energy they want to
deploy in the future.
“The wind industry won’t invest in
Europe’s economy if the market prospects
are not there. Countries now
have the chance to turn their National
Energy and Climate Plans into investment
brochures by committing to
ambitious wind volumes.”
Renewable energy generation continues to rise but the future of the energy transition is fragile.
The latest capacity market auctions in
the UK have cleared with record low
prices, and signalled a shift away from
the use of coal and new natural gasfired
capacity to build security and
flexibility in the electricity system.
The UK held two auctions in the last
month, securing 50.4 GW of capacity
at a clearing price of £8.40/kW for delivery
in 2021-22, and a further 5.8 GW
of capacity at £6/kW for delivery in
2018/19.
The auctions are the basis of the UK’s
capacity market, designed to ensure
energy security in winter months and
fill the gaps left by inherently intermittent
wind and solar power.
The clearing prices of the auctions
were well below the £18-£22.50/kW
year range of previous auctions and
served to exclude the prospect of new
natural gas fired capacity.
However, more than 86 per cent of
the capacity that won contracts came
from existing gas and nuclear power
stations, many of which are due to retire
in the next two decades. A further
10 per cent of the winning capacity
came from interconnectors.
N-ERGY managing director David
Bowman said that the results of the
auctions indicated that there is a lack
of consistency in government policy,
given its clean growth strategy and
commitment to phasing out coal.
Dr. Jonathan Marshall, Energy Analyst
at the Energy and Climate Intelligence
Unit (ECIU) said that the
results showed that “there is clearly
more than enough capacity on the
grid, and that we can keep the lights
on even without resorting to the oldest
and most toxic form of power
generation”.
Following the auctions, EPH, owner
of the 2 GW Eggborough coal fired
power plant in Yorkshire, said that it
would close the plant because of its
failure to secure a capacity market
contract.
Eggborough has been generating
electricity for more than half a century.
After it shuts, there will be just
six coal plants left in the UK, as Northern
Ireland’s last coal power plant is
also due to close in May after it failed
to win a contract in Ireland’s new capacity
market.
AES said it was disappointed that
Kilroot would have to close when the
new all-island Integrated Single Electricity
Market (I-SEM) begins operating
on May 23.
I-SEM is replacing the current Single
Electricity Market and is designed to
deliver increased levels of competition
as well as encouraging greater levels
of security of supply. The capacity
market auction was the market’s first
and procured capacity for May
2018-September 2019.
In all, Ireland’s auction awarded
9066 MW of capacity, over half of it
existing gas turbine capacity.
Enel said that its new advanced energy
services division Enel X,
through its US demand response services
company EnerNOC, Inc., was
awarded the delivery of 217 MW of
demand response resources in Ireland’s
auction.
Germany
readies for
new offshore
wind tender
The country’s Federal Network Agency
(Bundesnetzagentur) has outlined
the rules of the second competitive
offshore tender, setting a deadline for
bids of April 3, 2018.
The tender volume includes 1550
MW of capacity as set out in Germany’s
Offshore Wind Energy Act,
plus 60 MW of capacity that was not
awarded in the first call for tenders
held in April 2017. There is a quota
of 500 MW for projects in the Baltic
Sea.
The maximum subsidy rate for
which bidders can compete has been
set at €0.10 ($0.13) per kWh or €100
per MWh. In the first offshore wind
tender, the cap was set at €0.12/kWh,
although three of the four winners
actually placed zero-subsidy bids.
The capacity procured in the auction
will be operational after December
2020. The tender will be eligible for
offshore wind farms that were consented
before August 2016, or that
have advanced approval status.
According to Duetsche WindGuard,
offshore wind energy capacity
reached 5387 MW at the end of
2017.
UK auction
shuts out new
gas capacity
n Record low clearing prices
n Ireland completes first CM auction
Parliament building: Germany has outlined rules for the second
competitive offshore tender