Seven European Countries Set Ambitious But 'Necessary' Target to Decarbonize Power System by 2035
The seven European countries that make up the Pentalateral Energy Forum—Austria, Belgium, France, Germany, Luxembourg, the Netherlands, and Switzerland—will strive for the decarbonization of their interconnected electricity system by 2035.
The countries, which form the Pentalateral Energy Forum—a 2005-convened voluntary framework for regional energy cooperation—in a joint statement on Dec. 18 formally concluded, “timely decarbonization of the electricity system is a prerequisite to allow for full decarbonization of our societies by 2050, and that collective action in our region allows to address this challenge in a more efficient and effective manner.”
Target Reliant on Key Guiding Principles
The countries, which, with the exception of Switzerland, are all part of the European Union (EU), also agreed on a set of guiding principles. Among them is that they will apply an “energy efficiency first” principle to mitigate an expected increase in power demand. The Pentalateral Energy Forum also acknowledged a need for accelerated deployment of renewables, coordinated energy system planning, and flexibility as a “prerequisite.”
Other guiding principles include acknowledging a “pivotal role for molecules,” such as hydrogen, including their “fundamental role in stabilizing a decarbonized electricity system.” Infrastructure development, including grid modernization and reinforcement, will also be necessary, the forum said.
Finally, “We recognize the necessity of a future-proof market design. This design should incentivize necessary investments in renewable generation, flexibility, storage and transmission infrastructure and allow for efficient dispatch, and ensure resource and transmission adequacy for a sustainable and resilient energy future,” it said.
An Important Stepping Stone Toward Full Decarbonization by 2050
The statement on Monday stems from a 2021-issued commitment by forum ministers to reach full decarbonization of the electricity system by 2050. “Multiple studies to investigate possible futures of our energy system” indicate that decarbonization of the countries’ electricity systems by 2035 will be an important step toward achieving that goal.
A recent study commissioned by the Benelux General Secretariat on the forum’s behalf analyzed several trends gleaned from existing scenario assessments and technical reports, and it lays out 12 “convictions.” Foremost among them is that the power sector will need to be decarbonized as “early as possible, ideally by 2035,” with carbon intensities below 50 grams/kWh. The 2035 date is based on an International Energy Agency (IEA) net-zero scenario rolled out in 2021, and it was also endorsed by the G7 at their 2022 summer summit. The U.S., notably, has set a similar goal of 100% carbon pollution-free electricity by 2035.
However, the report also underscores how challenging the goal may be to achieve. While low-carbon technologies will be necessary, the decarbonization of numerous hard-to-abate sectors (such as industry, transport, and buildings) will depend on power sector decarbonization, via direct (direct use of power) and indirect electrification (converting power into hydrogen or other synthetic derivatives). “This implies a large expansion of the power sector,” the report suggests. The increase in domestic power demand may double in some Penta countries by 2050, it notes.
Renewables will be a “main pillar” to achieve the target. “The sum of solar and wind capacities across the most ambitious scenarios mounts up to 1,100 GW by 2050 versus 180 GW today—that is a factor of 6,” the report notes. “Yet, the rollout of renewable installations needs to strongly speed up: annual solar PV installations need to double in the current decade compared to the previous one, and they need to double again after 2030. Faster permitting procedures, among other measures, will help to unlock these investments,” it says.
In the long run, important amounts of renewable electricity are foreseen to be imported notably from the Baltic Sea, Southern Europe, and possibly the MENA region, requiring additional cross-border capacities.” In many scenarios, “electricity imports cover between 10% and 30%, and going up to 50% in selected scenarios, of total power demand by 2050. Additional internal and cross-border capacities are needed to enable such import volumes from other European countries,” it notes.
However, the need for and role of “other more immature low carbon power generation technologies,” such as small modular reactors, tidal and wave power production, and ultra-deep geothermal and nuclear fusion, remain uncertain. “Uncertainty also remains regarding the import ratio between electricity and decarbonized molecules, as well as the source countries outside Penta and potentially over-seas exporting the hydrogen (or hydrogen derivatives),” it says.
An Ambition Fogged by Uncertainties
Uncertainties are also pegged to power demand. Direct electrification could result in a significant increase in demand of up to 40% in 2030 and more than double by 2050. While the “energy efficiency first” priority could “release pressure” on the power system, the magnitude of accelerating building renovations, for example, is subject to uncertainty due to a lack of skilled labor and persisting owner-tenant dilemmas, the report notes. “The feasibility and effectiveness of a circular and more energy efficient economy is also questionable, notably due to the risk of a rebound effect following energy efficiency improvements,” it says.
Power grid capacities must also ultimately accommodate new demand. “Internal electricity transmission and distribution networks face unprecedented challenges, most notably a significant rise in connected renewable capacities and demand volumes,” the report says. “In some scenarios, [renewable energy source (RES)] capacities connected to distribution grids increase by a factor of 5 to 7 compared to current levels, demand volumes by a factor of 2 (with peak loads potentially featuring an even more important rise in case of suboptimal load profiles).”
In combination with decreasing system inertia, grid aging, and rising transit flows, the prospect of new variable sources results “in a strong need to increase power grid capacities, through a smarter and more efficient operation of existing assets (e.g., via dynamic line rating, phase-shift transformers, power electronics), and through grid reinforcement,” it notes. “Annual distribution grid costs are expected to increase by 25% to 100% until 2050; annual costs for transmission grids may rise even more importantly by up to a factor of 4.”
The Pentalateral Energy Forum has underscored a need for a “coordinated approach to energy system planning.” A key objective should be to “identify the optimal trade-off between the exploitation of high-performance RES potentials, electrolyzer siting, and optimized power/gas/hydrogen grid adaptation (management, repurposing, reinforcement),” the report says. “It requires a significant effort of coordination (i.e., transaction costs), but allows for cost-efficient infrastructure deployment and avoids stranded assets.”
Flexibility will no doubt be key to enabling a decarbonized power sector. “Daily flexibility needs are expected to rise by a factor of three to four at the Penta-level, and more than a factor of five in selected Penta member countries until 2050. Seasonal flexibility needs face a less pronounced but nonetheless very important increase (as solar and wind generation feature seasonal patterns, and heating is further electrified),” the report says. However, uncertainty remains “on the magnitude of participation of renewable or low-carbon gas in the power sector, notably regarding the role of biomethane and hydrogen in peak power generation, and the need for hydrogen or its derivatives as seasonal power storage.”
Regional cooperation and enhanced cross-border interconnection “may soften” the vast increase in flexibility needs, the report concludes. “By ‘simply’ interconnecting the Penta market area, demand and RES variation flattens out significantly, implying a 10% reduction in flexibility needs,” it says. “That is, regional cooperation lowers costs and facilitates RES system integration.”
Achieving all of this may also be contingent on how successfully the region facilitates a “future-proof electricity market design.” The report lays out several recommendations. Market areas should be further interlinked “in terms of reinforced cross-border interconnection capacities but also via market integration, cross-border cooperation to share reserve capacity and net balancing, the joint development of offshore wind energy parks, so-called hybrid projects,” it suggests. Investments and incentives, through capacity remuneration mechanisms, will also be required. “The participation of all flexibility sources should be enabled, and the potential reconfiguration of bidding zones could be investigated,” it says.
—Sonal Patel is a POWER senior associate editor (@sonalcpatel, @POWERmagazine).