The EU’s 2040 climate target not only sets a 90% reduction in net greenhouse gas emissions goal, but also forecasts that there will be up to twice the amount of electricity in EU final energy consumption by 2040, compared to 1990 levels.

Meeting these goals, predicts Eurelectric, will require ‘a double-digit billion figure of additional investments every year, when armed conflicts, deindustrialisation, higher interest rates and a cost of living crisis present a more challenging environment to transform the European economy’.

The Russian challenge
Speaking before the Federation’s annual ‘Lights ON’ power summit on 22–23 May 2024, in Lagonissi, near Athens, Ruby says an immediate major challenge is to reduce the EU’s dependence on external suppliers for natural gas – notably Russia – as gas still represents around 21.5% of EU energy consumption.

‘From a geostrategic point of view, Europe should proceed as fast as possible with a full decoupling from all Russian energy imports,’ states Ruby. ‘Practically, it might take a bit longer than we would like, but the three main avenues should be: to replace fossil fuels with homegrown clean and renewable electricity; diversify imports of gas and rely more on [democratic] countries like Norway and the US; and to scale up the use of alternative gases such as biogas and hydrogen. Last (of course) and most importantly, we need electrification,’ he says.

Indeed, Eurelectric argues that to achieve EU decarbonisation goals, all sectors must be largely electrified. Massive electrification rates will be made available by large shares of renewables and other decarbonised power generation, while today 70% of final energy demand in transport, buildings and industry still relies on fossil fuels.

‘The backdrop of the energy transition has changed substantially,’ the Eurelectric Secretary General continues. ‘To succeed with the long-term goal of climate neutrality, it is critical to keep the support of European businesses and citizens. We therefore advocate a decarbonisation strategy that maintains a manageable pace and keeps the focus on proven technologies.’

Build-out
Ruby suggests that to balance the electricity system of the future: ‘We need a huge build-out of firm and flexible technologies, specifically carbon-free power plants and storage capacity, to ensure a situation where up to half of all energy needs are covered by electricity 15 years from now.’

He continues: ‘According to our estimates, we need to quadruple the storage capacity by 2030 [from 51 GW today to around 191 GW]. This is challenging given that demand for electricity is flat or even falling and so we need to provide investment signals and derisking instruments to incentivise investments into electricity.’

With that in mind, Eurelectric welcomes the EU Executive’s recent allocation of nearly €600mn for energy infrastructure projects contributing to decarbonisation and security of supply, while noting that much more is needed.

‘High-speed electrification of society requires massive investments and measures across the board. Therefore, we welcome the investment initiative and call on policy makers to launch an electrification action plan within the first few days of the new mandate’, says Ruby. In view of a new European Parliament and Commission taking office (in July and November 2024 respectively). They will stay there until 2029.

With the EU’s target to achieve carbon neutrality by 2050, fossil fuel phase-out is essential.

Ruby emphasises: ‘We have to be clear that fossil fuel plants, especially coal plants, need to be phased out. Ambitious timelines are necessary from a climate perspective. At the same time, the phase out should be orchestrated in a way that does not jeopardise security of supply. This has not been the case yet, but in the short- and medium-term, we see yellow flags from grid operators when it comes to system adequacy.’

In the run-up to the 6–9 June European elections, Ruby says it was essential to ensure ‘sufficiently clear investment signals for new decarbonised capacity to come online in time for the fossil fuel plants to be phased out’.

Various options
As for using new nuclear plants to replace fossil fuels, he says more firm and flexible capacity is needed to ensure electricity supply. ‘The choice of technology will differ from company to company and country to country. Some will opt for nuclear, others for hydrogen-ready gas plants and others for hydropower or storage depending on their natural resource endowment,’ Ruby says.

He states that, from the point of view of the electricity industry: ‘Different regional approaches to ensuring security of supply can actually be an upside, because different technologies can complement each other and allow for a simultaneous build-out in a period where supply chains are stressed.’

Renewables
Meeting the new EU Renewable Energy Directive goal of a 42.5% renewables target by 2030 will also impact the electricity market greatly, especially as some member states are not on the same page, suggests Ruby. France, for example, so far has refused to set any renewables goal.

Reaching 42.5% is an enormously ambitious target, Ruby observes. ‘Adding 600 GW of variable renewable capacity to the electricity system will have profound impacts for the functioning of the system as well as the electricity market. The additional capacity will mean that electricity overall will be more plentiful and therefore cheaper,’ he says.

At the same time, renewable capacity will not necessarily be always available, given the weather-dependency of renewable energy sources. ‘This means that flexibility and reliability will be the most valuable elements in the electricity system, which will also be reflective in costs,’ he remarks.

He tells New Energy World that there have been encouraging developments in this area. For example, solar power plants used to be able to produce electricity at full capacity 12% of the time, now these figures are coming up above 20%.

‘The big influx of renewables will have impacts on price formation in the power market; we will see a downward trend in prices. As renewables begin to dominate the market, an increasing amount of hours with zero or negative prices is expected.’ – Kristian Ruby, Secretary General, Eurelectric

Electric vehicles
The rise in popularity of electric vehicles (EVs) should also help the push for cleaner mobility and carbon neutrality, Ruby continues, citing Eurelectric’s June 2023 Decarbonisation Speedways study which argues that despite concerns about recharging infrastructure, EVs are set to take over and replace polluting internal combustion engines. (The report encourages consumers to switch to EVs: ‘Switching to an EV today would reduce up to 72% of CO₂ emissions per year, while consuming a third of the energy needed for a fossil-fuelled car,’ it states.)

In addition, Eurelectric’s report on the future of mobility, written with Ernst & Young and released in March 2024, shows that 75 million EVs are expected by 2030. ‘This is both an enormous opportunity and a big challenge: making sure we are on time, ensuring that the charging structure is interoperable, and giving a smooth driving experience wherever possible,’ it says. Transport is also expected to score the largest energy efficiency gains in the ongoing energy transformation, with at least a 53% reduction of final energy demand compared to 2015 levels.

As ever, with new technologies, increases in demand will vary, and occasionally fall, but Ruby says the overall trend towards electrification in transport is upwards. For instance, while EV manufacturer Tesla reported a fall in global sales of nearly 9% in January–March 2024 compared to the same period in 2023, coupled with an, albeit very slight, drop in demand for EVs in the UK, the rise in electric bicycles sales is surging. According to Belgian cycling organisation Pro Vélo, at least half the bikes on Brussels roads are now electric.

‘We have seen many changes in mobility with the introduction of the electric bike,’ says Ruby, who himself has a normal bicycle as his preferred means of transport. ‘People can now commute 15 or 20 km per day with these bicycles. This would have been a challenge a few years ago.’

He also notes that Eurelectric’s Decarbonisation Speedways study anticipates the power system across the EU will require between 531 and 782 TWh of flexibility to support variable renewable generation by 2050. The Secretary General observes: ‘This is roughly the annual power production of Germany!’

With this in mind, ‘we have a huge market conundrum coming,’ he warns. ‘The big influx of renewables will have impacts on price formation in the power market, and we will see a downward trend in prices. As renewables begin to dominate the market, an increasing amount of hours with zero or negative prices is expected.’ Dealing with such difficult issues will take up Eurelectric’s time for the foreseeable future, Ruby notes, alongside getting to know the next crop of elected EU officials.

Ruby says that he and Eurelectric could impact EU and national government energy policy. ‘As a trade association, providing high quality advice to policy makers and doing so in a timely fashion, the key to successful industry representation is to identify where the industry interests overlap with the public interest.’

Looking forward, Ruby hopes that the European energy sector finds greater sustainability as it targets a greener future.

• Further reading: ‘European electricity market overhaul underway’. The UK and European energy retail markets have been rocked by events post-COVID and the war in Ukraine, which have all taken their toll. Their energy markets are now at a crossroads, with strategic reviews underway nationally and internationally.
• The European Commission (EC) has unveiled new measures to accelerate the deployment of renewable energy in the European Union (EU) and reduce Russian fossil fuel imports, building on the REPowerEU Plan launched two years ago.