In a new study on the region’s electricity market design, Eurelectric states that with around 70% of the planned new renewable capacity being connected to the distribution grids, these require reinforcement and expansion.

But for efficient and timely connection, the way the grids are developed needs to change from an essentially reactive approach to a ‘build-for-the-future’ approach that includes inter alia anticipatory investments.

“Getting our electricity networks fit for net zero should be a top priority in the coming years, both at EU and national level,” says Kristian Ruby, Secretary General of Eurelectric.

“This requires a new mindset among regulators and legislators. One that anticipates Europe’s capacity needs to integrate more renewable projects, and one that accommodates unprecedented electrification of transport, buildings and industry to match the speed and scale needed for Europe’s energy transition.”

The REPowerEU plan anticipates around 50 to 60 million heat pumps, 65 to 70 million electric vehicles (EVs) and over 600GW of additional renewable capacity by 2030.

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A scarcity of grid capacity translates into longer waits for connections, more congested areas and higher costs for network users.

In its earlier ‘Decarbonisation Speedways’ study, Eurelectric found that the EU currently invests €23 billion (US$25 billion) per year in grid infrastructure. However, the investment in distribution grids should reach no less than €38 billion per year until 2030 and up to €100 billion per year until 2050 to deliver on the decarbonisation’s agenda.

Eurelectric proposes in its report that the distribution networks should be planned at least 5 years ahead, with the option of reaching 10 years and with a 2050 horizon projection.

Further regulators must be flexible on DSO investment instruments, removing regulatory obstacles and adopting output-based remuneration taking into account both capex and opex.

EU policies and funds also must promote investments in the physical dimensioning of the grids. In this connection, dynamic line rating is one of the basic means to expand capacity.

Likewise, significant digitalisation efforts are needed and should be incentivised for grid management and forecasting and flexibility should be promoted, with local production and consumption stimulated.

A key for infrastructure development is permitting and Eurelectric urges for a “dedicated and permanently simplified procedure” for grid development, including a possible ‘one-stop-shop’ concept for a single permit for a generation project and the associated grid expansion.

Underlying much of these actions is the need for accurate information and Eurelectric calls for “robust data-sharing mechanisms” among the various players.

Audiences at energy conferences don’t often break out in a spontaneous round of applause, yet Catherine MacGregor of French energy company Engie got one this week at the Eurelectric Power Summit in Brussels.

The chief executive won cheers and applause after she delivered a passionate statement on why the energy industry is a great place to work.

“We are a super-attractive sector,” she said. “We are an unbelievable sector. We are going to transform the world for the better. For young people: where else would you go?”

She was taking part in a discussion highlighting how European utilities have been impacted by geopolitical events in the past year.

Asked how long she believed the turbulence in the market would continue, she said that “tensions and volatility might stay until 2026 and 2027”.

Yet she stressed that helping to stabilise the sector – and in turn accelerate the transition to cleaner, secure and affordable energy – was in the hands of the industry itself.

“We are a bit stuck in our own arguments and debates,” she said. “We need to unleash more positive energy.”

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Earlier this month, MacGregor unveiled Engie’s 2050 energy scenario for Europe. It had seven key action points:

• All current levers and those under development must be activated to make “Net zero emissions” a reality in under 30 years. 
   
• To meet European climate commitments, there is a need to step up efforts on energy conservation and energy efficiency, with the aim of achieving a 34% reduction in energy consumption by 2050.
   
• A very significant acceleration in the growth of renewable energies, primarily electric (wind and solar power) is essential to reach European climate targets and limit costs.
   
• Flexibility technologies (battery storage, pumped storage, combined-cycle gas turbines) will play a central role in the energy system in the context of the growth of renewable energies. Additional capacity of 600GW must be developed (a circa 4-fold increase on current capacity). 
   
• Methane will be fully decarbonized by 2050 and will play a key role in the energy transition. The demand for methane will be halved in France and in the rest of Europe. In France, biomethane will play a dominant role, accounting for 2/3 of demand in 2050. The biomass potential in France is sufficient to cover the need for solid, liquid and gaseous biofuels. 
   
• Decarbonized hydrogen and molecules produced from hydrogen (e-molecules) will play a key role in transports and for certain industrial uses. Demand for hydrogen and e-molecules – driven by the need to decarbonize heavy-duty transport and industry – will increase 8-fold by 2050 (75% for transport and 25% for the industrial sectors most difficult to decarbonize, such as steel). Almost half of this hydrogen will be produced locally. 
   
• Investment in electricity infrastructures will increase massively, while existing gas infrastructures can be adapted to a totally carbon-free energy mix at limited cost. Minimising the cost of the energy transition, they meet the challenges of peak demand and energy system flexibility.

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At the launch of the scenario, MacGregor said: “The magnitude and urgency of the energy transition makes it an unprecedented challenge for Europe.

“At a time when the debate on energy planning is gaining traction in Europe, we wanted to share our convictions on what we believe to be the most realistic pathway.

“A successful transition means achieving net zero carbon while ensuring that the cost to citizens and businesses is kept under control, developing a robust and reliable energy system.

“To achieve this, we are convinced of the need to exploit all levers for decarbonization. The combination of the molecule and the electron is the answer to these challenges on a national and European scale.”

The chief executive of E.ON and new Eurelectric president Leonhard Birnbaum has slammed the prevailing attitude to artificial intelligence in Europe.

“I’m dismayed at the discussion about AI in Europe,” he told the Eurelectric Power Summit in Brussels.

He said negativity around AI obscured what he believes is an essential stepping stone to accelerate the energy transition: “We have to get AI in our systems.”

And this he said was going to take “a different mindset: stop thinking that “no business is digital – realise that your business is digital”.

“We should have a completely different attitude, otherwise, we are going to be surpassed. We have talent in Europe: the potential is huge and we need to unleash it.

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“If we don’t fully digitize our energy system then we cannot manage volatility and flexibility. And we cannot integrate renewables.”

Asked what keeps him awake at night he said simply: “Speed and scale.”

He elaborated: “Only what scales matters and only what scales fast matters.”

And he said that speed and scale were needed more than ever in response to the Inflation Reduction Act in the US.

The IRA is, he said, “simple, predictable and stable”.

In contrast, he said EU regulation is “complicated, not stable and often delivers an outcome that is a [unwanted] surprise.”

“The IRA is a carrot: EU regulation is a stick. But either has to be stable, predictable and not complicated. There is much to be learned from the IRA.”

The secretary-general of Eurelectric, Kristian Ruby, today painted a stark picture of the challenge Europe faces to be seen as a major player on the global energy economic stage.

He said that on a world map, Europe could be considered as a collection of ‘small countries’, and he warned that “we are becoming the small countries in a geopolitical sense”.

“War is back in Europe, coal plants are back in operation. In Asia, the emerging economies have emerged and the US is reshaping its industries. A new balance of power is emerging and we need to avoid that ‘small’ means ‘weak’.

Delivering the opening speech of the Eurelectric Power Summit in Brussels, Ruby said the “dark clouds of climate change are gathering and protectionism is on the rise”, which he said was resulting in “the economic mantra changing from ‘just in time’ to ‘just in case’.”

And he said the energy transition was seeing Europe shift from “a fuel-intensive economy to a raw materials economy”.

He said that Europe had made great strides in the energy transition in the first half of this century, yet a variety of events in recent years, including the Covid pandemic and Brexit, had resulted in it taking its eye off the ball in terms of energy security.

And now countries were left asking: “How did we get so dependent on Russian gas?”

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But now he said “Europe has its eyes open” and the question it must answer is: “How do we get back to the future without repeating the mistakes of the past?”

“How do we scale solutions to build a net zero Europe,” posed Ruby. “In the new balance of power, home grown electricity is industrial power and it is political power.”

And he stressed that being the ‘small countries’ has advantages that must be maximized. “The strength of the small countries flows from our unity, co-operation and commitment to freedom and planetary stewardship.”

At this morning’s opening of the event, Eurelectric unveiled its report Decarbonisation Speedways, which identifies three decarbonisation scenarios, or ‘speedways’, towards net zero by 2050 based on current policies – one on Fit for 55, another on REPowerEu and the third named ‘Radical action’ as an extension of the latter to deliver net zero by 2040.

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The study, which was undertaken with Accenture, identifies three decarbonisation scenarios, or ‘speedways’, towards net zero by 2050 based on current policies – one on Fit for 55, another on REPowerEu and the third named ‘Radical action’ as an extension of the latter to deliver net zero by 2040.

Along with these are indicative targets across sectors for the interim 2030 and 2040 ‘landmark’ dates as well as for 2050.

With approximately 70% of Europe’s final energy demand in transport, buildings and industry relying on fossil fuels, these are considered the main target for decarbonisation, with the main route in the three scenarios relying heavily on electrification of demand.

Clean electricity is available via renewable energy sources, while efficiency gains lead to a reduction of the total energy needed.

Indirect electrification with e.g. hydrogen is favoured only in hard-to-abate sectors such as heavy industry and transport.

Among the three sectors, buildings see the largest absolute electricity demand, although the largest relative demand growth is in transport.

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Within this sector road and rail largely electrify towards 2050, while in marine and aviation, hydrogen is introduced as an alternative.

Similarly by 2050 light industries largely electrify, reaching rates of 74%, while hydrogen has the more important role in heavy industries, reaching 31%.

Overall the study finds that the share of electricity in final energy demand in 2050 should approach 70%, around 5,000TWh.

Power sector transformation

The study finds that all scenarios call for a strong increase in renewable capacities, with faster rollout of especially solar PV and onshore and offshore wind essential to meet the capacity demand.

The aggregated capacity amounting to an about ten-fold expansion for 2050 is estimated between 2,485GW and 3,287GW, requiring annual growth of over 80GW.

This, in turn, will require between 531TWh and 782TWh of flexibility by 2050 to balance the supply and demand, along with much-increased investment in both the grids and the generation capacity.

For example, grid investment is needed in the upper €30 billions per year by 2030 compared with the low to mid €20 billions in the latter part of the last decade, while generation investment needs to increase by about 50% to reach €80-100 billion per year.

Accelerated decarbonisation

Commenting on the study, Kristian Ruby, Secretary General of Eurelectric in an exclusive interview said that the study was aimed to provide insight into the EU’s accelerated decarbonisation ambition and a “first” to look in detail at the 2040 milestone and where the region needs to be then based on today’s policies.

“To be climate neutral by mid-century, 2040 is a natural milestone on the way,” he says, pointing to several reasons, including the discussions around carbon budgets becoming increasingly important and the implications for power sector investments after 2030 and whether these should continue essentially business-as-usual or there should be significant ramp-up, “which is what we are finding”.

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Key also is the opening of discussions by the EC on 2040 targets as a requirement for international reporting purposes.

Turning to the headline findings of the study, Ruby says there are three to highlight, with the first that it confirms that “electricity and electrification is an indispensable part of any credible and cost-efficient decarbonisation pathway”.

The second one is that with the implementation of all the technologies, there would be positive economic benefits for societies, but also for households.

And the third is that while “the target in the distance is important, it’s even more important to get going”.

“We have a lot of targets, a 2050 target and a 2030 target, but what we really need to do is start marching towards those and while we are happy to contribute to the debate, we need a period where we focus on delivering the already agreed policy.”

Scenario planning

While scenarios are not intended to be specific predictions of the future, they are nevertheless a key starting point for wider engagement and Ruby says that the Decarbonisation speedways study provides insights to inform discussions with the European Commission on the one hand and with industry stakeholders on the other.

They also do not take account of specific challenges that are faced, among which Ruby mentions those currently in Europe including the debate around electricity market reform, infrastructure permitting, supply chains and not least potential future skills shortages.

“In debates, everybody likes to give their two cents worth and what we’re doing is to basically say: What would be the implications? What are the things we should do? What should we build and where should we build – how many transformers, how many wind turbines? And what are the dollars and cents we need to invest to get this done? It’s about injecting some facts into the debate.”

Joining Birnbaum in the presidency are vice presidents Markus Rauramo, CEO of Fortum and Georgios Stassis, CEO of PPC.

The new presidency will place a strong emphasis on ramping up electrification while supporting Europe’s decarbonisation and energy sovereignty goals.

According to a media statement, the key priorities of the new team include; strengthening electricity grids, rethinking Europe’s security of supply, and ensuring proper investment conditions.

Leonhard Birnbaum said in a statement: “The big transformation of our economy and society happens in the power grids. We must urgently prioritise the growth and digitalisation of our infrastructure to enable consumers to reap the benefits of their own flexibility and ensure access to clean, reliable electricity.

“Policymakers and regulators need to supercharge the green agenda and support electrification. Simple cost control is no longer an option, and Eurelectric will be carrying this message loud and clear in Brussels and beyond.”

According to Eurelectric, the energy landscape is changing due to the war in Ukraine and Russia’s weaponization of energy. This, coupled with cyber, military and weather threats, places energy security at the top of the priority list to be supported by industrial and external policy.

In order to mitigate the resulting risks and ensure autonomy and carbon neutrality, grid modernisation, as well as expansion and digitalisation of electricity infrastructure are essential.

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By 2030, 50% of Europe’s low voltage lines will be over 40 years old, states Eurelectric, which means a modern and resilient grid will be needed to connect the additional 650GW by 2030.

Vice president, Markus Rauramo, said: “Political and industry leaders must now act decisively to defend the EU’s industrial competitiveness without delaying its decarbonisation, nor weakening the integrated energy market with disruptive intra-EU subsidies races.”

Vice President Georgios Stassis added: “The power sector is at the forefront of the unfolding energy transformation and there are two challenges lying ahead: scale and pace. To deliver reliable and affordable electricity to consumers while achieving our climate goals, we need a resilient electricity market structure that spurs investments and reduces the risk of future price spikes”.

Eurelectric’s new presidency will now initiate research in the areas of grid and security of supply to inform the debate and support policymakers in their quest to meet new challenges.

According to the report, 2022 was a bumper year for e-mobility. EV sales won around 20% of the market, up from 17% in 2021, reaching eight million units in Europe.

Driving into the mainstream, however, will depend on the ability to convince the mass-market customer to take the EV-turn.

Kristian Ruby, secretary general at Eurelectric, stated in announcing the report: “Getting our transport sector off its fossil fuel addiction is critical to achieve energy independence. The key to achieve that is to make the EV ecosystem the obvious choice for the consumer.”

The essentials for EV uptake

According to the report, bringing down battery prices will be the first step. This entails setting clear regulations and mandates to attract investments in a resilient supply chain.

Enhanced battery performance, recycling, and innovation in alternative chemistries as well as faster permitting and sustainable mining to ensure access to lithium, cobalt, and nickel are now urgently needed to escape dependencies on unreliable suppliers.

But the battery price tag is not the only factor to encourage consumers to make the switch.

The EV must be coupled with adequate charging infrastructure, in the places and spaces where people need it. It must be enabled by a smart grid that allows the two-way flow of green energy and supported by digital technologies that make EV ownership simple, flexible and likeable.

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Lack of public charging infrastructures was found to be the first concern for potential EV buyers. Charging stations – whether at home, in the office, or on the road – must be quickly and evenly deployed across EU countries.

By 2030, Europe will need 5.4 million non-residential chargers from the 482,000 currently accessible to supply around 200TWh of energy demand for EVs. This raises challenges for grid balancing that must be addressed now to avoid overloads and blackouts later.

Smart grids to cope

According to the report, there is currently a shift in market from incentive and policy-led to one that is self-sustaining and backed by customer demand.

This is helped by price corrections for critical minerals, following record highs in 2022, which will feed through into cheaper batteries and more affordable vehicles.

As supply catches up with demand, global sales of plug-in and fully electric vehicles will climb from 10.5 million in 2022 to 14.3 million in 2023. In Europe specifically, EV sales are projected to climb 30% in 2023 as supply chain bottlenecks ease.

However, analysis by the IEA reveals that when EV stock exceeds 20% of electricity demand, the need for grid adaptation will become significant.

To cope with increased load and minimise the need for grid upgrades, alternative mechanisms and smarter solutions are emerging, such as flexible connection agreements, procurement of distributed flexibility, diverse tariffs and integrated charging networks among others.

Urska Skrt, mobility manager at World Business Council for Sustainable Development, states: “The technology is available. The next challenge, of course, is to change consumer behaviour and to remunerate flexibility, so that systems can be efficiently integrated.”

For EVs to become a resource rather than a challenge to grid stability, we urgently need coordinated grid plans and digital technologies for two-way communications and pricing between EVs and grids. In this light, the report hails Vehicle to Everything (V2X) tech as “the next big thing in smart charging”.

However, the technology is at a nascent stage, with around 78% of projects running on a trial basis.

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Turning data into insights

The report highlights data management a complex challenge, a result of the emergence of a ‘data highway’, which is emerging metaphorically and literally.

Data is generated at primary nodes — in EVs, at public and private chargers and by Charge Point Operators (CPOs) — within the e-mobility ecosystem.

As immense amounts of data is generated, issues raise around data storage, ownership, usage and regulation. It also provides opportunity for:

• Generating insights relevant to wider industry needs
• Understanding grid network capacity and other areas of concern
• Assessing suitability for renewable energy integration.
• Supporting identification of suitable locations for charging infrastructure.

To coordinate the data highway, the report looks at digitalisation, and thereby-enabled interoperability, as an answer.

To enable this, numerous touch points will need to be addressed, including:

• Open protocols to support neutral interconnections between EVs, CPOs and e-mobility service providers (EMSPs) and to enable roaming and grid connection.
• An open connected platform neeeded for data sharing, alongside fair and transparent data access requirements.
• A digital twin needed of the grid to model traffic density, grid network capacity and potential for renewable integration, as well as to identify suitable sites, land usage requirements and permits.

Utilities and policymakers will steer the charge

EV numbers will continue to rise, a consequence of market dynamics and technological, regulatory and economic drivers. But, as we speed towards the point of no return, utility companies must continue to play their critical role in delivering the EV solution.

Utilities will play a huge role in pushing the e-mobility industry into mass adoption, by rolling out new and upgraded networks and renewable projects. Regulators, however, must also be on board with a clear enabling framework.

Through release of the report, Eurelectric is calling on policymakers to:

• Expand, upgrade, and climate-proof distribution grids
• Streamline permitting to reduce delays in installing charging infrastructure and incentivise businesses to install charging stations via tax credits and subsidies
• Support flexible technologies such as smart meters and vehicle-to-grid to enable demand-side response and raise awareness on how citizens can become active energy transitioners;
• Encourage investments in domestic raw material production, recyclability, and alternative battery technologies

Leonhard Birnbaum will be taking over from Jean-Bernard Lévy, chairman & CEO of EDF, whom he has assisted as vice-president of Eurelectric since June 2021.

Birnbaum will take the lead at a tumultuous time, as the war in Ukraine impacts supply and electricity prices and causes a rethink of Europe’s market design.

One of the first endeavors of Leonhard Birnbaum will therefore be to steer the industry at a time when several member states are seeking market interventions and market design reforms.

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Leonhard Birnbaum said in a statement: “The electricity sector is facing unparalleled challenges. We are operating in an extreme environment with high prices, supply disruptions and frequent political interventions in the market. A key priority will be to strike a balance between customer protection and investor certainty.

“The decisions we will make in the coming months will be decisive for Europe’s future. They will determine our ability to invest our way out of this crisis to achieve cost-efficient, climate-friendly and secure energy supply and infrastructure to our citizens and industry. I am honoured to take the reins of Eurelectric at this important time.”

During his Presidency, Lévy focused on taking decisive steps to put renewable and low-carbon electricity at the core of the European Green Deal and setting in stone the electricity sector’s commitment to a climate-neutral economy.

“The past years have been extremely challenging for the industry with Covid-19 lockdowns and economic downturn immediately followed by war, supply crisis and inflation. This difficult context confirms that the way forward is accelerated electrification and decarbonisation. Efficient short-term markets combined with long-term investment signals can allow the power sector to deliver the massive renewable and low-carbon investments needed”, said Jean-Bernard Lévy.

In March, Eurelectric’s Board will elect a new Presidency team, composed of a President and two Vice-Presidents which will be effective as of June 2023.

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Register for the event to attend their sessions and more.

The Barometer, released by Eurelectric, sector association representing the common interests of the European electricity industry, illustrates the association’s data crunch on trends in the industry.

The report finds positive trends have been emerging in major oil and gas consuming sectors – in 2021 the electric powertrain represented 18% of new vehicle sales and heat pump sales grew by 25% to reach 2 million units.

Accelerating the electrification of transport, responsible for 63% of imported oil, as well as that of buildings and industries, representing 57% of gas demand, is critical to reducing fossil fuel imports.

To keep up with power demand, annual investments in both generation and distribution grids need to rise above €135 billion ($135.2 billion), a significant increase compared to today. Reducing energy demand in households as well as industry will be indispensable to address soaring prices as well as energy shortages.

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Meeting climate targets

Eurelectric‘s report looks to six essential criteria to meet 2030 climate targets:

1. Decarbonise faster

Which extends to adopting an electrification strategy, addressing permitting barriers, tackling critical materials supply chain issues and anticipating workers’ skill gaps.

2. Electrify now

Including buildings, transport and industry to reduce dependence on fossil fuels. This also relates to deploying heat pumps, electrolysers, smart chargers and storage solutions to unlock demand side flexibility.

3. Strengthen grids

Which encompasses boosting investments, modernising tariffs, ensuring access to EU funds and reinforcing grid infrastructure to integrate decentralised energy resources.

4. Secure investment

Which involves deepening the EU competitive electricity market, ensuring long-term investment signals and tackling gas prices and distortive market investments.

5. Protect customers

Energy vouchers, VAT reductions and energy efficiency incentives can be adopted to mitigate the price surge’s impact while ensuring sufficient gas storage and supply diversification.

6. Save energy 

Business requires incentivisation to reduce energy demand through tenders, interruptible contracts and demand-side flexibility while raising awareness and support for citizens to save energy via retailers.

Electrification

The Barometer elaborates on the importance of electrification for Europe to reach its net zero targets – although electrification rates are still too low, going faster is key and is very much possible; the European economy could be 34% electrified by the end of the decade.

The Barometer looks at electricity as filling an important role for decarbonising heating and cooling, in particular, through heat pumps.

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Heat pump stock should reach 50 million by 2030 to meet Europe’s decarbonisation goals and benefit from significant efficiency gains compared to oil or gas heating alternatives.

Electrification can also lower the continent’s reliance on Russian fuels and boost its energy security. 57% of gas consumed by buildings and industries for hot-water, space and process heating systems can be replaced with heat pumps and electric arc furnaces.

Investment in distribution grids

More investment into distribution grids is called for between 2030 and 2050 to ensure modern systems to support the energy transition.

Smart investment will support the power system of the future, enabling demand-side flexibility and bolstering the deployment of heat pumps, electrolysers, smart charging infrastructure and storage solutions.

These will empower customers to play an active role in the energy transition, and move beyond oil and gas.

E-Mobility

63% of imported oil goes to the transport sector, 48% to road transport alone, and e-mobility has a huge potential to displace this.

The Barometer finds that this can be reached if government policy empowers the spread of charging infrastructure via ambitious deployment targets. This will foster the ramp-up of electric vehicles and infrastructure across the EU, improve people’s access to e-mobility and ensure a just transition.

Additionally, an eleven-fold increase for electric vehicle chargers by 2030 is required to keep up with EV growth rate.

And as most charging stations are concentrated in a few EU countries, namely the Netherlands, Germany, France and Italy, this infrastructure should be deployed across Europe to make sure no region is left behind.

The member-based organisations, Eurelectric, E.DSO for Smart Grids, European Heat Pump Association, Wind Europe and Solar Power Europe, in a joint declaration address the issues of data access, privacy and data protection, cybersecurity and technological sovereignty.

Pointing to the need to strengthen the link between the “mutually reinforcing” green and digital transitions, they state that the action plan “should be the new sectorial EU digital initiative and technological framework enabling trustful and digitally-enabled interactions.”

These transitions are embodied respectively in the July 2021 ‘Fit for 55’ package and the March 2021 ‘Digital Decade’ principles.

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The European Commission set out its proposals for an energy sector digitalisation strategy in a roadmap in July 2021, with indicative planning for the nearly closed Q2 of this year.

The roadmap stated that the plan will outline how different EU policy and funding instruments will work together to exploit the benefits of digital solutions in the energy sector while minimising their risks and environmental footprint.

Five focus areas were indicated – a European data sharing infrastructure, empowering citizens, enhancing digital technology uptake, enhancing cybersecurity and supporting the development and uptake of climate-neutral solutions for the ICT sector.

Starting with data access, control and sharing leveraged on interoperability, the declaration states that the upcoming legislation to define an interoperable framework for easier data access and exchange shall serve as a reference for data exchange in the energy sector, to avoid having multiple platforms and rules.

There should be an open and transparent process involving all the main stakeholders to jointly establish for example which data are ‘highly sensitive’ with exemption from sharing, which are ‘critical and sensitive’ that should be anonymised and aggregated, which can be exchanged without specific protection measures and which are public.

Risk analyses and cost-benefit evaluations will enhance participation in data sharing, while the costs such as changing data formats, anonymising and assuring the transfer of data should be recognised and allowed to be part of the general remuneration scheme.

On privacy and data protection, the declaration states that policy measures are needed to ensure that new markets, products and services based on energy data are open and competitive, while privacy rules must allow for greater innovation.

On cybersecurity, there needs to be consistency and harmonisation across the various plans and legislation including creation of common terminologies for cyber incident reporting. Regarding certification schemes, a maturity-based approach is recommended with a set of minimum requirements that shall be defined on the European level.

Finally, on technological sovereignty, an enabling regulatory framework is needed to increase the uptake and trust on emerging digital technologies such as the Internet of Things, cloud services and artificial intelligence.

Common codes of conduct for cloud computing service providers and portability rights on data and services must be considered and the EU should promote the development of multi-country projects and investments such as Industrial Clouds projects of common interest.

Speaking at the opening of Eurelectric’s annual Power Summit in Brussels, Lévy said “climate change requires transformative action on a scale like never before”.

He said this urgency was compounded by the hangover of the coronavirus pandemic and the knock-on energy price effects of the war in Ukraine.

Yet he said there was a silver lining: an accelerated energy transition and electrification can get Europe out of these crises.

And he stressed that a renewed focus on decarbonisation was “not a focus on target X or target Y: our focus should be on the ‘how’: how to strengthen the grid; how to unlock speedier permitting; how to get greater clarity on taxonomy?”

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To focus minds on these ‘how’ questions, Eurelectric – the European trade body for electricity sector players – has released four action points, and at a press conference, Lévy outlined them in turn.

Raise the game on clean and renewable power generation

Lévy said the power sector is heading towards having 85% of EU electricity carbon-neutral by 2030 – but this is not fast enough. He said fast-tracked permitting for renewables – he included nuclear and biomass with wind and solar – and a skilled workforce are essential to ensuring this transition.

“Permitting, permitting, permitting,” he said. It was the cork that needs to be pulled for an outpouring of renewables.

To illustrate the problem of permitting, Melissa Stark of Accenture had earlier told the audience that the EU has four times more wind capacity stuck in the permitting stage than it currently has under construction.

Electrify everything that can be electrified  

Lévy warned that “the share of electrification is stagnating at 22%”. He said it is essential to fast-forward these stagnating electrification rates and bolster the deployment of heat pumps, electrolysers, smart charging infrastructure and storage solutions. 

Secure investments

Eurelectric highlights that €1200bn in investment is needed by 2030 to install the necessary clean energy capacity and ensure that grids can optimally support a carbon-neutral, decentralised and electric future. Levy said: “It’s not all about wind and solar – it’s also about transmission and distribution.”

Yet he warned that investors face a challenging market: distortive wholesale market interventions, ‘clawback” mechanisms and retail price caps deter investment in the energy transition and harm security of supply. “We must safeguard the integrity of the energy market,” he said. He stressed that the distribution grid alone needs a finance injection of €400bn between now and 2030.

He said the energy sector had enjoyed something of a “golden age of financing” but warned inflation was going to bring this to an end, which was why “unconsidered and distorted interventions in the market” like retail price caps and clawback measures were hindering the energy transition. “Not paying the full price for fossil fuels does not help the climate challenge.”

Yet he stressed that “public opinion is moving the needle very strongly towards ESG investments”.

Protect customers

Levy said that in times of high energy prices and volatility for consumers, it is essential to properly address the question of energy affordability, accelerate energy efficiency measures and ensure the social acceptance of the energy transition.

To sum up the journey ahead, Eurelectric Secretary General Kristian Ruby said: “We are at the beginning of a long curve. We have been fed cheap fossil fuels and now we have to get away from that addiction.”

The consensus from panellists in the business session at Eurelectric’s Evision 2022 was that it is widely accepted that EVs are the future and it is up to businesses, from utilities to charge point operators to fleet operators, to make it easy and fun for consumers to switch.

In the keynote, Fiona Howarth, who runs UK independent supplier Octopus Energy’s Electric Vehicles business, explained that the company’s focus was on aiming to “pull everything together – the vehicles, charging, energy supply and customer service”.

“As individuals and companies discover going electric they need to think not just about the vehicle but also all the associated aspects.”

A trend she highlighted has been an “explode” in the number of new vehicles, from just five with a range of about 250km five years ago to over fifty today from city cars to luxury cars to suit different people with different situations.

However, the challenge is in the lead times as the demand has increased and for some passenger models as well as vans can be up to 18 months.

Have you read?
Overcoming the e-mobility chicken or egg dilemma

She also highlighted a “mind shift towards charging” with two-thirds able to charge at home, while also there are over 18,000 public charging locations across the UK versus less than half of that number of traditional fuel stations.

“We have even seen people opening up their driveways in a sort of Airbnb style offering, which is useful for people such as Uber drivers.”

Howarth also commented on the benefits, including the low monthly running costs due to significant savings in fuel and maintenance costs and the considerable tax saving incentives in the UK amounting to as much as 40% of the monthly car costs.

“This has made an absolute shift in the appetite for EVs,” she said.

“We have found that the savings have encouraged people to get into the cars and test them.”

To further encourage uptake, Octopus also has started doing test events for businesses at which employees can see and test drive vehicles, with the overwhelming majority of those who have tested wanting to obtain an EV.

Customer response

Referring to Octopus’s vehicle to grid project, Howarth said customers are loving the opportunity to use smart technologies and they feel good because their electricity is green.

“By 2030 we expect about 40 million EVs and if just 10 million of those give energy back to the grid, it could power the whole of the UK at peak times. Our customers today see they are among the first to do that and are enjoying being part of that innovation process.”

Brian Palmer, Head of Public Policy EU Last Mile at Amazon, said that customers want the company to be a leader in the fight against climate change and sustainability and that was the driver for its climate actions, including the ‘Shipment Zero’ initiative to make half of all orders net zero by 2030.

“This needs a holistic approach to reducing carbon emissions across the chain from sustainable packaging to last mile delivery,” he said, adding that over 100,000 electric company delivery vans will be on the roads by 2030 with the first 10,000 of these during 2022.

Role of data

Orlin Radev, founder and CEO of EV charging platform AMPECO, said that software plays an important role to meeting the many challenges such as controlled charging, achieving operational efficiencies and adding to the positive environmental impact of EVs.

“Advanced technology solutions, i.e. smart hardware and intelligent software can solve most if not all the challenges of EV charging and help increase the benefits of the transition to e-mobility.”

He added that a lot of data is becoming available through the charging stations, which can be used to improve the reliability and quality of the service.

“Something we are doing is to apply self-healing coverage to try to recognise and resolve faults in charging stations before sending out someone to do it manually.”

Palmer noted that a major challenge to decarbonisation is in the ‘middle mile’ and the forthcoming investment in heavy-duty vehicle charging across European corridors should support the expansion of lower carbon freight.

“Data will be required to predict where and the extent to which heavy vehicle charging is needed.”

Looking ahead to meeting the challenges of millions of EVs on the roads, Radev said the problem is in the demand peaks. The technology is there for managing charging but it needs to be leveraged to gain driver participation.

Howarth said that Octopus’s flexible tariffs had demonstrated the potential of a tariff approach, but lacking is transparent time-of-use pricing across the whole generation and distribution system.

EV challenges

Commenting on future challenges, Howarth said she felt that “for the most part the electricity infrastructure piece is working its way through” with investment and significantly improved reliability and quality of charging.

However, the main challenges are in the supply of vehicles and the potential future shortfall in materials. For example, it has been estimated there could be an almost 20% shortfall versus demand for copper by 2030.

Palmer agreed, adding that other outstanding issues are around range and ownership and driving down the life cycle costs of ownership.

He also noted the importance of partnerships with other companies, such as Amazon’s with Rivian as an EV supplier, as a critical element in the future business.

Radev highlighted the importance of government support, suggesting this should come as businesses moved in the e-mobility transition.

“I think individual drivers are convinced that EVs are going to be the future and the innovations and successes of businesses will convince others to jump in and transition.”

Picture it like this. If the chicken was the electric vehicle and the egg was the grid infrastructure, the question would be, which do we develop first?

This question was a core theme of this year’s Eurelectric’s EVision online conference, which delved into the challenges and opportunities for utilities around EV adoption.

Policy – the driving force behind green driving

Kristian Ruby, Secretary General of Eurelectric spoke to Adina Vălean, EU Commissioner for Transport, about the importance of policy as a driving force for transport electrification and infrastructure development.

Said Vălean: “The politicians are driving this forward with policies like the EU Green Deal… Policies are giving the signal to the market, producers and customers that this change is happening, the future is the electric vehicle.”

Vălean explained that even though policy is a driving force and EV numbers are growing quickly, the evolution is still in its early stages, with several countries in Europe facing cultural and historical barriers, as well as public scepticism.

“For those who are more advanced, it’s not because of policy, it is a natural development. The market and the public embraced this new technology,” explained Vălean.

Even if technology is embraced, Vălean stressed the importance of addressing the chicken or egg dilemma. “We must aim to create infrastructure points and fast charging facilities, leveraging available finance mechanisms to achieve this.”

Once member states develop charging infrastructure, explained Vălean, then the scale will grow and prices will decrease.

Mitigating the chicken or egg dilamma with proper planning

Jean-Bernard Lévy, Eurelectric President – President & CEO, EDF, said: “Effective planning will determine success. At Eurelectic, there is a general feeling that we are on the verge of huge electricity growth and huge infrastructure development – even if this is not always well understood by politicians.”

Lévy spoke to the importance of managing the chicken and egg situation by leveraging available technology and government funding to avoid the congestion caused when EVs charge simultaneously.

Managed charging, time of use tariffs and peak shaving will help mitigate this risk. However, Lévy suggests big investment in grids will be needed to ensure EVs are used effectively as storage systems.

Lévy pointed out that creating new generation capacity and transmission lines takes a long time. Environmental permitting slows the industry and must be addressed to speed up low carbon mobility.

Investment needed for EV trucks

Martin Daum, Chairman of the Board of Management, Daimler Truck Holding AG, further emphasised the availability of infrastructure as one of the most important factors driving e-mobility.

According to Daum, EV truck sales are still low and infrastructure is lagging which is a problem. “An enormous investment is necessary from the electricity provider to ensure truckers can charge their trucks at various points, whether at depots or on the road.”

Daum noted that currently, there is a lot of insecurity regarding charging, with truckers asking if sufficient megawatts are available to charge their fleets.

However, once the industry achieves a Total Cost of Ownership advantage, Daum believes uptake will increase dramatically and the need to have established infrastructure will become evident. “It won’t be gradual. In trucking, it will be a steep curve. In my opinion, the time to act is now, we have five years from now.”

How utilities can accelerate the e-mobility transition

Serge Colle, Global Energy & Resources Industry Market Leader at EY, elaborated on the key findings in the latest report launched by Eurelectric and EY, Power sector accelerating e-mobility: Can utilities turn EVs into a grid asset?

Colle said: “To accelerate EV uptake, we need to make e-mobility work for the customer. This means delivering a seamless experience with a robust charging infrastructure that allows everyone to charge quickly and reliably. With significant investment needed in the grid and on supporting critical digital solutions, utilities are key to winning customers’ hearts and minds.”

According to Colle, the good news is that more automakers are making significant commitments to e-mobility, adopting a bullish stance to exploiting the opportunities presented by the electrification of transport.

However, despite the good news and success, we need to do more, stressed Colle. Utilities must address the key concerns customers have, which include the high upfront costs, range anxiety, lack of charging at home, and reliability of charge points.

The report identified three main barriers to infrastructure roll-out, namely;

• Permitting delays and limited access to real estate,
• Delays in grid connections and a lack of visibility on the network, and
• Diversity and process complexity creating investment uncertainty.

“Having e-mobility as a flexibility option will be the next holy grail,” said Colle.

In order to maximise these flexibility opportunities, Colle suggested that utilities invest proactively, ensure transparency of grid data and streamline connection. He also emphasised the importance of modelling and reducing peak loads through a digital-first, customer-centric approach.

Visit the EVision platform for more insights into the electrification of transport.

Eurelectric’s latest report, The missing piece: Powering the Energy Transition Through Efficient Network Tariffs, highlights that cost-reflective time-of-use network tariffs can coexist effectively with flexibility markets and can incentivise a sustainable and efficient use of the electricity system.

By 2030, around 500GW of additional renewable capacity will be installed, while 45 million electric heat pumps and somewhere between 50-70 million EVs are expected to replace the fossil-fuelled alternatives.

Have you read?
EU electricity on fast-track to carbon neutrality – Eurelectric
Eurelectric’s Kristian Ruby optimistic about net zero future

Electricity grids are key assets to enable a cost-effective decarbonisation with electrification at its core, facilitating the integration of decentralised and variable renewables, and to serving millions the uptake of electric alternatives in transport, buildings, and industries.

Kristian Ruby, Secretary General of Eurelectric said: “The recent price crisis has shown us that the clean energy transition must accelerate. For this, the backbone of our electricity systems, the networks, must be prepared to accommodate massive additions of renewables, and millions of EVs and heat pumps, and different consumer behaviours. But network tariffs must also adapt to better reflect and guide the future utilisation of the grid.”

Grid modernisation requires investments of approximately €400 billion ($466 billion) by the end of the decade. While the replacement of aging infrastructure is the biggest investment driver, electrification, digitalisation, and resilience need also play a key role. By pairing investments in physical infrastructure with digital solutions, the electricity system will gain flexibility.

This will enable grid operators to better manage the network, retailers to diversify their offers, and consumers to efficiently use the network by adapting their consumption to tariff variations. Such flexibility is essential to support the integration of variable wind and solar resources into the power system, spur investments in distributed generation and involve consumers in the energy transition.

A network tariff design that is adjusted to the energy transition provides a cleaner and faster way to manage the grid, by optimising use patterns and investment needs. Pricing the grid services in a cost-reflective way will be critical to optimise the value of the grid for the benefit of network customers and ensure sufficient revenues for grid owners, especially as the boundaries between generators and consumers are being blurred by the emergence of self-generation.

Eurelectric’s report explores multiple options for structuring the network tariffs – flat, volume or capacity driven, static, or dynamic time-of-use, assessing their capacity to provide economic signals to drive electrification and an efficient use of network services.

Static time-of-use tariffs improve cost-reflectiveness and provide better price signals than other network tariff options. First, they could reduce grid losses, reinforcement needs and congestion costs, while deferring investment costs. Second, they promote innovation in retail markets and demand response. Finally, they facilitate electrification and are a promising cost-reflective solution for pricing new energy uses, like EV chargers, electric heat pumps with storage or electrolysers.

Electricity pricing that varies by time of use is an important component of the transition to net-zero. It can prompt consumers to change they way they use energy, by offering lower prices in hours when supply is plentiful, or demand is generally lower.

Importantly, stakeholders must be consulted on changes to tariff design and changes must be duly communicated to ensure all actors, including distribution system operators and customers, can reap the benefits.

The report is available for download.

Jorge González believes that over the last 25 years the world has experienced major progress in the energy sector, especially with renewable energy generation becoming more competitive and overtaking traditional power generation.

Said González: “There are many places in the world where green generation costs are lower than transmission charges, so they can even compete with an hypothetic zero-cost in centralised production sites.

“This singularity has driven the ‘energy revolution’ we are living today. It has enabled the goal of carbon neutrality, it has triggered the electric mobility advent and it will also boost the green hydrogen dream.”

According to González, this development has also forced the full redefinition of the electric energy backbone, which is the electric grid. DSOs are being encouraged to digitize their grids by adding an electronic, software and communication layer to the existing one, which mean the electric grid is no stranger to the phenomenon of the digitization of society.

“But the real revolution of the energy future is connected with energy consumers. They will become prosumers who will actively interact with the electric grid, changing their behaviours and life patterns.

Have you read?
Recent energy transitions point way to an ‘Electric Decade’ ahead
Eurelectric’s Kristian Ruby – ‘2020s will be a decisive decade’
‘Smart grids are vital’ – Schneider Electric’s Gary Lawrence

“In the near future, we will start to see how energy prosumers will become active players by producing and storing their own energy, as well as electrifying most of the energy consumptions, such as mobility or heat. This empowerment of the customer will create an “information” demand about energy origin, cost signals, and so on. All this will lead to a new wave of digitization of the grid, far more of what it is today: with a smart low-voltage grid, further sensorisation and much better communication media between the DSO and the final customer.”

González suggests that all these changes will drive a “green” acceleration of society and will overtake the global decarbonisation objectives.

Pressure is growing to drive towards net zero with a transition in the energy system unparalleled in its history.

In its net zero by 2050 pathway the IEA has called for the 2020s to be the decade of massive clean energy expansion with clean and efficient technologies.

European electricity industry federation Eurelectric has dubbed the decade the ‘Electric Decade’.

Have you read?
Recent energy transitions point way to an ‘Electric Decade’ ahead
Make 2020s the decade of massive clean energy expansion – IEA

In a report prepared with Accenture and released at the organisation’s Power Summit 2021, the challenges and opportunities are set out providing pointers to the central role that electricity companies have to play.

Key objectives identified are to shape demand with residential and corporate consumers and to scale up at speed.

Residential customers want better experiences from service providers that reflect their values and lifestyles at affordable prices. Electricity companies should reposition themselves and become the trusted partner for net zero consumers, says the report.

For corporate consumers, investments in low carbon technologies present significant opportunities. Industrial clusters are an example of the opportunities available and utility providers should claim the position as the active leader decarbonising heavy industry.

At this point of the transition, the real innovation challenge is not in new ideas but bringing the technologies to scale as quickly as possible. Europe’s electricity companies possess the capabilities and assets to scale innovations, which will enable uptake among a broad customer base.

To do so, new solutions and technologies from small companies and start-ups would be critical, but they need to be scaled by larger players, the report adds.

Digital and data

The report also identifies two ‘enablers’ to the Electric Decade based around digital and data.

The new energy system has a data layer on top of the traditional physical energy system. Physical infrastructure data can drive value and differentiation by optimising the electricity system and helping guide the demand side development.

Digital twins optimise can be operated in real time to develop new models that optimise asset management, ensure grid stability and integrate technology to deliver new consumer propositions.

But people with deep digital expertise will be the main enabler determining success. A looming challenge is the reskilling of the workforce, which in turn requires a deep understanding of what people need and matching technology development and training.

Navigating the energy transition will require electricity companies to attract a new kind of talent who want to use their digital skills to solve the complex challenges ahead, states the report. As that level of talent is in short supply, electricity leaders will need to embed the latest technology and match that progress with a culture built on innovation.

Collaborating with nimble start-ups and large organisations is also a powerful tool to acquire new skills at speed.

According to Lawrence, the advent of smart digital grids is the most momentous industry event over the past quarter of a century. He believes the gradual digitalisation of utilities and networks could not have come at a better time to enable a clean energy transition just as we race to save the planet.

“The electric grid is the bloodline of today’s digital world. Electricity possesses near 100% maximum thermal efficiency when it comes to ‘useful energy’ while up to 67% of energy coming from other sources is lost (e.g., a combustion engine).

“The digital grid optimised through Advanced Distributed Management Solutions (ADMS) software and IT-OT platform integration, can support a mix in the decarbonised power generation mix and proactively prevent outages. It is also the backbone of a bi-directional decentralised energy grid.

“In the future, this innovation will allow consumers and companies alike to generate their own clean and plentiful energy supply through solar and microgrids, make it available for others to buy, or to store for future use, such as for charging their EVs overnight. Investing in new energy opportunities and distributed energy resources (DERs) can further help utilities improve responsiveness, agility and reliability as the world moves to electric vehicles and electrifies cooking and heating at pace.”

Have you read?
Eurelectric’s Kristian Ruby – ‘2020s will be a decisive decade’
Recent energy transitions point way to an ‘Electric Decade’ ahead
Energy’s crystal ball: Looking into the future

If there is one thing Lawrence wishes to be achieved in the next 25 years, he points to the modernization of the existing grid infrastructure to support the new digital world and help achieve our ambitious collective targets to reach net-zero by 2050.

“While the required groundbreaking technologies already exist, the pace of electrical infrastructure upgrades remains slow. Most of our existing electric grids are decades old, built when electricity needs were simple. Originally designed for a one-way power flow from coal-fired power stations to power-hungry urban and industrial centres, various upgrades have simply ‘patchworked’ over a basic infrastructure that, since the development of renewable energy and EV charging, is no longer fit for purpose. Overall, the current grid does not have the digital capabilities required to manage the new reality of consumer demand and others feeding into the grid.

Read more about the Eurelectric Power Summit 2021

“The ever-changing and rising energy demands of the 21st century necessitates urgent modernisation in our electric grids. A smart grid is an intelligent digitised energy network optimally delivering energy from source to consumption and makes the grid more efficient, reliable, secure, and green.

“Smart grids are vital because they support tomorrow’s electricity-dependent world. We must invest in this technology today to enable a better net-zero future for tomorrow’s world,” says Lawrence.

Want to know more about the next 25 years in the industry?
Read our special 25th birthday ‘Back to… the future’ supplement.

According to Ruby, the most significant development is the advances of electricity towards becoming a fully carbon-neutral energy vector. In several European countries, this is more or less a reality today, but over the next ten years I expect that we will take giant steps in this direction at pan-European level.

A combination of factors, including the technological developments in the field of solar and wind generation, batteries and EVs, artificial intelligence, and digitalisation, as well as the increased societal demand for transformation, has brought us to where we are now.

Read more about Eurelectric
Recent energy transitions point way to an ‘Electric Decade’ ahead
‘Electricity at the heart of saving the planet’ says Eurelectric president
Timmermans – pace of electrification must quadruple over next decade

Two thirds of Europe’s electricity is sustainable, clean and cost-efficient. What 25 years ago was an idealistic and unaffordable transformation, has now become the most cost-efficient way forward, courtesy of falling manufacturing prices, economies of scale and innovation.

It is now cheaper to produce electricity with renewables than to extract fossil fuels. Over the past decade, the cost of solar has dropped by 82% globally, while the costs of onshore and offshore wind have fallen by 40% and 29% respectively. This has pushed the fossil-fuelled electricity generation into terminal decline, with European coal-fired power plants closing at an accelerated pace.

In terms of the next 25 years, Ruby says: “I would like to see a fully decarbonised power sector by 2045. This increasingly clean electricity would be the fuel of choice, helping to decarbonise transport, heating and cooling, and industry.

“We are looking at a net-zero future, where decarbonised electricity powers 60% of Europe’s economy, with two thirds of the energy in transport and buildings being directly electrified.”

Ruby believes there is room for optimism with regards to our ability to decarbonise the power sector, so long as we get the right framework conditions. But the 2020s will be a decisive decade, where we need to lay the groundwork for our 2050 decarbonisation goals.

Said Lévy: “Direct electrification is the key enabler to meet the climate ambitions of the future. Achieving carbon neutrality by 2050 requires deep transformation of our energy systems, shifting away from fossil fuels and entering into an elect decade”.

Jean Bernard Lévy was joined by captains of industry to understand how this electric decade can and must fight carbon in all sectors, allowing us to reach our climate targets. Speakers and panellists also unpacked the practical steps needed to ensure urgent action.

“If we want to deliver the amount of electricity needed while ensuring resilience and security of supply, we must invest massively in renewables, low carbon generation, networks, storage, digital solutions. To get this done, we need a supportive and comprehensive regulatory framework to be attractive to investors.”

Why the electric decade? Lévy explains that more electricity means fewer emissions. More electrification also will mean a more energy efficient society, a more integrated and connected power system, as well as a thriving European industry.

Have you read?
Timmermans – pace of electrification must quadruple over next decade
Recent energy transitions point way to an ‘Electric Decade’ ahead

Lévy concluded: “I have a clear and bold conviction which I want to share with you. Our electricity industry can change our economy and our society. Electricity transformed the world in the 19th century, electricity will be the key enabler of the net zero ambition and the next decade will be the electric decade.”

Speakers agreed that the scale of the energy transition is unprecedented and there are many uncertainties, across European member states, each with different starting points.

Jean-Marc Ollagnier, CEO Europe, Accenture: “The energy transition is the largest infrastructure intervention since rebuilding after World War Two”.

Ollagnier made it clear that achieving this mammoth task in the constrained time frame will involve many stakeholders and collaboration beyond the energy industry.

Energy companies must also embrace digitalisation across their operations. In fact, Jean-Marc Ollagnier believes energy companies must be perceived as technology companies working to fix one of the biggest problems facing our planet. That perception will ensure they attract the talent required to drive transformation.

Ollagnier suggests “redefining your strategy, governance, purpose and talent base with digital and sustainability at the core.”

Ignacio S. Galán, chairman and CEO of Iberdrola called for faster and more agile permitting processes, energy taxation and public support for low carbon technologies. He also emphasised the need to avoid investment in assets that have no future.

Markus Rauramo, president & CEO of Fortum emphasised the need to decarbonise the 5000TWh of gas-powered electricity currently being used by Europe. Hydrogen will be a useful component to this process however, Rauramo makes it clear, the technology, innovation, and capital are ready to go, but it comes down to sound policy frameworks to mobilise and unleash the investment. First, ensure visibility and predictability in policy, then the projects become bankable and desirable.

You can listen to the full discussion below or peruse the Power Summit Programme (25-28 May) for a range of interesting future-focused topics.

So said Frans Timmermans, the European Commission’s Executive Vice-President for the European Green Deal.

Delivering a speech in Brussels, he said the coronavirus pandemic “is teaching us a harsh lesson about the fragility of us as human beings… but it’s a lesson we must heed if we are to tackle to climate crisis”.

“There is no vaccine for the climate or biodiversity crisis, but there is a way out – and our launch pad to a better future for our children and grandchildren is the energy sector.”

“As we build back our economy, we also need to build back our forests and oceans.”

Timmermans said that when the EU launched the Green Deal, “it was relatively lonely on the world stage. But more than one year later, we have been joined by many others in the race for net zero.”

And he stressed that it was “a race we can all win – but we still run the risk of it all slipping through our fingers. Of easing back into ‘business as usual’, simply because it is the comfortable thing to do. So the urgency of acting on our commitment is high.”

Speaking at the launch of the Eurelectric Power Summit, he said the EU had 1.8 trillion euros “to bounce back from the Covid crisis and restart the European economy”. And he added that “30 per cent of those funds must go to climate action”.

“Energy is responsible for 75% of greenhouse gas emissions – there is no credible path to climate neutrality without deep decarbonisation of our energy system. This will require unprecedented investment in renewables, hydrogen production, building refurbishments and electric transport.”

Have you read?
‘Electricity at the heart of saving the planet’ says Eurelectric president
Recent energy transitions point way to an ‘Electric Decade’ ahead

However, he stressed that these investments “will pay back and bring new jobs and a more sustainable market for our goods”.

He said the decarbonisation of Europe will follow two parallel tracks: firstly, a move towards greater energy efficiency – “we must leave no molecule or electron to waste” – and secondly, a move away from fossil fuels.

And he added that “above all, we have to integrate sectors: power generation, buildings, transport and industry, into one energy system”.

“This is in many ways a Herculean task – but it is feasible. But to get there the pace of electrification must quadruple in the next ten years. In the next decade, Europe needs to double its renewables capacity from 420 GW in 2020 to 840 GW by 2030.”

He said there would also be a need for “unprecedented investments” in the grid to connect new wind farms, fleets of electric vehicles, and electrolysers for renewable hydrogen.

“We will need to jump higher than we’ve ever jumped before. The good news is that there are also immense opportunities for investment and economic growth.

“The scale of the change we will need is comparable to the jump we made when James Watt invented the steam engine.”

Timmermans concluded his speech by highlighting how “fossil fuels have been the backbone of Europe growth since the 18^th century. Now the renewables revolution is taking over. They already produce the cheapest power humanity has ever seen. That’s a pretty good starting point if you ask me.”

The Eurelectric Power Summit continues each day this week. Click here for details and to watch: https://powersummit2021.eurelectric.org/

“Climate change is no different to a pandemic,” says Pat O’Doherty, chief executive of Irish state-owned utility ESB.

“And we need the same kind of mobilization of governments – the same togetherness – in the response to climate change as we have seen against Covid.”

Speaking today at the Eurelectric Power Summit, O’Doherty said that during the coronavirus crisis, the power sector “has stood up and been counted”.

“That doesn’t surprise me, because one thing we do well is we deal with crisis and emergency. The pandemic has allowed us to further connect with that purpose.

He said “what we have all learned from Covid is how governments and society have responded – we have seen no stone unturned. We should take that into the response to climate change.”

“For 100 years, electricity has been at the heart of societal well-being: it’s been an enabler of economic well-being. This is now the second coming of electricity. It places electricity right at the heart of societal transformation in saving the planet.”

“If the last decade was about positioning the electricity sector [in decarbonisation], then this is the decade of ‘doing’. Everything is putting climate action centre-stage, and the role of electricity and electrification is also coming centre stage.

Have you read?
Recent energy transitions point way to an ‘Electric Decade’ ahead
Eurelectric Power Summit: Why the 2020s are the electric decade

“We are going to have 50 million heat pumps and 70 million electric vehicles – we can see that shift taking place before our very eyes: we are living that change.

“That’s the opportunity that’s presenting itself to us as a sector and we will step up and grasp it.”

He said what has happened in the last four years or so is “we have begun to see the power of electricity and its transformative role in climate action.

We have gone from decarbonizing our own industry and getting it ready [for the energy transition] to now looking at the role our industry can play in decarbonizing the wider economy.

“There isn’t a government climate action plan in Europe that doesn’t include electrification, particularly of heat and transport, at its heart.”

And his outgoing message to the European power sector is one of collaboration. He said the energy transition “is a huge societal transformation and a huge systems transformation. It brings together regulators, utilities, policymakers, academia, technology providers – all working together in a joined up way.”

“We must also put the customer centre stage – and we need to do this is a way that is inclusive. There must be inclusion so that all customers can afford to do this and everybody can afford to take part in this transition.”

The Eurelectric Power Summit continues each day this week. Click here for details and to watch: https://powersummit2021.eurelectric.org/

Says Kaastra, without a doubt, the most significant development in the utilities sector in the past 25 years is the shift to green energy. Consider the data: Renewable energy represented 38% of total electricity output in the EU in 2020 – more than fossil fuels at 37% – with nuclear providing the remaining 25%. Wind and solar increased by a remarkable 10% from 2019 to 2020.

Bearing in mind that this came from more or less a standing start, with renewables representing less than 1% of the total in 1996, we have come a long way indeed.

Read more about Eurelectric
Eurelectric Power Summit: Why the 2020s are the electric decade
Energy storage urgently needs to scale in Europe, Eurelectric advises

Unlike earlier energy transitions, however, this shift is different; it is largely demand-driven, with demand for sustainable power and solutions growing, due to pressure from consumers, policymakers, investors, and employees, all driving utilities to develop reliable, affordable supplies of low-carbon electricity.

This is a huge accomplishment, but energy companies cannot stand still. There’s a need to address what must happen in the next 25 years, namely the transition to net-zero carbon emissions. What we hope to see is end-use electrification, involving the accelerated electrification of everything from trucks to cities, driving down emissions and putting electricity providers at the center of new and emerging industries.

This will take place in two stages. The first is likely to be a significant acceleration of the energy transition in this decade as companies seek to meet EU 2030 targets for cutting emissions by half. These include a 55% reduction in greenhouse gas emissions from 1990 levels, a 40% improvement in energy efficiency and 85% of electricity coming from carbon neutral sources.

Eurelectric’s Power Summit (25-28 May 2021)
The Power Summit will host 12 public sessions on the most pressing issues facing the European power sector. From gaps in investment to jumps in innovation, persistent challenges to new opportunities, the Power Summit will explore the energy transition from every angle.
For details and to register your place, visit: powersummit2021.eurelectric.org

The second stage will be the implementation of direct electrification, re-inventing everything from heating to mobility. End-use electrification relies upon a portfolio of technologies, some developed, some still emerging. Hydrogen, in particular, offers new pathways for the indirect electrification of hard-to-decarbonize sectors of the economy.

The next decade will be the “Electric Decade”. For the first time, consumers are aligning with the industries and governments that serve them. Yet, to realize emission reductions through end-use electrification, huge investments are required, as well as technology and human ingenuity. It is an extraordinary challenge, but one that can and must be met.

Electrification of society will bring about huge benefits. A massive shift in clean electricity use will foster the creation of two million jobs according to the International Labour Organisation, save lives thanks to reduced air pollution, and reduce Europe’s gas and oil import bill.

This article was originally published in Smart Energy International Issue 2-2021.

Read the mobile-friendly digital magazine or subscribe to receive a print copy.

The 2020s must therefore pace up the move to an increasingly decarbonised, decentralised and digitalised power system. This will be done courtesy of all clean and renewables technologies. In 2020, renewables represented 40% of the electricity generation mix, nuclear 26%, and fossil fuels 34%. By 2030, we expect renewables to reach 60% and fossil fuels to drop to 19%.

This means adding some 470GW of centralised renewables and 40GW of self-consumption, which would be deploying no less than half of today’s existing renewables capacity over the next 10 years. In other words, we need to double the size of wind capacity and triple that of solar.

Have you read?
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The cost of connecting the dots
Next move? Decarbonise, electrify, engage!
Europe’s distribution grids need €400bn by 2030 says study

Getting there requires political will. Policymakers must imperatively look at simplifying and speeding up permitting procedures from a snail-paced deployment of renewables to a fast-tracked one. This is a matter of urgency. They must also develop a holistic pro electrification strategy, capable of unlocking all its benefits. Such a strategy would unchain the necessary investment in electricity generation, storage (€100 billion/ year until 2030), and distribution (€400 billion/ year by 2030). It would also bring about the needed volumes of EVs and charging points, boost electric heating and smart meters, and foster the use of green hydrogen produced via electrolysis.

Read more stories about Eurelectric

It is clearly the case that Europe is on track to see a meaningful reduction in greenhouse gas emissions over the next decade, and the role of decarbonisation through electrification in this transformation will be central. However, we cannot underestimate the challenge before us, notably regarding investment and permitting, which must both be accelerated if we are to hit our 2030 targets.

Eurelectric’s Power Summit (25-28 May 2021)
The Power Summit will host 12 public sessions on the most pressing issues facing the European power sector. From gaps in investment to jumps in innovation, persistent challenges to new opportunities, the Power Summit will explore the energy transition from every angle.

For details and to register your place, visit: powersummit2021.eurelectric.org

About the author

Gael Glorieux is Head of Strategic Communications at Eurelectric.

Climate action is the defining issue of our time – it is being discussed and debated in our homes, our educational institutions, boardrooms and in government. There is a clear realisation that fossil-based energy is a major part of the problem, and we need to find alternatives and solutions. There is consensus on the need to act quickly. More than 100 countries have committed to net zero economies in the next 30 years, and more are likely to join that list come COP26 in Glasgow in November.

This article was originally published in Smart Energy International Issue 2-2021.

Read the mobile-friendly digital magazine or subscribe to receive a print copy.

When everyone is working towards the same goal it makes global cooperation possible and effective. As countries begin to examine the changes needed to meet their net-zero targets, it has become clear that unabated fossil fuels need to be virtually eliminated from our energy system.

This has significant implications for individuals and communities in terms of how they consume energy: how they cook their meals, how they travel, and how they heat and cool their homes. We must turn commitments into reality and actions and show people that we are working towards a better future – one that is not only more sustainable but more convenient, comfortable, and efficient too. And we need to demonstrate clear plans on how we will get there. The EU has a significant programme of work underway to progress this, starting with the “Fit for 55” review expected soon.

Have you read?
Next move? Decarbonise, electrify, engage!
Balancing energy policy with decarbonisation goals
Energy storage urgently needs to scale in Europe, Eurelectric advises

Our friend electric

There are so many things we can do with a unit of electricity; we have only barely scratched the surface of its versatility so far. Electricity has been held back by artificially under-priced fossil fuels, so applications like transport and heating have not been electrified to the full. However, this has changed with recent advances in wind and solar energy and battery storage, along with the recognition that fossil fuels are destroying our environment.

I have seen numerous decarbonisation roadmaps from all over the world, and all highlight the importance of energy efficiency and electrification to meet our decarbonation targets. Practically every country envisages significant renewable electricity expansion, coupled with the deployment of ultraefficient technologies like electric heat pumps, district heating, electric vehicles etc.

In Europe, electricity accounts for approximately 20% of final energy demand; this must increase to 60% or more to meet net-zero in the most efficient way. This is entirely possible; electric and battery solutions are progressing to the the point that even compared with two years ago, there are fewer and fewer areas that can’t be electrified.

Read more stories about Eurelectric

Key enablers

While the potential is vast for electricity to decarbonise the world economy, it will not happen by itself. There are five key enablers that are required to support this transition:

• Technology: We need electricity to displace fossil fuels across as many applications as possible. This means making existing technologies like wind solar and batteries cheaper and innovating further in the areas of EVs, heat pumps, electrolysis, storage, etc. We are seeing a pivot away from fossil-based technology by R&D departments, but this must be accelerated.

• Digitisation: Data will be the lifeblood of a decarbonised electricity system. It is critical for matching demand with times of excess renewable electricity and ensuring that electricity is efficiently produced and available where and when it is needed. We will need strong protocols on data use and security, but I believe that this can be addressed by building these requirements in at the design stage.

• Finance: The energy transition requires significant investment in areas where transitional financiers might not have ventured. We know that there are vast amounts of low-cost money in international markets, looking for a stable home. There are also significant low carbon value-adding investments that are needed. We need to ensure that the flow of money into low carbon projects is seamless; Environmental, Social, and Governance (ESG) criteria, green bond standards and low carbon taxonomies will play a vital role in this.

• Regulation: We need regulators to support the transition to low carbon energy systems, to drive out barriers to electrification, and ensure the most efficient use of the power system. Currently, regulatory barriers to electrification, such as the structure of system charges, need to be addressed. Suppliers’ business models will have to evolve so that they can support customers to live low carbon lives through new product offerings and incentives; the regulatory framework must support this.

• Distribution System Operator (DSO): Electricity DSOs must evolve their traditional operating models to meet customer and decarbonisation requirements. They will be required to balance the need to reinforce the distribution network and accommodate as much flexibility as possible through load shifting and non-wires solutions. They will also need to facilitate local flexibility marketplaces, where they can procure their own system needs and embedded services required by the TSO. It is therefore key that we secure sufficient investment into our grids over the next decade investment needs being estimated to €375-425 billion by 2030).

Not every part of the low carbon transition is known or mapped out, but as technology advances, more elements of the pathway will become clear. However, electrification is a certainty and many of the enabling technologies already exist. We must get to work now, working together to maximise impact and accelerate the global shift to a brighter, healthier and more sustainable future. I look forward to discussing this and many other important climate topics at the upcoming Eurelectric Power Summit.

Eurelectric’s Power Summit (25-28 May 2021)
The Power Summit will host 12 public sessions on the most pressing issues facing the European power sector. From gaps in investment to jumps in innovation, persistent challenges to new opportunities, the Power Summit will explore the energy transition from every angle.

For details and to register your place, visit: powersummit2021.eurelectric.org

About the author

Pat O’Doherty is President of Eurelectric. He was made chief executive of Irish energy company ESB in 2011 and appointed to the ESB board in 2013.

For quite some time now, the European Commission was underlining the importance of creating one association to represent DSOs the same way ENTSO-E is representing TSOs. This new entity has been formally established with a gentle push or a nudge from the Electricity Regulation (EU) 2019/943, “in order to increase efficiencies in the electricity distribution networks in the Union and to ensure close cooperation with transmission system operators and the ENTSO for Electricity”.

Watch on demand:
Enlit Europe episode: Interview: Roberto Zangrandi, EDSO

As such, this new entity is going to be accepted as the sole counterparty from the DSOs part to discuss the development of network codes and guidelines. Its aim is to reflect on the new role of DSOs in the energy transition, strengthen the cooperation between DSOs, create a forum for discussion and facilitate the DSO/TSO collaboration.

In other words, this is a very important association and those that earned a seat on the board are going to have a lot and important work to achieve. Among the names on the board are some very familiar ones, like that of Mr Vincenzo Ranieri, CEO of E-Distribuzione spa, Mr Remy Garaude Verdier, Head of European Affairs at Enedis and Mr Torsten Maus, Managing Director of EWE NETZ GmbH.

Here I should add that I personally expected to see the name of Mr Joao Torres of EDP Distribucao (now E-REDES) on the board too, but according to the latest news, Mr Torres decided to step down after 15 years as the head of the Portuguese DSO. Smart Energy International and this column wish him the best in his new endeavours and we hope to meet him at Enlit Europe in Milan this year.

But this is not the only surprise. The second surprise regards the governance of the EU DSO Entity and it comes as a decision of the EU Parliament’s ITRE committee. The MEPs voted on the Electricity Regulation and Directive, which are the centrepieces of the new electricity market design and according to E.DSO “by opting for an unbalanced representation in the body’s Board of Directors, MEPs have chosen an approach that will make future work in the Entity much more difficult”. 

What happened, in short, is that in the new Entity there are 3 categories of DSOs: those with less than 100.000 connected customers, those with at least 100.000 and less than 1.000.000 connected customers and finally, the ‘big guns’ with at least 1.000.000 connected customers. The problem that EDSO is underlining, is that the vote of the representatives of all 3 categories is equal. That is, the vote of a DSO with less than 100.000 connected customers is equal to that of a DSO with more than 1.000.000 connected customers. I assume that the MEPs wanted to avoid that the large DSOs ‘take over’ the association and that the voice of the smaller DSOs is heard, which makes sense.

Have you read?
Measuring the performance of Europe’s smart grids
Europe’s DSOs need new market model, innovative technological tools

However, “We support the Parliament’s position to open the eligibility for membership to all DSOs across Europe, who are at different levels of unbundling,” said Roberto Zangrandi, Secretary-General of E.DSO for smart grids, the association of European leading electric power distributors, connecting between 70 and 80% of EU customers.

“However, what the Parliament fails to acknowledge is that giving equal weights to different DSO categories in the steering structure of the new Entity is grossly overlooking the realities of the European DSO landscape and actual market shares. Assigning one-third of votes in the Board of Directors to distributors with less than 100.000 grid users that, by comparison, connect much fewer customers is not only gravely disproportionate but a political rather than a practical choice. Larger DSOs will ultimately be expected to provide the organisational capabilities, resources and technical expertise to ensure the effective running of the DSO Entity”, he added.

He does make a valid point, doesn’t he? What do you think?

I would be keen to hear your thoughts via editorial@smart-energy.com.

Cheers,

Areti Ntaradimou
Editor, Smart Energy International

The key performance indicators (KPIs) comprise seven for distribution system operators (DSOs) and one common for transmission and distribution operators.

These were developed for Europe’s national regulatory authorities in response to EU Electricity Directive requirements for a new methodology to enable them to monitor infrastructure upgrades with smart grids, focussing on energy efficiency and the integration of renewable energies.

The review identified six common challenges facing DSOs as cooperation in network operation and in network planning, exchange of information on long term planning of network investments and regarding generation and demand response for daily operation, cooperation for coordinated access to resources, and ensuring the secure and reliable development and operation of the networks.

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The DSO KPIs that have been identified are as follows:

1 – System observability: To measure the capability to keep under ‘proper monitoring’ of the relevant nodes/lines of the grid.
2 – System controllability: To measure the capability to keep the grid under ‘proper control’.
3 – Active system management: To measure the capability to perform active management of the grid in daily/short-term operation.
4 – Smart grid planning: To measure the capability to use design and planning procedures to fulfil actual grid needs in medium and long-term, guaranteeing cost efficiency in grid updating and the most efficient use of existing assets.
5 – Transparency in data access and sharing between relevant stakeholders: To measure the capability to make accessible and share data between stakeholders.
6 – Local flexibility markets and customer inclusion: To measure how much the customer is involved in grid management and enabled to provide services to the grid and to measure how much the local flexibility market/customer agreements are implemented and how much it can contribute to grid (and system) management.
7 – Smart asset management: To measure the use of advanced asset management strategies, tools and methods focusing on assets condition monitoring and risk mitigation.

The common TSO-DSO KPI is:

1 – TSO-DSO coordination capabilities: To measure coordination capability between TSOs and DSOs.

Each of the KPIs are presented with key indicators as examples of performances that can be measured or alternatively adapted to national specificities.

The KPIs were prepared from the work of a joint TSO and DSO task force created in March 2020 under the initiative of ENTSO-E and the four European DSO associations CEDEC, E.DSO, Eurelectric and GEODE.

The report states that the KPIs are intended to supplement existing indicators such as SAIDI and SAIFI and further work should be done at country level to select the most appropriate defined parameters.

With the indicators in place, the national regulators are required under the Directive to report smart grid assessments every two years.

Investments in Europe’s power distribution grids need to be ramped up by at least 50% compared with those in the last decade, according to the two industry associations, Eurelectric and E.DSO.

They say the estimated investment requirement in this area is €375-425 billion ($451-512 billion) until 2030 in the EU27 and UK.

This article was originally published in Smart Energy International Issue 1-2021.

Read the mobile-friendly digital magazine or subscribe to receive a print copy.

The warning, delivered in a new study, presents an additional challenge to the sector in the energy transition, but an essential one to face given the central role of distribution.

The majority of new renewables is being connected at distribution level. It is this market to which prosumers are being integrated and, increasingly, it is being required to enable flexibility and demand management not only locally, but also for the system as a whole.

The study Connecting the dots: Distribution grid investment to power the energy transition, which was prepared with Deloitte, is based on empirical data from ten distribution system operators and assessments of ten countries in Europe – Denmark, France, Germany, Hungary, Ireland, Italy, Poland, Portugal, Spain and Sweden.

The 2030 scenario constructed is aligned to the EU’s 2030 and 2050 decarbonisation targets. It envisages the rollout of 40-50 million heat pumps in the residential sector, 50-70 million electric vehicles with up to 56 million charging points and additional demand of 335TWh, with the demand growth averaging 1.8% annually. With this, 470GW of new centralised renewables and 40GW of self-consumption is envisaged for an approximately 70% penetration of renewables connected to the distribution grids by 2030.

For energy efficiency and conservation, at least half of electric vehicle charging needs to be enabled in off-peak hours.

Smart meters and a holistic data management model also are considered key to increasing distribution grid observability, optimising grid investments and enabling flexibility services. So far, however, less than a handful of EU countries have reached a high level of penetration, i.e. greater than 70%, and in most the penetration is less than 50%.

Distribution investment drivers

The study categorises the investment needs into eight key drivers. The two most important in monetary terms, accounting for almost half the investment requirements, are grid modernisation and new renewable generation.

The power distribution grids are ageing. Approximately one third of the EU’s grids are over 40 years old – and three-quarters are over 20 years old – and by 2030 the share is likely to surpass 50%.

The risk of technological obsolescence is increasing but the modernisation needs vary depending on the power grid expansion timeline at the national level; e.g. countries that had an economic expansion in the 1992, such as Denmark, may present a maximum of replacement needs around 2030.

The next largest driver, requiring one-fifth of the investment, is the electrification of buildings and industry, which will add 40TWh of final electricity demand and require new powerlines, reinforcements and additional transformer capacity.

The balance of the investments is split almost equally between the remaining drivers, electrification of mobility, digitalisation and automation, smart meters, resilience and the smallest in percentage terms at 2% – if not in importance to the transition – grid connected energy storage.

These investments, amounting to the €375-425 billion, represent an annual investment effort that’s some 50-70% higher than historical data, the report says. This percentage is less than the estimated 100% increase required across the entire energy sector.

Moreover, the impact on electricity costs is anticipated to be marginal, growing at an annual rate of about 1.5% compared with the 2% target inflation rate across the EU.

The investments also should provide widespread societal benefits in terms of sustainability, the economy, competitiveness and progress towards customer centricity; and are expected to outweigh the economic impacts. For example, the EU could save over €175 billion ($211 billion) in fossil fuel imports annually and reduce the average electricity costs by €28-37 billion ($34-45 billion) in the long term.

Additionally, the study shows some 90% of investments, or €30-35 billion ($36-42 billion) of annual revenue, could be captured by EU manufacturers and service providers. Overall, the investments in distribution grids could sustain up to 600,000 jobs per year in the EU and UK.

Policy and regulation

Given the scale of the challenge facing DSOs with the increased investment requirements and the shrinking timescale, regulatory support is going to be essential both at the national and European levels, the report indicates.

National planning frameworks need to be aligned to the energy transition, DSOs should be enabled to access EU and post-COVID recovery funds and local communities need to be properly involved in the execution of plans.

The role of DSOs needs further development through region-wide regulatory frameworks on cybersecurity and data management and a forward looking remuneration approach is necessary to enable cost effective remuneration and incentive models.

Flexibility development is needed through the definition of roles, infrastructure, economic signals and information exchange procedures. Efficient tariff structures also should be defined to optimise the long-term investments and facilitate power system economic sustainability.

Regulation needs to set a clear direction for all participants in the value chain and investment is required in both public and private charging infrastructures as well as in the distribution grids to support this infrastructure.

The report, Accelerating fleet electrification in Europe, argues that the region’s vehicle fleets hold significant potential for supporting accelerated decarbonisation of transport and should be prioritised.

These fleets consist of 63 million cars, vans, buses and trucks operated by private companies or public authorities. Together however, despite representing only 20% of the vehicle stock, they account for 40% of all kilometres travelled and 50% of the CO2 emissions from transport.

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Next move? Decarbonise, electrify, engage!

If Europe’s road transportation’s emissions are cut by 10% year on year, the region stands a very good chance of meeting its 2030 emissions target, paving the way to a 90% reduction in transport-related emissions by 2050, the report states.

“Electrification of car fleets can be a real game changer. It comes with tangible reductions of total costs of ownership and CO2 emissions,” says Kristian Ruby, Secretary General of Eurelectric.

“So it is a good deal both for fleet owners and society at large.”

Fleets offer several advantages for targetted electrification. One is the incentives and discounts applied to bulk sales, which raise the attractiveness of EV purchases. Another is the route predictability of vehicles, which would accelerate the deployment of charging infrastructure in key locations.

They also would accelerate the development of a second hand EV market.

Charging infrastructure

However, the lack of infrastructure is a key hurdle to growth with Europe’s existing 213,000 public EV charging points, of which only 14% are fast chargers, well below target. A 13-fold increase is needed to meet the European Commission’s ambition of installing three million public charging points by 2030, the report finds.

The cost of this public charging infrastructure is estimated at €20 billion ($24.3 billion). A further €60 billion ($73 billion) is needed for private charging infrastructure, while €25 billion ($30 billion) is required to enable the distribution grids to support the charging infrastructure rollout.

The lack of interoperability is another hurdle and agreed common standards are needed for both the hardware and software of recharging solutions to incentivise investment and enhance the driver experience.

Another issue is the supply chain for batteries and vehicles to ensure that the right products are brought to the right time and that end-of-life battery recycling is enabled.

The study anticipates that fleet electrification could grow 24-fold to total 10.5 million EVs by 2030. By then, the bus segment will have electrified 42% of its stock, followed by the car and van segments at 17.5% and 12% respectively.

The two industry associations point to the distribution grids as the backbone of the digital and energy transition – they ensure continuous and reliable electricity flow, integrate the majority of renewable energy sources and enable the creation of new services for consumers – but they need to be fit-for-purpose in an increasingly decarbonised, decentralised and digitalised power system.

The study, carried out by Monitor Deloitte on the basis of detailed data from 10 European countries, finds that European distribution grids will need investments of €375-425 billion until 2030.

The single biggest investment driver is identified as modernisation of the infrastructure due to ageing. Approximately one third of the EU’s grids is over 40 years old and by 2030 the share is likely to surpass 50%.

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A further significant part of the investment need is driven by the ongoing energy transition. These include expansions and replacements related to integration of variable renewables such as solar and wind as well as to the progressive electrification of industry, transport and buildings.

Despite these investment requirements, with the right framework conditions and a smart tariff design the impact on electricity prices and grid tariffs can be moderate, the study finds.

Moreover, the societal benefits in relation to sustainability, economy and competitiveness are expected to outweigh the economic impacts. The EU could save over €175 billion in fossil fuel imports annually and reduce the average electricity costs by €28-37 billion in the long term.

Additionally, the study shows some 90% of investments, or €30-35 billion of annual revenue, could be captured by EU manufacturers and service providers. Overall, investments in distribution grids could sustain up to 600,000 jobs per year in the EU and UK.

“Grid investments are urgently needed for the energy transition and they hold a huge potential for job creation,” says Kristian Ruby, Secretary General of Eurelectric.

“With the right framework conditions we can make the 2020s the decade of distribution grids. We call on policymakers to improve investment frameworks and tariff design, facilitate access to EU funds and accelerate authorisation and permit granting processes.”

Study assumptions include the installation of 510GW of new renewable capacity comprised of 470GW of centralised solar and wind and 40GW of self-consumption. Almost three-quarters is connected to the distribution grids.

Cumulated annual growth rate of electricity demand is 1.8% and includes 50-70 million EVs and 40-50 million heat pumps.

At the dawn of this new decade, businesses made resolutions and plans to bring sustainable economic growth while transforming their operations and processes, as a way to move one step closer to meeting the energy and climate targets.

This article was originally published in the Enlit Europe supplement of 
Smart Energy International Issue 5-2020.
Read the full supplement, the full digimag or subscribe to receive a print copy.

No one had anticipated a health crisis of such magnitudes and ensuing economic impact. In a matter of weeks, the industrial output plunged, infrastructure development projects stopped, and construction sites were abandoned.

The power sector, however, continued its operations, proving its crucial value for society. Overnight, utilities switched to crisis operation mode, making sure hospitals, critical facilities and millions of teleworkers continued to benefit from a reliable electricity supply.

Moreover, the electricity industry continued on a fast and firm path towards decarbonisation, with clean power being the only energy sector expected to grow in 2020. Within the next 10 years, 80% of the electricity consumed in Europe will be carbon free.

COVID-19 could not stop the renewable energy segment from achieving its best year ever. During the first half of the year, renewables covered 40% of the generation mix, as favourable weather conditions pushed wind and solar output to record highs.

At the same time, the carbon price stimulated an accelerated phase-out of fossil fuels, leading to a drop of 18% compared to 2019. Coal generation took the brunt, plunging by 32%.

The EU power sector’s CO emissions shrunk by 23% this year. This is a significant drop when considering that between 2013 and 2019, the carbon emissions stemming from the electricity industry fell by 29%. Overall, electricity is by far the sector in the EU Emissions Trading System with the highest CO cuts.

Accelerating decarbonisation

We can accelerate the speed and scale of decarbonisation, as renewable technologies have gone from being scarce and expensive to abundant and more affordable, changing mindsets and stimulating long-term investments, but the coronavirus has added complexity to the situation.

Whereas the share of renewables in the power mix has increased during the pandemic, in the economic environment the virus has had an impact on deployment and investments. In the initial phase of the pandemic, the lockdown measures affected new projects across Europe.

Supply chain disruptions as well as travelling restrictions that hindered the movement of personnel and materials needed for construction sites all contributed to delays in many ongoing projects.

In addition, the investment capacity of utilities is likely to decrease 10-15%, as electricity demand shrunk and power prices plummeted in the fi rst part of the year.

But the climate efforts should not be diluted. Regardless of a protracted economic crisis or a fast recovery, the energy transition must continue at a higher pace. It is, therefore, crucial to urgently tackle the negative impacts of lockdowns on the electricity value chain, by encouraging the deployment of zero-carbon infrastructure programmes, stimulating capital-intensive investments in carbon-neutral generation and support the electrification of transport, buildings and industry.

New frontiers for electrification

Electricity is by far the cleanest and most efficient solution at hand to bring the EU economy to net zero CO emissions. And the potential for the direct electrification of those carbon-intensive sectors of the economy is huge: 63% of the energy used for the buildings and transport sectors should be electrified, and 40% of the energy used by industries, in order to achieve a cost-effective transition.

Today, the transport sector is responsible for one-third of EU’s CO emissions, with road transport accounting for 72%. But the switch to clean electricity is an efficient way to decarbonise various segments of this sector and 2020 has provided some positive signs in this regard.

When it comes to road transport, for instance, the sales of electric vehicles in 2020 registered a 57% growth, while the overall market dropped by 37% amid lockdowns and confinement measures.

This rising demand for battery electric vehicles, and plug-in hybrids, shows a positive trend spurred by the introduction of EU and national targets for CO emissions reductions, support schemes for buyers, diversity of models, as well as a growing awareness towards the reliability of these vehicles.

As the EV sales are growing, so are the expectations for ready-to-use charging infrastructure. But this year, the roll-out of charging points was slowed down, and in some countries even halted. Unless the recovery packages stimulate the further deployment, EU’s ambition to make one million public charging points available by 2025, will be out of reach.

The maritime sector, which currently relies on highly polluting fossil fuels, also presents ample opportunities for electrification. But a credible decarbonisation pathway needs to be urgently devised. A study, recently conducted by DNV GL with input from Eurelectric, presents the fundamental transformations needed for turning ports into frontrunners of the energy transition.

The starting point: exploring the potential of ports to become clean energy hubs. In the next 30 years, the total electricity generating capacity for industrial ports could increase more than tenfold, as they are the landing point for the huge off-shore wind planned capacity, and have numerous possibilities for solar PV deployment.

On one side, clean shore-based electricity could replace the oil-powered electricity, which is used for on-board activities while the ships are docked, thus tackling the emission from one of the most energy-intensive port activities. Moreover, the switch to short-sea shipping battery vessels, such as electric ferries and boats, is gradually taking off. But an adequate charging infrastructure must be developed in parallel.

On the other side, the increasing amounts of available clean electricity can be used to decarbonise the industrial clusters. Both direct and indirect electrification could serve this purpose. Take, for instance, clean hydrogen, which can be extracted from water via electrolysis, powered by the abundant renewable-based electricity.

This clean hydrogen would then become a decarbonised source for the production of novel maritime fuels, such as ammonia, or be used as feedstock for other industrial processes. Unfortunately today, only 95% of Europe’s hydrogen is produced with fossil fuels.

Enlit Europe will gather in Milan between 30 November and 02 December 2021 and will feature innovative companies accelerating decarbonisation at Europe’s largest gathering of companies driving and leading the energy transition. Are you going to be there?
Click here to join us in Milan.

An inclusive energy transition

The electricity industry is accelerating its decarbonisation process to become the solution for powering Europe’s net-zero emissions economy. But reaching this objective requires unprecedented societal cooperation between industries, authorities and citizens to increase the uptake and use of low-carbon electric solutions and transform the generation mix.

Targeted mitigating measures will be necessary to offset the negative impacts of climate policies, if we want to square the circle and engage everyone in the energy transition. Several remedial options, which would reduce the burden on the population were outlined in E-quality: powering an inclusive energy transition, a study published by Eurelectric this summer.

Devising energy efficiency support schemes directed to households is one of the remedial measures. Through the Renovation Wave, the EU has an opportunity to improve citizens’ standard of living and reduce both energy use and costs.

Today, Europe’s buildings consume 40% of all the energy used across the continent and, in doing so, are responsible for 36% of all CO emissions. We are now faced not only with an opportunity to “Build back better”, but a chance to lay the foundations of futureproof, greener and more energy-efficient buildings to the benefit of all.

Additionally, compensation funds, in the form of lump-sum direct rebates or tax reductions, could reduce the potential negative impact of climate policies. We all remember how a rise in the price of fuels, meant to stimulate the decarbonisation of mobility, has triggered strong social reactions, in France for instance.

If revenues stemming from key decarbonisation policies, such as carbon pricing and taxes on fossil fuels are transferred to vulnerable households, the unintended consequences of climate policies could be mitigated.

Lastly, well-planned and adequately financed long-term retraining programmes can offer concrete options for workers, thus combatting the unemployment related to the transition. The EU Just Transition Fund could be a key mitigating tool to address an asymmetric job shift, particularly in the regions facing the biggest transformation challenges regarding their electricity mix.

Decarbonisation and electrification are key topics being debated in the Enlit Europe digital programme. To see what’s coming up, click here.