The ‘Fit for 55’ Package, adopted by the European Commission in July 2021, defined the policy framework for the European Union to implement the European Green Deal, by reducing carbon dioxide emission by 55% (with respect to 1990 levels) by 2030 and achieving ‘climate neutrality’ by 2050.
The Package comprised proposals in several areas, including an increase in the 2030 target for the share of renewables in final energy consumption from 32% to 40% and for an increase in the energy efficiency targets. The REPowerEU Plan, adopted by the European Commission in May 2022, in response to the unlawful Russian war of aggression in Ukraine, proposed further to increase these targets, to 45% of final energy consumption in the case of renewable penetration.
As it has been the case so far, the electricity sector is expected to contribute more than proportionally to the achievement of the renewable penetration target, with renewables expected to cover around 70% of final electricity consumption by 2030. An increasing role for renewable gases, including renewable hydrogen, is also envisaged. Most of the expansion of renewable-based electricity generation will occur in offshore wind and in decentralised installations onshore. According to the latest European Commission Staff Working Document, capacities of 592 GW of solar PV and 510 GW of wind are required by 2030 to reach the REPowerEU Plan’s renewable electricity objective. This would require average annual additions of 48 GW for solar PV and 36 GW for wind. In comparison, the International Energy Agency’s main case scenario foresees average annual net additions of only 39 GW for solar PV and 17 GW for wind during the 2022-2027 period.
A much more aggressive investment pace is therefore required for the EU to meet the renewable penetration target proposed in the REPowerEU Plan. Turning to hydrogen, the EU Hydrogen Strategy of July 2020 defined a set of actions in five areas – investment support, support of production and demand, creation of a hydrogen market and infrastructure, and research and cooperation – to increase the production and use of renewable and low-carbon hydrogen.
The full list of 20 key actions was implemented by the first quarter of 2022. In 2022, hydrogen still accounted for less than 2% of Europe’s energy consumption and was primarily used to produce chemical products, such as plastics and fertilisers. 96% of this hydrogen was produced with natural gas, resulting in significant amounts of CO2 emissions. The European Commission has proposed to produce 10 million tonnes of renewable hydrogen and to import 10 million tonnes by 2030. Different visions have been proposed regarding the way in which hydrogen will be transported into Europe and across Europe, including through repurposing some of the existing gas network components which will be no longer needed to transport a decreasing volume of fossil gas.
The increasing role of renewable electricity and of renewable and low-carbon gases, including hydrogen in meeting energy demand would have a profound impact on the energy networks. On the electricity side, the main challenges relate to the variability of generation from solar PV and wind installations, as well as to the decentralised location of new renewable generation – offshore or connected to distribution grids. Some saturation in these grids due to the massive increase of the number and capacity of renewable-based installations connected to them is already emerging, for example, in the Netherlands. The most effective connection model for offshore wind parks, including the option of transforming electricity into renewable hydrogen offshore and using the latter to transport energy to land and over long distances, is still under discussion.
Finally, regulators are looking at how best to regulate energy infrastructure, recognising that non-grid solutions might increasingly compete with grid solutions in addressing system needs: in this context, the regulatory framework should promote the most efficient mix of these two types of solutions. In November 2021, ACER published a Position Paper on incentivising smart investments to improve the efficient use of electricity transmission asset, in which it advocated the development of a regulatory framework which promotes the efficient use of existing (and new) infrastructure.
For this purpose, the Workshop, after an opening part, will be divided into three Sessions:
This event is by invitation only.
The FSR is hosting an academic workshop regarding the most recent insights and research on the design of electricity tariffs.…
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