For the first time ever, the gas and electricity transmission system operators in the EU have joined forces to develop a series of joint scenarios for the European energy system out to 2040. Takeaways: high carbon prices, no shale gas, hardly any CCS, less gas in heating/more gas in transport, less nuclear and more biomethane and power-to-gas. The scenarios matter because they will ultimately help decide which energy infrastructure projects get EU support. This article is published in full on our premium website Energy Post Weekly in Sonja van Renssen’s weekly Brussels Insider.
The European bodies representing network operators for gas and electricity – ENTSO-G and ENTSO-E – have teamed up for the first time to develop a series of joint scenarios for the future of the European energy system out to 2040. These scenarios will form the basis for their respective Ten Year Network Development Plans (TYNDPs) due out this autumn.
Those plans will in turn support the European Commission’s next selection of Projects of Common European Interest (PCIs) in 2019. Those projects get put on a regulatory fast-track and can apply for EU funds. All this to say that this latest bout of modelling in the EU capital is not without consequence.
In their press release on the joint scenarios on 30 March, the ENTSOs recommend them to “any party wishing to perform their own analysis of future policies, market designs or technologies”. They plan to “take initiatives to increase their usability” and talk about how “transparent” their scenarios are.
In their TYNDP 2018 Scenario Report, they explain an elaborate stakeholder consultation process and cite input from industry, NGOs, National Regulatory Authorities (NRAs) and Member States. It appear that here, finally, is an alternative to the much criticised – also for its lack of transparency – PRIMES modelling that has been the basis for EU energy policy to date.
The ENTSOs have actually included one of the Commission’s PRIMES scenarios alongside their own three scenarios for the future. More on that in a moment. First, all the scenarios make a few basic assumptions. They all assume, for example, that European greenhouse gas emissions will need to be cut by 80-95% by 2050.
That’s current EU policy, even if Green MEP Claude Turmes is trying to introduce a net zero emissions goal by mid-century via a new governance regulation in the Clean Energy Package. Realistically, the goal is likely to be revisited next year, when EU leaders have asked the European Commission to come up with a new 2050 climate strategy.
A second foundation for all the scenarios is that they are “broadly technically feasible; for instance making it possible to maintain the energy balance at all times in each country”, the report says.
To the scenarios themselves then. The ENTSOs have come up with three, which they develop for 2020, 2025, 2030 and 2040:
- Sustainable Transition, or let’s call it the GAS scenario. It’s the most conservative scenario, with a big role for gas. It’s the preferred decarbonisation option even for passenger cars. This scenario foresees defining roles for national regulation, emissions trading and subsidies, and maximum use of existing infrastructure. The EU is only just on track to its climate goals in 2030 and will need to up the pace after 2040. Economic growth is moderate.
- Distributed Generation, or the PROSUMERS scenario. This one’s all about small-scale generation and batteries. Consumers are engaged and empowered. This scenario has the highest penetration of electric vehicles and the highest electricity demand. There is substantial demand side flexiblity. There is also a strong EU Emission Trading Scheme (ETS). Both electricity and gas are important in the transport sector; hybrid heat pumps are the preferred option for heating.
- Global Climate Action, or in our view, the LARGE-SCALE ELECTRIFICATION scenario. This imagines a world on-track to rapid decarbonisation, with large-scale renewables development in both the electricity and gas sectors. There is a big role for a strong CO2 price and a steady decline of demand for gas in heating thanks to electrification. Gas retains a role in transport however. This is the secenario with the strongest development of power-to-gas.
Finally, the Commission’s PRIMES scenario that is included alongside is “EUCO 30”. It models the minimum that the EU has committed to deliver by 2030: 27% renewables (still backed by many Member States; the Parliament wants 35%), 30% energy efficiency (the Parliament also wants 35%) and a 40% greenhouse gas emission cut (the Parliament’s preceding demands would automatically bump this up to 47.5%).
In practice, the parameters for this scenario resembled those for scenario 3 above so EUCO 30 will replace it for the TYNDP.
Below is our take on interesting points in the new modelling exercise, beyond what’s already been noted above.
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