The EU has established a second emissions trading system (ETS) to put a carbon price on buildings and road transport, the âEU ETS2â. The ETS2 starts in 2027, but monitoring and reporting of ETS2 emissions will begin in 2025. One issue is that an ETS means prices for long-term fuel supply contracts will be affected, so a crucial question for firms is how to hedge their potential exposure, says Ingo Ramming at BBVA writing for the Florence School … [Read more...]
Europeâs cross-border Interconnectors: how JAO auctions optimise energy flows, prices
Interconnectors allow for cross-border flows of energy between two markets that would otherwise not be connected. Through an economic convergence between supply and demand, the cheapest marginal producer located anywhere in these two markets should be able to set market prices. As Jean-Baptiste Vaujour at the Emlyon Business School explains, the central question is to find an optimal allocation of the scarce interconnection capacity between the … [Read more...]
Chinaâs CATL to cut its EV battery costs by up to 50% this year, heralding a price war
Chinaâs CATL, the worldâs largest producer of EV batteries, is saying it will slash the cost of its batteries by up to 50% this year as part of a price war with Chinaâs second largest maker, BYD subsidiary FinDreams. The main cause is the overproduction of batteries in China: the oversupply means prices must fall. Muhammad Rizwan Azhar, Waqas Uzair and Yasir Arafat at Edith Cowan University look at the causes and implications, but add that … [Read more...]
Financing Europeâs cross-border Interconnectors to deliver energy security, lower prices: a look at incentives and policies
The EU and its Member States are building out interconnectors to improve security of supply and affordability of electricity through the physical and economic linking of national energy markets into a single, synchronised European market. But each interconnector is expensive, complex and therefore risky. They can span long distances or natural obstacles such as mountains or seas. Significant network planning and adaptation is needed to account … [Read more...]
Whatâs holding up EV adoption? European carmakers are focussing on more profitable SUVs, not affordable cars
European car manufacturers are focussing on more profitable SUV and premium EVs, and this is slowing down the adoption of EVs overall, according to an analysis by T&E. It also means consumers are paying far more than they should be for mass-market compact EVs. To make the point, T&E reveals that the average price of a battery electric car sold in Europe has increased by 39% (+âŹ18,000) since 2015 while in China it has fallen by 53%. If car … [Read more...]
EU ETS or national climate targets? We need both
The choice between using the EU ETS or national climate targets to decarbonise is a false dilemma. We need both, explains Chiara Corradi at T&E writing for the Florence School of Regulation. There are plenty of examples where a carbon market and national targets have delivered good results together, as in Germany, Finland, Denmark and Portugal. And, looking ahead over the next few decades, the right policies should be able to cope with ETS … [Read more...]
Heat Pump + Gas Boiler hybrids can reduce bills and emissions faster than a 100% heat pump roll out
The reduction in buildings emissions is well off track, not least in the residential sector. Something governments and millions of households are well aware of. The problem with replacing a gas boiler with a heat pump is the up-front cost and disruption. Installing the heat pump alone can cost several thousands more than replacing a gas boiler. On top of that, you should properly insulate your home and replace the radiators. Jovana Radulovic at … [Read more...]
Another chapter in Offshore Windâs stop-go story: New York
New York State should be leading the offshore wind ambitions of the U.S. The region enjoys high capacity factors for offshore wind, especially during the peak winter heating season. And New York is used to being a leader in so many things. Thatâs why it put its climate reputation at risk in October when the state government announced it would not renegotiate contracts with offshore wind providers Ărsted, Equinor and BP, explains Joseph Webster at … [Read more...]
EU Energy Outlook to 2060: power prices and revenues predicted for wind, solar, gas, hydrogen + more
Huangluolun Zhou, Elena Dahlem and Alex Schmitt at Energy Brainpool present their updated âEU Energy Outlook 2060â, modelling how the European energy system will undergo major changes in the coming decades while continuing to guarantee a secure supply and meet its climate targets. What do these developments mean for power prices, revenue potential and risks for solar PV and wind? The two main scenarios are âCentralâ and âGoHydrogenâ for the EU 27 … [Read more...]
How to manage price risk as the EU shifts from Russian Gas to Renewables
Europe is phasing out Russian gas and replacing it with more renewables. That means there will be greater demand variability and a resulting impact on European spot gas prices. The problem is that long-term contracting, the traditional way for buyers to mitigate spot price risk, is incompatible with Europeâs climate objectives of reducing long term consumption of gas. Kong Chyong at the Center on Global Energy Policy proposes alternative policy … [Read more...]
Investing billions in new cross-border Electricity Transmission capacity can cover its costs within a few years
The huge divergence of electricity prices between nations after the energy crises of 2021 and 2022 exposed Europeâs pressing need to increase cross-border transmission capacity, explain George Dimopoulos, Conall Heussaff and Georg Zachmann at Bruegel. Without it, generation costs will be higher, emissions too, and new generation will continue to be badly congested. The authorâs calculations reveal that one additional MW of cross-border capacity … [Read more...]
Why we need a European Central Carbon Bank within the EU ETS framework
The EU Emissions Trading System (EU ETS) is at a critical juncture as it navigates a path towards achieving a net-zero Europe by 2050. Amidst this transformation, the proposal to create the European Central Carbon Bank (ECCB) has sparked a range of criticisms. Some critics have raised valid concerns about the feasibility, necessity, governance, and potential drawbacks of such an institution. Robert Jeszke and Sebastian Lizak at the Centre for … [Read more...]
EU now has 9,000+ âenergy communitiesâ: smart, decentralised, flexible generation and consumption
The goal of the EUâs âClean Energy for all Europeans packageâ (CEP), adopted in 2019, is to improve the functioning and design of Europeâs energy markets and systems. Luca Arfini, writing for ESCI, explains how, as part of the CEP, new market actors called âactive customers/consumers and citizensâ and âenergy communitiesâ are being established. As variable renewable generation grows, the whole system needs to be more decentralised, smarter and … [Read more...]
EU states agree deal on electricity market to protect consumers from price volatility, boost cheap renewable power
On Tuesday EU member states finally agreed on how to reform the bloc's electricity market after long months of difficult negotiations. The introduction of long-term contracts, particularly contracts for difference (CfDs), should stabilise prices for consumers and give certainty to investors in new generation. But the big concern had been how the state support implicit in CfDs might be used to bias the playing field in favour of nuclear and coal, … [Read more...]
Belgium: commercially viable Rooftop Solar for social housing. No installation subsidies, lower bills
Rooftop solar is becoming a key component of the roll-out of clean energy. But whereas the decision to install is straightforward for homeowners, how do tenants in social housing blocks take advantage of the subsidies and lower electricity prices? Sven Van Elst at ASTER and Maarten Michielssens at Energy Vision, writing for WEF, describe their project that is installing rooftop solar, free, for 52,500 social rental homes in Flanders, Belgium. No … [Read more...]
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