What impact will the confrontation between Russia and NATO over Ukraine have on Europe’s energy security? Russia provides nearly half of Europe’s natural gas, and Moscow could tighten the flow if hostilities break out. If that happens, where would Europe get its gas from? Amy Jaffe at Tufts University looks at the constraints on global LNG supply (mainly liquification and regasification capacity), the global ability to redirect shipments to … [Read more...]
Gas Crunch: time to factor in volatility and externalities to reveal its true costs
The current gas price shock (and any future ones) raises the question: if we had invested more in renewables, efficiency, buildings renovation, and green gases, would we be actually saving money instead of losing it? Looking at the EU, Dolf Gielen, Michael Taylor and Barbara Jinks at IRENA urge governments to do something they’ve not done before and factor in the negative impacts of volatile fossil fuel prices. Moreover, they should calculate the … [Read more...]
Using ENTSO-E’s modelling for China’s grid expansion
The EU and China have similar challenges when expanding their complex grid network. Both have large populations and multiple borders (China has 23 provinces, five autonomous regions, four municipalities and two administrative regions). Both must rapidly add clean power whilst ensuring energy security at the lowest cost. Helen Farrell at ECECP describes their project to use European ENTSO-E modelling tools to assess scenarios for China. One key … [Read more...]
The Gas Crunch: EU and China can share lessons on Energy Security and Renewables Integration
With adversity comes opportunity. The global gas crunch has hurt countries around the world but has also made them appreciate their common concerns. That has provoked policy-makers to take a serious look at current and future energy security policies. In the EU the competitive gas markets, enabled by short-term spot markets, has reminded us of the value of long-term contracts when prices are volatile and rising. Meanwhile, China’s … [Read more...]
Turkey: when electricity price ceilings amplify the pain of gas spikes and currency falls
Turkey’s rules for an electricity price ceiling may be well intentioned, but they are creating a price ladder that is causing those prices to rise too fast and too much, say Fuat OÄźuz at Ankara Yıldırım Beyazit University and ÇaÄźrı Peker at the Energy Market Regulatory Authority, Turkey. When market participants are allowed to sell and buy electricity at distorted prices the effects of external shocks are amplified artificially. The main shocks … [Read more...]
Electricity Market Reform: ACER must empower consumers, not just network operators
ACER, the EU Agency for the Cooperation of Energy Regulators, has delivered to the EC its preliminary assessment of Europe's high energy prices and the current wholesale electricity market design. Simon Skillings and Lisa Fischer at E3G interpret ACER’s assessment as showing it wants to maintain the status quo. However, long-term changes in market design are inevitable. The authors want ACER to accept this reality and ensure the changes are … [Read more...]
China’s energy crisis: the problems with coal exit, emissions targets, and a command economy
China is also suffering from an energy crisis. Major industries have had to restrict production, and reports abound of candle-lit dinners, traffic lights failing and people getting trapped in elevators. Its effect has also been global, with Apple, Tesla, Microsoft and Dell saying it’s hitting their supply chains. As Jun Du at Aston University explains, China’s drive to cut coal has collided with post-Covid resurgent demand and an unusually hot … [Read more...]
Don’t let high gas prices stop the EU ETS from doing its real job
The EU ETS carbon price reached a high of over €60 per tonne in September. Some are arguing that its role in the current gas price crisis is a reason why it should be reined in. But Milan Elkerbout at CEPS Policy Insights explains that the EUA (European Union Allowance) has multiple purposes. It is an incentive to invest in low-carbon solutions such as renewables, efficiencies and new methods. The sooner we pass the cost hurdle of integrating … [Read more...]
Gas crunch: market and policy causes, and lessons learned
Andrei Belyi at the University of Eastern Finland says there are three main causes behind the huge rise in European gas prices. Everyone already understands that the reversal of the previous gas glut that gave us such low prices has been caused by a decline in European gas production, LNG imports and Russian gas deliveries. Added to that is the utilities’ reliance on spot contracts rather than termed contracts – great when prices were low – that … [Read more...]
The U.S. now needs a Carbon Tax to transition from Gas to Renewables
Gas emissions must be halved (and coal eliminated) by 2030 to meet President Biden’s goal of a carbon free power sector by 2035. The problem is that gas additions are half the price of new wind and solar installations. Though the clean energy champions are still getting cheaper, so are gas additions. Nikos Tsafos at the Center for Strategic and International Studies looks at the policy options over the next decade for the U.S. The stark fact is … [Read more...]
Germany 2021: coal generation is rising, but the switch to gas should continue
As news across Europe shows, a combination of factors is seeing coal powered electricity generation on the increase. Simon Göss at cr.hub, writing for Energy Brainpool, takes a close look at what’s going on in Germany. The post-pandemic demand bounce-back, low generation from wind due to calm weather, and record high gas prices have made coal more competitive. That’s even with rising prices for CO2 and record high prices for coal (caused by … [Read more...]
How to share the cost of an EU-wide Hydrogen network
The EU’s ambition is to make green hydrogen available throughout the region, and ramp up the transportation infrastructure as fast as possible to deliver it at a competitive price. But there are big disagreements between stakeholders over how and who should pay, explains Walter Boltz. The simplest solutions like focussing on hydrogen clusters will only deliver it to nearby customers. If only the customers pay it will make the hydrogen very … [Read more...]
How to keep Wind and Solar profitable as its electricity gets cheaper
Success can cause problems. As wind and solar penetration increases the electricity it generates gets cheaper. If it stops being profitable we’ll stop building it, thus endangering our emissions-free goals. Dev Millstein at the Lawrence Berkeley National Laboratory summarises their research paper that looks at how market value changed over time at 2,100 utility-scale power plants across major power markets in the U.S., using 2019 data. It’s clear … [Read more...]
Financial incentives for Grid Modernisation: the problem with guaranteed returns on investment
Grid modernisation is going to be very expensive. What’s the best way to pay for it? The financial incentives governments put in place now will determine what investments get made, how cost-effectively it’s done, and who ultimately pays. Meredith Fowlie at UC Berkeley’s Energy Institute at Haas explains that a common method is for a government to give some sort of guaranteed return on investment for the new asset. But it’s far from ideal. … [Read more...]
Germany: will the end of feed-in tariffs mean the end of citizens-as-energy-producers
Germany’s feed-in tariffs ran for 20 years. The guaranteed electricity price and connection to the grid incentivised ordinary citizens and communities to invest in smaller scale solar, biomass and wind generation for their homes and local areas. But that guaranteed price is now too expensive, and so the tariffs are ending and lowest-bid auctions are taking over. It’s the bigger players who are winning those auctions, and some of the existing … [Read more...]
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