EUROPEAN REVIEW

EUROPEAN REVIEW

Energy Transition in Motion

The European Union and its allies in Europe are looking to develop more low-carbon projects in the coming years in a bid to advance the EU’s net-zero by 2050 target and replace Russian fossil fuels in electricity generation, heating, and feedstocks for industries.

The EU’s full ban on imports of coal from Russia already went into effect on August 11, while the embargo on imports of seaborne Russian crude oil and products is expected to kick in next February. Meanwhile, Europe is grappling with severely crippled natural gas supply via pipeline from Russia and uncertainty whether or when Russia will turn off the taps.

Therefore, apart from looking to replace Russian pipeline gas with LNG, Europe also vows to accelerate the deployment of renewable electricity sources, produce more hydrogen, and develop hydrogen corridors.

The European Commission unveiled in May the REPowerEU Plan with a dual purpose to transform Europe’s energy system: end dependence on Russian fossil fuels, which are used as an economic and political weapon and cost European taxpayers nearly €100 billion per year, and tackle the climate crisis.

EU’s Plan To Scale Up Renewables

The REPowerEU Plan calls for accelerated deployment of renewables.

“A massive scaling-up and speeding-up of renewable energy in power generation, industry, buildings and transport will accelerate our independence, give a boost to the green transition, and reduce prices over time,” the European Commission said.

The EU’s executive arm proposed an increase in the headline 2030 target for renewables from 40 percent to 45 percent under the Fit for 55 package. The increase will include a solar strategy to double solar photovoltaic (PV) capacity by 2025 and install 600 GW by 2030 and a Solar Rooftop Initiative with a phased-in legal obligation to install solar panels on new public and commercial buildings and new residential buildings.

The plan entails doubling the rate of deployment of heat pumps, and measures to integrate geothermal and solar thermal energy in modernised district and communal heating systems. The Commission is also working to speed up permitting for major renewable projects. Dedicated ‘go-to' areas for renewables should be put in place by Member States with shortened and simplified permitting processes in areas with lower environmental risks, the Commission said.

The EU also targets 10 million tonnes of domestic renewable hydrogen production and 10 million tonnes of imports by 2030, to replace natural gas, coal, and oil in hardto-decarbonise industries and transport sectors. Finally, a Biomethane Action Plan

“Europe no longer lacks renewables ambition, but it is now facing an implementation gap. Europe needs to urgently buckle down on removing permitting barriers to unleash the full potential of renewables,”

will be developed to set out tools including a new biomethane industrial partnership and financial incentives to increase production to 35 bcm by 2030, including through the Common Agricultural Policy.

Yet, the European Commission’s cost estimate of the REPowerEU plan may fall short, a Rystad Energy analysis showed in May. The plan will require at least €1 trillion in investment to meet the core objective of increasing renewable generation from 40% to 45% of total energy supply by 2030. Additional investment will be required to meet targets, including grid and battery storage developments to ensure a stable supply of energy as the whole European power system will need to be restructured, the independent energy research company said.

“The ambition of the REPowerEU plan is huge. Power companies and energy markets will be looking for details on investments and infrastructure. While the targets are achievable, it will require wartime-like planning, levels of investment, construction, and production to meet goals by 2030,” said Carlos Torres Diaz, head of power research at Rystad Energy.

Renewables Acceleration Needed

EU governments have adopted higher renewable energy targets and companies are exploring innovative technologies as Europe looks to significantly increase clean energy deployment as one way to reduce and eventually eliminate its reliance on Russian fossil fuel sources.

Analysts and clean energy think-tanks say that Europe needs to accelerate wind, solar, and all other clean energy rollouts to eliminate Russian dependence and align the continent to a 1.5 degrees Celsius scenario.

“While the European Union keeps advancing renewables targets, on-the-ground deployment needs to accelerate to meet them,” climate and energy think tank Ember said in a report at the end of July.

The EU must double expected middecade wind and solar deployment in a 1.5C scenario, modelling from Ember showed. Last year, the EU deployed 34 GW of wind and solar capacity combined. To reach 1.5C, yearly additions will need to increase, reaching 76 GW in 2026. Forecasts show that by this date, the EU will only be adding 38 GW, half of required annual capacity increases.

Slow permitting processes also hold back faster deployment of renewables, the thinktank says.

“Deadlines for granting wind and solar permits are being exceeded by up to 5 times,” Ember’s analysis showed.

“Europe no longer lacks renewables ambition, but it is now facing an implementation gap. Higher targets have not yet translated into accelerated deployment on the ground. Europe needs to urgently buckle down on removing permitting barriers to unleash the full potential of renewables,” said Harriet Fox, Energy & Climate Data Analyst, Ember.

The EU Energy Ministers have paved the way for faster build-out of renewables and streamlined permitting for wind farms in proposed changes to EU directives expected to be discussed with the European Parliament in the autumn.

Commenting on the move, Giles Dickson, CEO at association WindEurope, said at the end of June:

“Europe now wants 510 GW of wind energy by 2030, up from 190 GW today. That’s 39 GW of new wind farms every year. Europe will only achieve that if it speeds up permitting. It’s very good that EU Energy Ministers have now agreed to do precisely that.”

“All new wind farms should be permitted in maximum two years. Governments should ensure this deadline covers all permits, including the environmental impact assessment and grid permits,” Dickson added.

As investors are increasing investments in wind energy, governments need to facilitate this and ensure they don’t discourage investments by introducing policies which deter investment, Dickson says.

Global offshore wind capital expenditure is set to more than double, from $46 billion in 2021 to $102 billion in 2030, with Europe driving the growth, recent Rystad Energy research showed. Capital expenditure on offshore wind in Europe in 2030 is forecast at nearly $53 billion, up from $15 billion last year, Rystad Energy noted. Europe was an early mover in the offshore wind space and currently leads the world with the largest number of installations. With over 26 GW of operational capacity, Europe accounts for more than 50 percent of the global total and is expected to have an installed base of over 57 GW by 2026, the energy research firm says.

In solar power, Europe is set to top even the highest deployment projections for 2022 of SolarPower Europe, supporting the region’s push to replace natural gas from Russia.

After breaking a decade-long installation record in 2021 with 27 GW, this year is set to see a new record of 39 GW of new European solar capacity, according to SolarPower Europe’s mid-year analysis. These additional 39 GW of solar would replace the equivalent of 4.6 BCM of gas.

“Every megawatt of energy generated by solar and renewables is fewer fossil fuels we need from Russia. European solar is rolling out as fast as possible in anticipation of a difficult winter,” said Walburga Hemetsberger, CEO of SolarPower Europe.

“For this winter, and every winter that follows, Europe needs full focus and attention on accelerating renewables,” Dries Acke, Policy Director at SolarPower Europe, said.

“A real challenge the sector is facing is a critical skills shortage - we risk not having the number of installers and project developers that we need. This cannot be overlooked in strategic planning for European energy security,” Acke noted.

In solar power, Europe is set to top even the highest deployment projections for 2022 of SolarPower Europe, supporting the region’s push to replace natural gas from Russia.