Power Choices Reloaded

Power Choices Reloaded

Summary presentation by Prof. Pantelis CAPROS (E3MLab)

EURELECTRIC, Brussels May 13, 2013

Decarbonisation Roadmaps for the EU

2007The Role

of Electricity

2009Power

Choices

2010ECF

Roadmap 2050

2011EU Low Carbon

Economy Roadmap

2050

2012EU Energy Roadmap

2050

2013Power

Choices Reloaded

2

These Roadmaps show common results:

Decarbonisation to the horizon of 2050 is feasible using known technologies; some have to become commercially mature

Carbon-neutral power by 2050 is achievable, with major CO2 reduction escalating during 2025 to 2040

All power generation technology options are needed simultaneously to reduce transition costs

Robust energy and carbon markets, infrastructure development and policies to foster energy efficiency support restructuring

Intelligent electricity systems could replace direct use of fossil fuels, in mobility and heat uses

3

Power Choices Reloaded (PCR) has updated Power Choices of 2009 and has focused on the impacts of deviations from optimal decarbonisation pathway

PCR assumes availability of all technologies and options for emission reduction

PCR updated assumptions on:• Technology progress

and costs• Fuel prices• Economic trends• Nuclear and CCS• Policies

Sensitivities have been quantified as deviations from PCR due to failures and delays

PCR and sensitivities are economic and technical energy

system projections for all EU countries

until 2050, based on PRIMES model

The Reference scenario mirrors currently adopted policies• ETS with allowances reducing

by 1.74% per year until 2050• 20% Renewables Share by

2020• Non ETS Effort Sharing

Decision for 2020• Eco-design, efficiency and car

regulation legislation• No new policies after 2020

4

Cumulative GHG emissions matter for climate change mitigation:all decarbonisation cases deliver equal carbon budget

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 20500

1000

2000

3000

4000

5000

6000

Reference

Total GHGs emissions in Mt CO2eq

Reference


The Lost Decade

Limited financing

Barriers to EE

Limited XB Trade

RES target in 2030

CO2 price driven

5

Deviating from optimal pathway implies higher costs

Reference


The Lost Decade

Limited financing

Barriers to EE

Limited XB Trade

CO2 price driven

RES target in 2030

-1957.03862421121

3931.97163364767

2448.41484383374

1192.50209554858

315.589800281014

145.330489975677

1230.56490341757

Difference of Cumulative Energy system costs 2011-2050 from Power Choices Reloaded scenario in bn €'10

excl. auction and disutility

6

Note: The emission reduction projections do not include possible reduction of fossil fuels prices driven by worldwide climate change mitigation

In Power Choices Reloaded all options are combined to reduce emissions:

0

1000

2000

3000

4000

5000

PCR: Decomposition of avoided CO2

relative to 2005 Fossil Fuel MixCCSRenewablesNuclearPolicy-induced Energy Effi-ciencyMarket-driven Energy Effi-ciency

Mt CO2

'2010-2...

18

21

11

32

6

13

% cumu-latively

14 17 21

26 26 16

15 137

38 34

28

6 1118

10

% of Total

39% from energy efficiency32% from Renewables11% from nuclear, 6% from CCS and 13% from natural gas

7

Decarbonisation of electricity generationThe Reference scenario already projects a very strong reduction of CO2 emissions in power generation due to the ETS: in 2050, -77% compared to 2010 levels

The Power Choices Reloaded suggests full decarbonisation of power generation

The ETS allowances annual change until 2050 would be required to become -3% instead of -1.74%, assuming no set-aside

8

20002005

20102015

20202025

20302035

20402045

2050

0.24

0.18

0.080.07

0.38

0.31

0.23

0.15

0.060.01

Carbon intensity of Power generation

ReferencePower Choices Reloaded

tCO

2/M

Whe

+MW

hth

20082011

20142017

20202023

20262029

20322035

20382041

20442047

20500

500

1000

1500

2000

2500

3000

EUA Allowances Current EUA: -1.74% pa

Required EUA: -3% pa

New uses of electricity in decarbonisation context

• Reducing emissions• Increasing energy

efficiency• Reducing dependence on

oil

Electricity for

transpo-rtation

• Substitution of fossil fuels• Higher overall efficiency

Electricity for

stationary uses

• Mixed in natural gas supply allows lower emissions and maintains gas use in small CHP and in domestic sector

• Perfect storage means for variable RES

Hydrogen from RES

Power

9

2010 2015 2020 2025 2030 2035 2040 2045 2050

3032 33

3436 37 38 39 40

3235 36

3739

4245

47% electricity in stationary final energy demand

Reference Power Choices Reloaded

2010 2015 2020 2025 2030 2035 2040 2045 20501.8 1.9 1.9 2.0 2.7 3.7 4.6 5.3 5.9

1.8 1.9 3.25.3

7.9

12.3

18.5

22.325.5% electricity in transport sector


2010 2015 2020 2025 2030 2035 2040 2045 2050

3.76.3

9.511.7

% of gross electricity used for H2 pro-duction

A systems approach with electricity as main pivot

Starting with emissions of 350g/kWh in 2010, the power sector will deliver about 10g/kWh in 2050 in the Power Choices Reloaded scenario.

Reaching the whole-economy 2050 goal requires a significant share of final energy use to switch to electricity, notably in the transport sector and heating, thus delivering emissions reductions and efficiency improvements

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 20500

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

Distr. LossesDistr. LossesDistr. LossesDistr. LossesDistr. LossesDistr. LossesDistr. LossesDistr. LossesDistr. LossesDistr. LossesDistr. LossesDistr. LossesDistr. Losses

IndustryIndustryIndustryIndustryIndustryIndustryIndustryIndustryIndustryIndustryIndustryIndustryIndustry

HouseholdsHouseholds

HouseholdsHouseholdsHouseholds

HouseholdsHouseholdsHouseholdsHouseholdsHouseholdsHouseholdsHouseholdsHouseholdsTertiaryTertiary

Tertiary

TertiaryTertiary

TertiaryTertiaryTertiaryTertiary

TertiaryTertiaryTertiaryTertiary

Energy BranchEnergy Branch

Energy Branch

Energy BranchEnergy Branch

Energy BranchEnergy BranchEnergy BranchEnergy BranchEnergy BranchEnergy BranchEnergy BranchEnergy Branch

Hydrogen

Hydrogen

Hydrogen

HydrogenHydrogen

HydrogenHydrogenHydrogenHydrogenHydrogen

HydrogenHydrogenHydrogen

Transport

Transport

Transport

TransportTransport

TransportTransportTransportTransport

Transport

TransportTransportTransport

Electromobility

Electromobility

Electromobility

ElectromobilityElectromobility

ElectromobilityElectromobilityElectromobilityElectromobility

Electromobility

ElectromobilityElectromobility

ElectromobilityReference

Electricity Demand in TWh

10

11

Completion of the internal market and grid infrastructureEfficient decarbonisation requires sharing of resources in the EU through unobstructed XB trade

The reference scenario already assumes implementation of the ENTSOE infrastructure plan.

Additional grid investment, post 2020, is assumed in PCR for exploiting RES (e.g. offshore wind) and for integrating decentralized RES

Trade volumes in the EU reach 14% of electricity demand in the Power Choices scenario compared to 7.5% in the Reference by 2050

2020 2030 2040 2050

259300

330371

462

542

652

Volume of electricity trade (TWh)


Already in the Reference scenario, ETS drives strong restructuring of power generation in the long term

In Power Choices Reloaded additional decarbonisation is achieved mainly through higher RES and CCS post 2030

Gas plays a key role in balancing and reserve services

Pumped storage increases and in the long term hydrogen storage emerges

2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 20500%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

PCR: Structure of power generation

HydroVariable RESBiomassGas w/o CCSGas-CCSOilCoal w/o CCSCoal-CCSNuclear

2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 20500%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Reference: Structure of power generation

HydroVariable RESBiomassGas w/o CCSGas-CCSOilCoal w/o CCSCoal-CCSNuclear

12

13

The Lost decadeThe Lost decade assumes a complete lack of action in the decade 2020-2030, therefore the entire decarbonisation

action has to occur in the last two decades

Infrastructure, power sector decarbonisation, mobility electrification and technology R&D, as well as energy

efficiency in the demand side sectors will have to develop in a very short period of time post 2030

The changes required in the system from 2030 to obtain the same cumulative emissions as the Power Choices Reloaded scenario lead this scenario to being barely

feasible in true life

The Lost DecadeConsiderable adverse effects on costs and performance (total cost 2% of GDP above PCR)

The considerable differences are mainly due to the delay in acting in the demand side (efficiency) and to lock-ins due to lower investment and delays in infrastructure development

<1%1 to 2%2 to 3%3 to 6%>6%

na

1.91.8

2.9

2.0

1.6

3.2

5.1 3.7

2.94.1 7.7

naYU

nK

10.7

n

2

2.5

Fre

F

F

1.0

1.7

1.7N

1.1

1.5

1.1 2.4

7.7

6.6

K

5.5

8.6

3.0

2.3

Increase of energy system costs as percentage of GDP

in the Lost decade compared to the PCR

14

The Lost decadeFinal consumers in the Lost decade scenario pay significantly higher amounts for purchasing energy products

The large differences in the Lost decade scenario are due to the changes in final energy demand which has to recuperate a lack of action until 2030.

The countries which pay the most have the highest difficulties in recuperating the lost energy efficiency and in dealing with the lack of electrification in transport.

15

<5.0%

5.0%...7.0%

7.0%...9.0%

9.0%...11.0%

>11.0%

na

11.0%7.8%

14.1%

7.5%

8.0%

9.8%

10.9% 8.5%

10.9%10.7% 12.8%

naYU

nK

8.9%

n

8

9.5%

Fre

F

F

9.0%

14.9%

8.7%N

9.2%

10.0%

6.2% 10.2%

6.9%

10.0%

K

12.8%

13.2%

14.4%

5.3%

Increase of cumulative fuel purchase costs by final consumers in the Lost decade

compared to the PCR

Failures involved in the Lost Decade case• Weak carbon market until

2030• Limited financing under

uncertainty hampering investment

• Market coordination failures delaying infrastructure

• Incompletion of IEM leading to low XB trade

• Slower pace of technology progress

• Barriers to Energy Efficiency persisting up to 2030

16

2020 2025 2030 2035 2040 2045 2050100

110

120

130

140

150

160

170

180

190

200Average Price of Electricity

after tax in €/MWh Reference


Lost Decade

Limited Financ-ing

Limited XB Trade

Investment in PCR

Investment costs increase substantially compared to current levels

A large part of additional investment will be carried out in consumer premises and for consumer vehicles

Investments are compensated by lower fuel purchase requirements as a large part of investments relate to energy saving investments

17

00-10 10-20 20-30 30-40 40-500

1000

2000

3000

4000

5000

6000

Energy related invest-ments in the Power

Choices Reloaded scenario (Bilion Euro'10)

IndustryResidentialTertiaryAdditional Transport Investments (comp. to ReferencePower grid investmentPower plantsSteam boilers

Economics of Decarbonisation• Affordable compared to the

Reference

• Less expensive in the context of a global climate action

• Highly capital intensive in both demand and supply

• Timely infrastructure development and coordination with emerging new technologies

• Consumers are required to spent upfront in order to save on variable costs

• Except electricity, rest of energy supply sectors see diminishing sales

• Deviations from optimal trajectory entail significant additional costs

0.86

0.27

0.7930314837166450.40801135928970

7

0.200002278534305

0.184904908302395

0.154468286916801

0.134054842610286

Total energy system cost cumu-latively until 2050 (as % of GDP)

18

Agenda for the 2020-2030 decade Robust carbon market to provide sufficient price signal for achieving

significant decarbonisation by 2030

Well-functioning power and gas markets supported by grid infrastructure to share resources for cost-efficient balancing and backup of renewables

Pursuing strong energy efficiency progress in domestic sector overcoming non-market barriers with electricity further enabling efficiency

Recharging infrastructure and effective market coordination for successfully emergence of electromobility supported by intelligent metering and grids

New nuclear investment and extension of lifetime of old nuclear plants, where possible

Carbon transportation & storage infrastructure and achievement of commercial maturity of CCS for post 2030 operation

19

Documents

Power Choices Reloaded