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Brussels Brief November 2016 Foreword


Giles Dickson

Electrification key to unlock new wind investments

A decarbonised world powered by renewables is impossible without the electrification of society, notably of transport, heating and cooling.

We’re doing a reasonable job getting renewables into electricity consumption – 29% of power consumed now in Europe and due to rise to 50% by 2030. But we’re doing less well getting renewables into transport, heating and cooling.

There are two challenges: replacing the fossil fuels in transport and heating by electricity; and making sure it’s clean electricity. The EU is on our side. They want CO2 emissions from transport to fall by 70% in 2050. This represents a huge opportunity for the wind industry. And it’s our best bet for reversing the slow decline in electricity demand in Europe.

Energy use in transport is 94% oil. Electric vehicles are starting to look viable. Roll-out on a mass scale would dramatically increase power demand to the tune of 100TWh annually. By 2040, between 35%-40% of all new cars worldwide will be electric, according to the IEA. Consumers and governments will be looking to renewables such as wind energy to provide this power.

This switch is already happening in some places. In Belgium, 5% of all passenger trains were powered by wind energy in 2015. In the Netherlands wind provides 50% of the energy needed to run the rail network. By 2018, it will run 100% on wind power.

The residential sector also holds huge potential for electrification. Electricity supply through clean, indigenous sources could play a bigger role here through heat pumps, smart technologies and energy consuming appliances.

It’s time to start looking beyond current demand in the power sector by integrating heating, cooling and transport into the electricity supply. Renewables can provide the solution to decarbonisation efforts, particularly in urban areas. This is a major part of the global energy transition.

In Europe, residential and transport electrification could also provide an outlet for energy systems coping with overcapacity. This is a common challenge facing many European countries, contributing to very low wholesale power prices. Moreover, electrification would encourage domestic and industrial consumers to take a more active role in consumption through demand-side response.

In a month’s time the European Commission will table proposals for a new EU Renewables Directive and a new design of Europe’s electricity markets. There is unlikely to be much on electrification in this “Renewables Package”. But a number of regulatory barriers are holding up the electrification of transport and heating. Policymakers should tackle these and ensure that its renewable electricity we’re getting into these sectors.

Reviving the EU market for wind energy includes looking beyond the current power system. To secure a continuous and sustainable deployment of wind energy, new sources of demand for clean electricity will be crucial.

– Giles Dickson
 

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