The European energy system will change dramatically in the coming decades. What do current developments in the EU mean for electricity prices, revenue potential and risks for photovoltaics and wind?
The electricity markets in Europe are subject to constant change, which makes current price scenarios indispensable. This is the only way to assess market developments, assets and contracts, investment decisions, PPAs or business models correctly.
The power plant fleet in Europe has developed over many decades and was particularly dominated by fossil generation capacities. Many of the power plants on the market have already reached an advanced age. They will have to be replaced by 2050, including all nuclear power plants (except those under construction).
The current climate debate is having an effect, so that a total of ten EU-states have now decided to phase out coal in order to limit climate change. Well known and proven technologies are available for the future: gas-fired power plants, renewable energies and nuclear power plants.
Wind power and photovoltaics in particular continue to have great growth potential. These technologies are now competitive – thanks to the sharp drop in costs over the past ten years. At the European level, gas-fired power plants will be the main source of controllable fossil generation capacity in the future. This is due to the lower emissions compared to coal-fired power plants. Even with carbon capture storage (CCS), the latter continue to lose importance.
The capacities of nuclear and coal-fired power plants will be reduced by more than 55 percent by 2050 Germany, France, Great Britain, Spain, the Netherlands, Finland, Italy, Ireland, Portugal and Denmark have announced coal exits for the future. As a result, the currently installed output of hard coal in particular will fall sharply to around 36 percent by 2030.
In overall terms, the share of generation capacity from controllable thermal power plants will be reduced from 50 percent to around 25 percent by 2050. This will have a considerable impact on the structure of electricity prices, which will increasingly be influenced by vRES prices.
The demand for electricity will rise by around 28 percent by 2050. Above all, population growth and more electrification in households as well as an increase in electro mobility are increasing the demand for electricity. According to the plans of the European Commission, most of the economic growth is taking place in the tertiary service sector, which also needs more electricity.
In the industrial sector, increased efficiency can prevent a significant increase in electricity consumption.
The amount of electricity produced from coal-fired power plants is declining sharply, falling by around 60 percent by 2030 and by around 95 percent by 2050. However, production from gas-fired power plants will increase by around 25 percent by 2050. Wind and solar power plants will generate around 45 percent of the electricity in 2050.
Around 36 percent of the electricity comes from controllable fossil-fuel power plants. The remaining electricity is produced by controllable, renewable energies such as biomass power plants or storage lakes. 79 percent of the electricity is generated emission-free. This would miss the climate targets that had been set.
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