The future of energy in Europe was written at the Power Summit 2021 – “Electric Decade”, organized by Eurelectric: 4 days of debates, 130 speakers, 12 sessions and over 3000 participants.
InvesTenergy, as the Media Partner of the event, presents – in the following – the conclusions of the four days of debates, transmitted by the organizers.
Day 1 of the Power Summit comes to a close after a day packed with impressive statements from European leaders and CEOs. All emphasised the crucial role of clean electricity in moving towards 55% carbon emission reductions by 2030 and called for an “Electric Decade”. The day was also marked by the release of two reports highlighting the challenges, benefits and trends of the #ElectricDecade while calling for the adoption of an EU Electrification Strategy.
The Power Summit kicked off in style this morning with European leaders setting the stage for the week. Short messages from our Secretary General, Kristian Ruby, and outgoing President, Pat O’Doherty, were followed by a keynote address from Irish Taoiseach Micheál Martin. All three shared their views on the wider trends of the Electric Decade, highlighting the benefits for climate, air quality, job creation and the economy at large. They also stressed the crucial need for effective cooperation between businesses to keep up with the necessary speed of change. Erna Solberg, Prime Minister of Norway, sat down with former Commissioner for Climate Connie Hedegaard to discuss Norway’s ongoing success and further plans to move beyond oil and gas.
The interview was followed by Executive Vice-President Frans Timmermans who outlined the challenges of decarbonisation and electrification at the European level and underscored the need to overcome them. He stressed how much “electricity is the agent of change for the Green Deal ambitions”, an accelerator for clean transport, buildings, and industrial applications. This is a Herculean task he stressed but “it is feasible and it will pay back in terms of jobs and offering a better future for the next generations”. This theme was shared by the final keynote, that of Danish Minister for Climate, Energy, and Utilities Dan Jørgensen, more specifically the challenge and opportunity of finding and adapting new technologies to meet net-zero.
From here to 2030
European leaders, industry, and public opinion have come together behind the task of reducing emissions by 55% by 2030. The Power Summit’s first panel was dedicated to this task and how the EU’s Fit For 55 package can best reach this goal.
To frame the discussion, utility group CEOs Jean-Bernard Lévy, EDF Group, and Ignacio S. Galán, Iberdrola, both tuned in. The former, now President of Eurelectric, used his keynote to detail the transformative role electricity will play over the coming decade, while the latter shared his thoughts on how countries that invest in grids, have smooth regulation, and fast permitting processes will capitalise on the electric decade. Accenture Europe CEO Jean-Marc Ollagnier added to this perspective the key role digitalisation will play in understanding, meeting, and ultimately shaping electricity demand.
Different speakers were then brought to bear on how best to reach the 2030 goal with a panel that included representatives from the European Parliament, the Commission, and Fortum, among others. Speakers covered a broad range of topics that will become familiar to Power Summit attendees. Expanding the number of renewable sources was high on the agenda, along with the accompanying need to increase grid investment and flexibility. To ensure reliable supply, energy system integration was also addressed along with the merits of gas as a transition fuel and hydrogen’s future role. Participants agreed that any long-term planning will require predictability and that as a result smoothing permitting processes and reliable regulation would be central to the transition.
ETS Reform – what next?
14 July the European Commission will propose reforms to the EU Emission Trading Scheme (ETS), a policy that has played a central role in phasing out coal. Today at the Power Summit, Eurelectric and Uniper hosted a discussion in light of the Commission’s ambition for the ETS to deliver emission reductions in industry and energy sector of 62%.
Representatives from the Commission and industry agreed on a stepwise approach when applying a carbon price in new sectors. Beatriz Yodi, Director European and International Carbon Markets for DG CLIMA, underlined that the carefully built EU ETS will have to be protected and reformed and that the policy tools in place for buildings and transport maintained. With this in mind, the Commission is indicating a proposal largely in line with what the electricity sector has advised.
Other panellists included Georgios Stassis, CEO of PPC, David Bryson, COO of Uniper, and Energy UK CEO Emma Pinchbeck. They were united in their message – strengthen the EU ETS in a predictable manner and only extend to new sectors in a step-by-step manner. The Carbon border adjustment mechanism (CBAM) also featured in the discussion, as well as the potential link between the EU ETS and the new UK ETS. The Commission stated that they were in favour of linking Europe to any region or country wishing to do so but – as emphasised by other members of the panel – if these two similar systems cannot be linked it puts into doubt how Europe can link its carbon market to other more diverse regions.
24/7 Carbon Free Energy
Renewable electricity sourcing is at the core of corporate decarbonisation strategies with companies already accelerating their transition towards 100% renewables. Europe, meanwhile, is increasing its CO2 ambitions to reduce emissions by at least 55% by 2030 which raises the bar for all actors in the coming ten-years.
This session was an opportunity to discuss the recent and growing interest among corporations to develop clean energy procurement strategies that accelerate grid decarbonisation. It included an introduction by Google in which they explained how they had sought 24/7 carbon-free energy for their global data centres and then a panel discussion featuring speakers from the Commission as well as other leading software and utility companies.
Participants agreed that while the market for this ambitious matching strategy is still in its infancy, it is expected to grow rapidly. As societies transition towards 24/7 carbon-free energy, it is companies that will help pave the way for strategies that can then be rolled out for all electricity consumers. Speakers were unanimous in declaring that with the growing scale of this RES offering it will be crucial to rethink electricity markets, grids, products, and certification systems to achieve a faster and more cost-effective grid-wide decarbonisation.
The second day of the Power Summit brought with it detailed debates on distribution, market design and the new generation of customers. Distribution grids are at the leading edge of a widespread transformation, facilitating the connection of massive amounts of renewables, EVs, and heat pumps – making them central to the #ElectricDecade. Market design was also widely debated and considered insufficient to provide long-term investment signals. Finally, younger consumers and their aspiration to take part in the energy transition were at the heart of the last debate.
Strengthening the backbone of our power system
Our high-level grid infrastructure panel, ‘Rewriting the grid for our future together’, brought together EU policymakers as well as executives from technology providers and distribution system operators. The session covered several topics such as investment frameworks, digitalisation, resilience, and operational efficiency.
Schneider and GE agreed on the need to build trust across the power industry value chain so that everyone is assured the technology is reliable and Europe maintains its global leadership. It was also pointed out that new challenges are stemming from cyber-attacks as well as more frequent and severe climate events – areas of resilience previously explored by Eurelectric.
Clearly, electricity distribution is becoming more complicated and experts believe the solution lies in digitalisation and improved data management. This vital modernisation, of course, comes at a cost, previously estimated by Eurelectric for the whole of Europe to €375-425 billion by 2030.
As Jean Marc-Moulin concluded, “There will be no one single technology that will make a difference, but a mix of solutions – with ongoing decarbonisation and digitalisation we need to accept that we are moving from a deterministic energy world to a more probabilistic one”.
Market design for investments
“We need to open the debate on the market model as it was created 20 years ago and it no longer works with the rise of RES to 70-80%”, began Enel’s Simone Mori. All other speakers agreed that a lot had changed in 20 years, with the spread of clean and variable technology, prosumers that interact with the power system, and two-way flows enabled by smart grids, and that this all affects the supply and demand of investments.
There was a consensus around the need to de-risk investment without overpaying but the debate centred on the right timing and tools. It is key to complete ongoing work on market integration before jumping into new market design discussions. Any proposed market design should build upon what we have today with short term markets that feature indicative planning, combine coordination of infrastructure, and develop hedging mechanisms that reward resources without distorting the market.
Moreover, as it is clear decarbonisation cannot rely solely on the development of renewables, the current investment framework should facilitate all types of clean generation technologies but also include flexibility products and demand-side technologies.
Generation X, Y, Z – the new digital customer
Eurelectric dedicated the day’s final session to the priorities of younger consumers, above all “gen Z”. The debate was powered by a keynote from Oracle Utilities, who shared insights on how consumer engagement has changed over the last year and more broadly with accordance to different age groups. It asked big questions of the sector’s interactions with younger utility customers, especially as concerned three key drivers of consumer behaviour, affordability, sustainability, and engagement.
A panel debate followed where participants responded to the findings with their own observations and examples. Representatives of utility companies and Generation Z were joined by the Eurelectric Secretariat in concluding that the proactive approach of the younger generation is pushing utilities to improve their portfolio with more digital and green projects. Business models are increasingly explained by the lifestyle of the customers. Yet, it was noted that a certain level of disconnect still exists between utilities and younger customers. As a response, Eurelectric highlighted details from its 15 Pledges campaign and how these pledges are being transformed into specific actions.
New opportunities were undoubtedly the theme of Day 3 of the Power Summit, with a trio of sessions that underscored how the power sector will be at the heart of the energy transition and just how wide an impact the #ElectricDecade will have. The day began with sector integration exploring how it promises to bring together new technologies and agile infrastructure – all powered by clean electricity. Infrastructure was the focus of the next session, above all the evolving role of DSOs, which was then followed by a discussion on Hydrogen, its uses, sources, and colours.
Sector integration – synergies on the horizon
Adam Guibourgé-Czetwertyński began our third plenary by laying out the opportunities and challenges of sector integration in very clear terms, there exists “great potential for electrification to reduce emissions in several sectors but we need to ensure that energy is cheap to avoid energy poverty or affecting competitiveness”. That this statement came from the Polish government shows that integrating energy sectors is no longer a political question but a reality. In fact, energy system integration was illustrated by all participants through several ongoing projects across Europe.
Concretely, sector integration is first and foremost the maximisation of the decarbonisation potential of every sector of the economy, driven above all by increasing the share of renewable-based energy. Speakers underlined that no sector should expect a special favour; emitting CO2 will not be optional and all sectors will need to speed up their decarbonisation transformation.
Integrating the sectors also means fostering synergies, both technical and economic. Already, clear and simple synergies exist; electric vehicles will not just goods but services, improving air quality and enabling grid flexibility, meanwhile, there are already 14.8 million heat pumps in Europe contributing to reductions in building emissions and consumer energy bills. The upcoming Fit-for 55 Package should translate this ambition into a solid regulatory framework, unlocking the benefits beyond silos.
Grid flexibility, the critical enabler
“Decarbonisation of heat, transport and industry is possible through electrification and increased use of renewables in the power sector” introduced Stephen Woodhouse from AFRY. From the demand side, this means a constantly growing share of distributed renewable generation but also a rising number of prosumers engaged in demand-response. This related increase in demand will likely be characterised by the arrival of new flexibility needs and new market players looking to provide it.
Although, at the same time, it creates new roles for DSOs. Ellen Diskin, from ESB, suggested that the challenge here will be to successfully connect ever more renewable assets at distribution level. In this respect, flexibility is an efficient tool to improve the resilience of the grids while offering a sustainable alternative to grid upgrades and new infrastructure. Even if, that is, we a still a long way off being able to trade flexibility on markets.
According to Power Grid’s Christian Todem, the electricity market is not a real market as such, but a flexibility market could bring a liberalisation to the end customer. To support the development of transparent and efficient flexibility markets, other speakers asserted the crucial need for policy arrangements that send effective investment signals. In this respect, Devrim Cellal from Upside Energy stressed the central place of standardisation and interoperable solutions. All panellists ultimately agreed that pro-active regulation will be the key to securing grid flexibility in the near future.
Hydrogen and its future
Hydrogen is back at the top of the EU agenda. The excitement of previous months has moved into pragmatism to better create a fit-for-purpose market with the potential to be the matchmaker of the energy system, achievable by increasing electrification of production and synergies with the existing gas system.
Despite being colourless this popular gas has nonetheless been attributed several shades over the years. The participants, however, agreed on the need to be colour-agnostic and rather focus on the necessity of supporting a carbon-free hydrogen market. A market that anticipates decreasing costs in the next decade and prepares for increasing interactions with all sectors of the economy, driven above all by bigger RES penetration and wider use of electrolysers.
Guided by efficiency requirements, hydrogen will be best used where you cannot use direct electrification and battery storage as the primary solution. This includes maritime and industrial purposes, in other words, the highest rungs of Michael Liebreich’s hydrogen uses ladder. This would avoid inefficient uses such as heating or fuel cells for cars that make up the lower rungs. Meanwhile, the priority should be to upscale EU Hydrogen production and gradually develop the right market design based on key EU principles. The final aim remains to have a fully merchant and competitive hydrogen market and leading electrolyser industry.
Day 4 wrapped up this year’s all-digital Power Summit. The morning began with a big picture look at the investment needed to make the #ElectricDecade a reality, where it will come from and how best to incentivise it. The later sessions looked at some best uses of this investment, namely the modernisation of DSOs and deployment of EV charging infrastructure.
Mind the gap
Meeting the 2030 climate targets will require filling a gap of €90–110bn in annual investments in power generation and €34-39bn annually in power grids. There is however no shortage of money, and the power sector stands at the forefront of the decarbonisation challenge, or as ESB Chief Pat O’Doherty put it: “We have huge capability, huge balance sheets, and the technology is quite clear, so it’s about the investments opportunity now and the funding to deploy that”.
This next decade will be key. Investment policies need to scale up clean technology and support the transition of carbon-intensive sectors. To achieve this, an EU framework needs to encourage investor engagement in sustainable finance, small-scale projects, and risky innovative and clean solutions. Such investors’ engagement can be triggered by enhancing disclosure requirements and by institutions working to de-risk certain projects.
All these options and concrete solutions reveal the need to connect all sectors and relevant stakeholders. In this context, the power sector is ready to partner up with investors and deliver on the 2030 climate targets.
The DSO of the future
The afternoon saw EPRI sponsor an active discussion on “Digitalisation in the DSO of the Future” featuring figures from regulation, DSOs, industry, and research institutions. Knud Pedersen, outgoing Chair of Eurelectric’s Distribution & Market Facilitation Committee, set the scene for the session talking about DSO investment needs with particular focus on digital solutions. During the discussion he offered a powerful plea to regulators: “[we] should not be in opposition with each other. We should share the perspective and the services which we want to have developed.”
Clara Poletti, from ACER, agreed in principle but also mentioned the need for caution, if the regulatory framework isn’t given time to adapt to new innovations the sector risks not being able to take advantage of the full potential of smart technologies. The session touched on a number of other open questions concerning the implications of society’s digital transformation – now greatly accelerated by the Covid pandemic. As more and more of everyone’s social and professional lives move online, this will increase attention on issues such as decentralised IT infrastructure, data governance, digital identities, and how modernised DSOs will navigate them to carry out their essential work.
Deploying ultra-fast charging
Eurelectric held a final panel session to discuss the specific needs and challenges of a continental rollout of smart charging infrastructure. A keynote presentation by Ormazabal set the scene and explained how digitalisation and smart grids will provide services and solutions for the millions of EVs expected to be on Europe’s roads soon. Following the keynote, a panel of industry experts and policy makers deep dived into the role of ultra-fast charging in the uptake of e-mobility.
The panel discussion focused largely on the barriers to the speedy deployment and the needed policy to further improve EV charging. In terms of barriers, it was agreed that obtaining permits is a struggle across geographies while some participants also pointed out the slow process of obtaining connection to the medium-voltage grid. As a consequence, policy was highlighted as an important step to simplifying permitting requirements and speeding up charging deployment. AFID and TEN-T were mentioned, in particular, as the main levers to deploy ultra-fast charging along highways, together with the use of Recovery Funds by Member States.
Chief executive and Commissioner conclusions
The Power Summit came to a fitting end with short panels featuring some of the electricity industry’s biggest names. First, Kristian Ruby moderated a conversation between former Eurelectric presidents Pat O’Doherty and Francesco Starace on the recent accomplishments of the industry and what key challenges remain. This was followed with an opportunity to talk with the incoming presidency, led by Jean-Bernard Lévy, about their ambitions for the sector – as laid out in their Presidency manifesto.
Finally, European Commissioner for Energy Kadri Simson closed the Power Summit, thanking everyone for the fruitful discussions of the past four days and reaffirming the vital place of the power sector in the fulfilling the promise of the Electric Decade.