Energy in Europe, 2018 the turning point of the energy model

Energy in Europe, 2018 the turning point of the energy model


In recent weeks the price of oil and gas has shown some stability. However, a great volatility persists, which will continue over time. With quotations, in the case of Brent, which have gone from 30 dollars per barrel in 2016 to the 80 that has recently reached, and with unusually high carbon prices, it is not surprising that Europe wants to depend as little as possible on the fossil energy. To this is added the energy policies carried out by the community authorities, which are directed as a priority to reduce CO2 emissions. To achieve this, projects for renewable technologies are being promoted and the foundations laid, so that each member state includes more and more renewable technologies in its generation mix.

In this sense, as pointed out by the team of consultants of Energy & Sustainability Services of Schneider Electric, The decarbonisation of the economy acquires a great relevance in the whole Old Continent at this moment. In Germany, for example, the commitment is that nuclear technology and coal disappear by 2030; in Italy and in Portugal they want to eliminate coal before that year and, in France, they have a firm commitment to eliminate this type of generation in 2023 and reduce nuclear technology by 80% to 50%. For its part, in Spain, we have the example of companies such as Endesa, which has announced that by 2030 it will no longer have coal plants. Iberdrola intends to dismantle its two plants, while Repsol has purchased the assets of the Spanish electricity distributor and generator Viesgo, with the exception of coal. Schneider considers that our country starts from a relatively good base, since, although the "mix" continues to include coal and combined cycles, approximately between 20% and 30% of the generation capacity is already of renewable origin.

Nuclear

Although the disappearance of carbon in the medium term seems to be clear, the same does not happen with nuclear technology. "It is clear that there will be no new nuclear projects, partly due to the controversy generated by their waste management, but it remains to be seen if existing plants will disappear or how nuclear technology will be compensated with others, if necessary, "assures Schneider Electric analysts.

Thus, decarbonisation plans must be accompanied by a clear investment in renewable technologies that replace those that will disappear. Regarding the proportion of renewable technologies, the balance, according to Schneider, It is the key, since they are complementary technologies. In this sense in Spain and Portugal, the predominant technology is wind, since the public sector has been committed to it in recent years, but the projects underway or planned are mainly photovoltaic. In Italy, however, they opted for solar and, now, they are moving towards wind power and, in Germany, the predominant technology is solar technology. "Renewable projects require a very high initial investment and, until 2018, they were promoted by the government with high subsidies, but, now, the rules of the game have changed. Aid is no longer granted and it is the responsibility of investors to capture the financing, "say the consultants of Energy & Sustainability Services.

Volatility

Volatility in prices is another handicap of clean energy sources. "Renewable technologies, unlike coal and gas, are discontinuous generation, because they depend directly on meteorological conditions. This characteristic has an impact on the price of electricity which translates into a very high volatility of prices. They are technologies with a fixed cost and a very high investment, but their variable cost can tend to zero, since, if there is sun – and once the fixed cost has been amortized -, practically, it is generated alone ", they add. Thus, it remains to be defined what instruments will be available to soften the impact of this price volatility on customers that, not necessarily, means that prices will be higher or lower, only that they will be more changeable.

Like every moment of transition, in the end it implies crisis, uncertainty and, therefore, high prices. In fact, 2018 has been the most expensive year of the last decade, the prices of raw materials have much to do with it, but there is also a component of significant uncertainty in future prices. Schneider Electric's Energy & Sustainability Services consultancy team says that, by 2019, the price of electricity is likely to be at least as expensive as in 2018. "However, these are forecasts that they can be affected by a drop in the price of Brent, a greater amount of rain, or by the effects of the reduction of the generation tax. That is, although the forecast is upward, no one can confirm that in 2019 the price of electricity is more expensive than in 2018. In any case, the levels of 2016, the year of the historic minimum, will not be reached ", conclude .

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