An audience of energy sector professionals provided thought-provoking answers to questions about the industry, posed at last week’s POWER-GEN Europe event in Cologne, Germany.
Thursday’s summary panel discussion included a new feature, audience voting. To survey questions asked by the moderator, conference director Nigel Blackaby, members of the audience were invited to contribute their opinions via small clickable voting devices.
Nine questions were asked. Here we present the results:
1. What regulatory structure would be best for Europe’s electricity sector: fully regulated, fully open, or a compromise between the two?
Almost 83 per cent of the audience opted for the compromise option, with regulated markets coming a distant second at 10.3 per cent and a fully open single market proving a dismal third choice at 6.9 per cent.
2. Given the current economic, technical and regulatory constraints, is Europe right to be pressing ahead so fast with its decarbonization agenda?
While the audience agreed that decarbonization is a priority, attendees were divided on how it should be pursued, with 43.3 per cent choosing “Yes, as quickly as possible” and 50 per cent answering “Yes, but at a slower pace”. “No, we should not make this a priority” was chosen by just 6.7 per cent.
3. What is the best available way to address intermittent generation in Europe’s grid system?
Perhaps unsurprisingly, the top answer from this crowd of power producers was “Use of flexible fossil-fired generation” at 30 per cent. The next most popular answer, at 23.3 per cent, was “Deploy available storage technologies”, followed by “Deploy demand response, e.g. smart meters/appliances/grid solutions” at 20 per cent. “Better integrate electricity and heat markets” garnered 13.3 per cent of the vote, while “Strengthen and increase interconnections” and “Use nuclear power to back up solar in the winter” tied at 6.7 per cent.
4. What would you like policymakers to do with the European Emissions Trading System (EU-ETS)?
Interestingly, this question produced a three-way tie between very different responses. “Scrap it”, “Increase the floor price to discourage coal and lignite generation”, and “Use the mechanism but with more restricted allowances” each received 28.6 per cent of the vote. In last place at 14.3 per cent was “Allow the CO2 price to find its own level”.
5. What would have the greatest positive effect on kick-starting large-scale power project development in Europe?
“An upturn in economic conditions” received a modest 6.7 per cent of the audience vote, while “Removal of subsidies for renewables” received only 3.3 per cent. This reporter, having heard numerous discussions on the need for a capacity market during the three-day conference, was surprised that “Guaranteed value for capacity” received only 20 per cent of the vote. At 23 per cent was “A reliable long-term policy framework from Brussels” – but the big winner, and again perhaps a surprising answer, was “None – the market for large power plants will never return”, at 46.7 per cent.
6. What do you think is most likely to have the greatest impact on Europe’s electricity sector in the next five years?
“Lower cost of renewable generation” proved the most popular answer to this question, at 37.9 per cent of the vote. Next was “development of shale gas in Europe” at 24.1 per cent, followed by electricity storage at 17.2 per cent. Smart technologies drew 13.8 per cent, while deployment of CCS and electric vehicles tied at 3.4 per cent.
7. How do you feel about recent consolidation among equipment and service suppliers?
“Concerned that innovation and R&D will suffer” was the view expressed by 33.3 per cent of the audience, while 30 per cent believed consolidation to be a “Natural and healthy consequence of tough market/economic conditions”. Twenty per cent were “Concerned that Europe’s global influence in power engineering will suffer” while 16.7 per cent termed the consolidation a “Regrettable reduction in competition among suppliers”.
8. Do you expect the growth of electric vehicles to noticeably increase electricity use in Europe in the coming decade?
The impact of EVs is still an open question, if the votes are any indication. While 38.7 per cent of the audience voted “Yes”, the same percentage – 38.7 per cent – voted “No”, with 22.6 choosing the “I don’t know” option.
9. Who do you expect will be responsible for the majority of power generation in Europe in 10 years’ time?
Decentralized energy is on the rise, according to the audience: 46.7 per cent chose “Small municipal/local producers”. But the status quo had its supporters: another 36.7 per cent opted for “Large centralized utilities”. Prosumers were chosen by only 6.7 per cent, while “Other entities e.g. Google or Amazon!” was selected by 10 per cent.
If we take the opinions of these industry professionals as read, Europe’s future power sector will be decentralized, with big utilities going the way of the dinosaur. The future EU electricity market will combine regulated and open elements. Fossil fuel-fired power plants will continue to back up intermittent renewable generation as Europe moves, at a slower and steadier pace, toward a low-carbon future; costs for renewables will continue to fall, and energy storage will increasingly come into play.
The ETS will be reformed in a manner yet to be determined, or done away with altogether. A capacity market may be implemented, but will not rescue big utilities from their ‘death spiral’ in the end. Europe’s global competitiveness may suffer due to industry consolidation, but when economic conditions improve this trend may reverse itself. And EVs may or may not contribute to growing electricity demand.
All in all, not unreasonable predictions.