The head of the world’s eighth largest power utility says ‘new coal is finished’ and gas-fired power is set for a similar fate.
In a wide-ranging interview with the Euractiv website, Enel CEO and new president of Eurelectric, Francesco Starace said that renewables are the clear winner and gas is next for phase-out.
In response to a question on why, despite Eurelectric’s commitment to ending coal power in Europe by 2020, Greek and Polish members did not sign up, and whether he hoped to convince them during his mandate, Starace was dismissive.
“To be frank, I think they are already convinced. The Polish energy minister recently said that after the completion of three large coal-fired plants, new investments in coal will be stopped. In Greece, the Prime Minister made a statement recently about the gradual reduction in the production and burning of lignite coal. I don’t think anyone with some business sense would invest in coal generation anymore.”
“Poland is different, they have a deep relationship with coal. And I think they may have just finished building their last coal plant. And even if the Polish build a last one, so be it. It doesn’t really mean that much. Ask any company around Europe if they are planning to build a new coal plant. They will all say no. New coal is finished.”
In recent weeks, secretary-general of Eurelectric Kristian Ruby had warned that forthcoming EU legislation proposing stricter regulations on power plant emissions (the application of the 550g emissions performance standard) could backfire, as more utilities would choose to build gas-fired power plants to adapt to the carbon limit, making for ‘significant unintended economic and systemic consequences for the clean energy transition.’
Starace, however, believes gas power is set to go the same way as coal, as the new energy system evolves.
“Gas also is being phased out, just like coal. It’s still needed for 20 years to run the system. But this 550 cap won’t change anything. It’s the wrong target, the wrong battle. This 550 cap is a classic micro-debate that everybody gets excited about. But it’s a risk the industry will not take. No one will build another 10,000 MW as a plant because of the 550 rule. This will not happen.”
“The issue today is who will build a new gas power plant. That is the hard question now. And if you ask that question, many companies will say they’re not doing that either. So when are we going to discuss no more gas power plants being built in Europe – that is going to be interesting.”
Despite news this week of a potential carbon capture and storage site off the coast of Ireland, the Enel supremo is equally certain that this technology has no future.
“I think CCS has not been successful. It doesn’t work, let’s call it what it is – it is simply too expensive, too cumbersome, the technology didn’t fly. In general, the debate over the single European market design for energy – that is taking longer than it should. There is no market design that can protect an obsolete installation or technology that doesn’t work. it’s not by a market design trick that we can protect an obsolete technology.”
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Starace was more positive about Eurelectric’s members meeting its climate neutrality target by 2050, fast approaching ten years since it was set, although he conceded some time had been lost.
“Getting there will be less expensive than thought and we will make more money out of it than was conceivable before. If long-term pricing signals are in place, then you would have the tool. Just look at the list of thermal power installations across Europe. If you take the date of birth of each installation and calculate how many years of residual life they have, you will see that if we substitute those with renewables, we can get to carbon neutrality earlier… certainly earlier than 2050.”
While recognising the opportunities for electric mobility to help meet targets and the role digital transformation will perform, the Enel chief believes renewables exceeding expectations has proven the key.
“Progress was faster and deeper than expected in renewables, which are now competitive. Today, they are clearly the winner of the cost per kilowatt hour battle. So that went a lot better than people thought.”
“Europe is better placed (for electric vehicles) than any other region of the world because we have a high population density, a relatively mild climate and a well-built network. So the conditions for deployment are good… I think the digital transformation of the networks will surprise Europeans.”
“What MEP Claude Turmes says is true: We have to quickly decarbonise electricity so that the argument of the internal combustion engine becomes obsolete. As soon as electric cars are no longer driven by coal-based electricity but renewables, this argument doesn’t hold. So, on cars, the first step for us is infrastructure, infrastructure, infrastructure.”