The aim of the recently completed “Role of Electricity” project was to draw up an authoritative view of the role of electricity in responding to the challenges of developing a low-carbon, energy-secure and competitive European economy. The project’s results clearly point the way to a “new path” for energy policy in the coming decades.

Chris Boothby, EURELECTRIC, Belgium

There is now overwhelming evidence that emissions of greenhouse gases (GHGs) are contributing to a worrying shift in the global climate and that they will have to be very substantially reduced in the coming decades. At the same time, managing the security of Europe’s energy supplies is becoming a major issue. Solutions must be found to these two crucial challenges in a way that also helps to maintain the competitive strength of Europe’s economy – making it a triple challenge.

The role of electricity

EURELECTRIC, the association representing Europe’s electrcity companies, has for many years made pro-active input to the worldwide energy policy debate, and has already undertaken groundbreaking initiatives in the fields of emissions trading, rational energy use and electricity market development. Recognizing that the electricity industry, especially in the industrialized world, must play a pro-active role in seeking economically feasible solutions for ensuring security of supply and achieving reductions in GHG emissions, we launched a project in September 2005 designed to set out an authoritative view on the future role of electricity in relation to the triple challenge of climate change, security of supply – in particular oil and gas dependency issues – and economic competitiveness. Results and a summary report were unveiled in late March of this year, with the key conclusion that it is feasible, with the right policies, to achieve substantial reductions in GHG emissions, while reducing oil and gas import dependency, at reasonable economic cost. The project points the way forward on a new path to secure, competitive energy in a carbon-constrained world.

Carbon intensity of power generation (tCO2/MWh)
Click here to enlarge image

Entitled The Role of Electricity, the project, which covers the 2006 European Union of 25 member states, looks towards a time horizon of 2050, a period consistent with the long lifetimes of many energy-related investments, and thus relevant for both policy-making and industry decisions being taken today. Key questions relate to both existing and new energy-efficient demand-side technologies and existing or new low-carbon energy/electricity supply technologies, their impact in the coming decades and potential valuable synergies in the search for a balanced energy policy.

Boosting demand-side efficiency

An academic consortium led by the University of Leuven, Belgium, explored the likely evolution of electricity demand in the various sectors, examining the impact of existing and new technology, and providing a quantitative analysis to 2030, accompanied by a qualitative analysis from 2030 to 2050. The project team found significant potential for improving energy efficiency in many sectors, including more efficient lighting, reduction in stand-by power, more efficient motor systems and expansion of suburban rail and high speed trains. However they identified two areas where the potential for energy-efficiency improvement can be coupled to great effect with substitution of imported hydrocarbons.

The first is the use of heat pumps in spatial heating and cooling. Heat pumps use an electric compressor to extract ambient heat or cold to heat/cool houses or commercial buildings, or supply warm water. By pumping heat from outdoor air, soil or groundwater into the house, a heat pump can produce two to six times more heat per kWh than an electric radiator, and the cycle can be reversed in summer to provide air conditioning. This energy extracted from the environment is a renewable source.

Heat pumps, unlike gas and oil heating, not only have zero carbon dioxide (CO2) emissions at the point-of-use, but also perform better in a well-to-wheel analysis. This savings potential is enhanced in combination with a low-carbon electricity mix, resulting in CO2 emissions a mere fraction of those in a standard home heating system today, the projections show.

The second is plug-in hybrid electric vehicles (PHEVs) in transport. Results show that transport is a fast-growing market likely, under business-as-usual conditions in the European Union (EU), to become the largest consumer of energy by 2030. Given its almost total dependency on oil, road transport is a key segment for action on energy efficiency and carbon reduction through more efficient and/or alternative drives that do not use fossil fuels.

PHEV in allelectric and hybrid mode (Toyota)
Click here to enlarge image

PHEVs have a double advantage over the classic internal combustion engine (ICE). The combination of an electric motor with the ICE improves fuel efficiency, while the plug-in option allows a full electric drive and, unlike a fully-electric vehicle, a PHEV has unlimited autonomy. Therefore the PHEV has the ability to substantially reduce CO2 emissions and improve energy efficiency in road transport, also reducing oil dependency, without sacrificing passenger comfort or safety. In battery mode, final consumption will be less than half that of the standard hybrid (electric-ICE) vehicle, while primary fossil fuel will be replaced by the portfolio of energy sources used in electricity generation. Therefore, in combination with a low-carbon electricity mix, such as that projected under the “Role of Electricity” scenario described below, synergies can be put to work to significantly reduce both oil use and consequent CO2 emissions.

Low CO2 power mix

On the electricity supply side, a team at VGB PowerTech analyzed prospects for power generation technologies to 2030 and 2050. Even today the EU employs a balanced mix of generation technologies, and the current share of renewable energy sources (RES) and nuclear power ensures that 45 per cent of all electricity generated in the EU-25 is already CO2 -free. Meanwhile we are likely to see the commercial emergence of carbon capture and storage (CCS) technology shortly after 2020, enabling us to continue the use of fossil fuels in large-scale power generation, but with low CO2 emissions. The VGB analysis shows that under the right policy framework, the transition to a low-carbon EU power generation mix, based on secure energy sources, is technically and economically feasible. Under the “Role of Electricity” energy mix scenario, the average CO2 content of EU electricity decreases from 410 g CO2/kWh in 2005 to 130 g CO2/kWh in 2030.

Business-as-usual is unsustainable

The findings from Leuven University and VGB Powertech were then fed into a database at Athens National Technical University, where a team led by Professor Pantelis Capros investigated the quantitative impact of various demand-side and supply-side policies and technologies, using the PRIMES energy system model for detailed projections to 2030 and the Prometheus model for broader projections to 2050. Working against a Baseline scenario, several alternative scenarios were set up to explore the impact of a theoretical reduction in EU GHG emissions of 30 per cent by 2030 and 50 per cent by 2050 versus the 1990 level.

These theoretical emissions targets set up in 2005, while differing somewhat on figures and timelines with the goals envisaged in the European Commission’s January 2007 Energy Package, are nevertheless broadly in line with the Commission vision and therefore highly relevant to the current EU policymaking debate.

Power generation by source. (TWh). Baseline Scenario versus Role of Electricity Scenario
Click here to enlarge image

The “Baseline” scenario includes ongoing current policies on energy efficiency and support for RES, but does not expand them, nor does it foresee any change in current constraints on the development of nuclear energy or envisage the emergence of CCS technology. Results show that this scenario is unsustainable, both in terms of GHG emissions and gas and oil import dependency.

The “Efficiency & RES” scenario centres on energy efficiency and RES, with the same constraints for nuclear energy as under “Baseline”, again with absence of CCS. The “Supply” scenario is based on the hypothesis of a nuclear “renaissance” and commercial availability of CCS technology. The third alternative scenario, entitled “Role of Electricity”, envisages the use of all options towards a low-carbon energy system – energy efficiency, RES, nuclear energy and CCS. It also exploits synergies between a low-carbon electricity supply system and efficient electro-technologies.

All three alternative scenarios deliver the required cut in CO2 emissions. They were benchmarked against parameters such as total energy cost, oil-gas dependency and carbon value.

All-options scenario best

Results show the “Role of Electricity” scenario performing better than the others because of its balanced, synergy-seeking approach. This scenario convincingly performs best on total energy costs and the GHG target is reached without additional total energy costs compared to Baseline. Oil and gas import dependency remains almost stable in 2030 and 2050, compared to 2005, whereas all other scenarios see a significant rise in dependency.

While all scenario calculations assume economic growth of two per cent per year the “Role of Electricity” scenario thus offers the brightest outlook for economic development in a carbon-constrained environment. It is the only scenario leading to a reasonable and stable level of carbon value – circa €40-50/tCO2 – whereas other scenarios peak at €120/tCO2. This has great significance not only in economic terms, but also for global relevance and worldwide acceptance of EU climate change policy. This all-options scenario is moreover the most robust. Its portfolio approach, avoiding extreme choices that might jeopardize implementation of the other scenarios, renders it less vulnerable to unforeseen events and better able to exploit a range of future-oriented technologies with worldwide potential.

Seeking synergies: intelligent electrification

A further remarkable advantage of the “Role of Electricity” scenario is that an essential part of the solution it offers is provided by the massive potential synergies between a low-carbon electricity supply and energy efficient electro-technologies. This synergy – calling for what one might term “intelligent electrification” of the economy – is important in all areas, but is particularly significant in two sectors that have until now been highly dependent on the direct combustion of oil and gas – spatial heating and road transport.

For instance by 2030, a heat pump driven by the electricity supply mix of the “Role of Electricity” scenario is shown heating a house or office at a fraction (around 80 per cent reduction) of the CO2 emissions made by current oil or gas heating, simultaneously reducing oil/gas consumption by 90 per cent. On the same time-horizon, driving a plug-in hybrid car in electrical mode, fed by the Role of Electricity supply mix, entails a spectacular (circa 75 per cent) reduction in CO2 emissions, while reducing oil/gas consumption by some 80 per cent. The scenario assumes a reasonable, but not wildly ambitious penetration of these technologies. Their impact will continue to expand beyond the time-horizon set by the study and this could be accelerated if the authorities enact supportive policies.

Unleash energy efficiency potential

The conclusion of the Role of Electricity project is clear. Only an energy policy that unleashes the potential of demand-side energy efficiency and promotes active development of all low-carbon supply sources, coupled with systematic exploitation of the synergies between low-carbon electricity supply and efficient electro-technologies will ensure the transition to a low-carbon economy, while contributing to both the security of Europe’s energy supply and the competitiveness of the economy.

Pro-active, parallel action

It is however important to stress that all the elements comprised in the “Role of Electricity” scenario must be put to work if we are to see the desired results. These recommendations for a new path to secure, competitive energy in a carbon-constrained world must be pursued pro-actively in parallel, without “cherry-picking” single elements. It is the combination that will deliver the benefits and we need the full portfolio with all options on both the demand and supply side so as to exploit their highest cost-effectiveness potential. If we do not pursue this approach, we will fail to meet the three-fold objective of reducing GHG emissions, while ensuring security of supply, all at reasonable cost to the economy. The European electricity industry is committed to this agenda, but it must be shared by policymakers and stakeholders and translated into coherent, urgent action. And the time to begin moving on this agenda is now.