Opinion article sponsored by COGEN Europe, published on Euractiv.com (13 September 2023).
Article by Hans Korteweg, Managing Director, COGEN Europe
As the EU institutions discuss how to reform the design of Europe’s electricity market, it’s important to understand that the electricity market has a central role to play in driving the energy transition and fostering the decarbonisation of Europe’s energy system. In particular, the market should support the deployment of more decentralised, efficient and flexible ways of generating electricity – including cogeneration technologies that can make the best use of precious renewables like biomethane and clean hydrogen, whilst also capturing valuable heat that can be used locally.
[Image: G Tipene (Shutterstock)]
Europe’s electricity market has a vital role to play in driving the energy transition by fostering the increased uptake of renewable energy sources such as solar (PV) and wind, whilst reducing our consumption of fossil fuels and cutting emissions of greenhouse gases – thereby contributing to the objectives of the European Green Deal.
As the EU and its Member States strive to achieve their energy and climate goals for 2030 and beyond, households and businesses are being encouraged to invest in ‘clean’ technologies such as electric vehicles and heat pumps. The successful deployment of these solutions will depend on consumers having access to reliable sources of affordable electrical power.
As we advance towards the goal of ‘net zero’ emissions, an increasingly important share of electricity demand will be covered by renewable energy sources such as solar (PV) and wind – but we must not forget that these intermittent sources of power are not always available and so we cannot rely on them 100% of the time. To put it plainly: the sun isn’t always shining and the wind isn’t always blowing!
Energy storage solutions, such as batteries, have an important role to play, but we will also continue to need dispatchable sources of electrical power that can be called upon to cover the gap between supply and demand, thereby avoiding power outages or blackouts. This will be especially vital during the winter months when there is less power available from solar (PV) and wind, and when electricity demand is highest.
Smart technologies, increased energy efficiency and demand response measures can all help us to limit and hopefully reduce the demand for electrical power, but let’s not forget that technologies like heat pumps and electric vehicles will also lead to increased electricity demand – most particularly during the coldest days (and nights) of the year.
Most experts agree that we will continue to need dispatchable electricity generation in the coming decades – up until 2050 and beyond. The important question to ask, therefore, is which technologies, solutions and energy sources should we use to generate electricity when the supply from non-thermal renewables such as solar (PV), wind and hydroelectric is insufficient to meet the needs of households, businesses and other customers?
In COGEN Europe, we believe there is a very strong case for giving priority to cogeneration* technologies that are highly efficient and decentralised – thereby reducing the amount of energy that is lost in transmission, and also producing valuable heat that can either be used locally (e.g. in a district heating network) or stored for later use. A well-insulated hot water tank is one example of a relatively simple thermal storage solution, and is considerably less expensive than using batteries to store electrical power.
Carbon dioxide emissions can be reduced and eventually eliminated by switching from traditional fuels like natural gas to renewable and low-carbon gases such as biomethane and clean hydrogen. The good news here is that most of the cogeneration systems currently on the market (including reciprocating engines, steam turbines and fuel cells) are already able to run on biomethane, and they can easily be converted to run on hydrogen. This is why we say that cogeneration technologies should be seen as ‘future proof’.
The reform of Europe’s electricity market represents an opportunity for the EU to embrace a more integrated and holistic approach to energy policy that puts energy efficiency first and combines a variety of different energy sources and solutions in order to reduce greenhouse gas emissions as rapidly as possible, whilst also ensuring affordability for customers, managing fluctuations in demand and maintaining reliability of supply.
In this context, COGEN Europe wishes to highlight four key principles that the EU institutions should keep in mind during their discussions on reforming the design of Europe’s electricity market:
Put Energy Efficiency First
The EU and its member states should give priority to high efficiency cogeneration for the supply of flexible (dispatchable) electricity during times of peak demand, instead of building more large-scale conventional power plants. Distributed power generation, including on-site industrial cogeneration, will also contribute to reducing the strain on electricity grids and limiting the costs of investments in necessary grid infrastructure.
Support all flexibility solutions across integrated energy systems
Given the greater reliance on intermittent renewable electricity from solar (PV) and wind, alongside increased electrification of heating and transport, the whole power system will need to become more flexible. Distributed generation including high-efficiency cogeneration using renewable gases and cogeneration will be vital to ensure that supply and demand for electricity are always in balance, also taking seasonal variations into account.
Ensure security of power supply by encouraging necessary investments
Across European regions, power adequacy concerns may persist despite the uptake of flexibility options. In this context, positive investment signals are needed to ensure that sufficient dispatchable electricity generation capacity is installed, in order to maintain security of supply and affordability for end-users.
Empower consumers to produce their own electricity and/or heat
Energy users are increasingly opting for self-generation solutions including cogeneration systems to protect themselves against excessive electricity prices and/or power outages. Europe’s electricity market should encourage efficient and renewable dispatchable generation, allowing businesses, households and other ‘prosumers’ to sell their excess electricity and/or heat to other users when this represents the most efficient and lowest-cost solution.
For further details, please refer to COGEN Europe’s recent position paper on Electricity Market Reform.
* Cogeneration is sometimes called Combined Heat and Power (CHP)
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