Thinkpiece: The impact of EU’s energy transition on the geography of the energy system, industry and transport

Author: Thomas Sattich

In October 2009, the European heads of state and government agreed on an ambitious long-term climate policy objective in order to prevent dangerous anthropogenic interference with the climate system and to ensure that the European Union (EU) plays its part in limiting global temperature increases to 2°C. Moreover, European policy makers decided to bring the European Union on a demanding decarbonisation path, with the  objective to reduce greenhouse gas (GHG) emissions by between 80 and 95 per cent by 2050, as compared to 1990 levels.

 Many decisions taken today influence the EU’s ability to meet these goals. Energy policy is one of the main fields in this regard, as decarbonisation of Europe’s economy in only a few decades implies a major and swift transition of Europe’s energy sector in order to reach almost zero GHG emissions from energy production, transportation and consumption. The electricity sector plays a particular role in this transition, as renewably-generated electricity has largely to replace fossil fuel consumption according to the decarbonisation plans.

The adaptation of Europe’s power system therefore is one of the key elements of the EU’s decarbonisation strategy, and as the energy sector moves towards greater electrification, it faces several challenges and strains. But decarbonisation does not simply represent the replacement of old power generation units with new and more efficient ones, but a new setup for the entire power industry when it comes to 1) energy carriers, 2) supply lines, 3) generation facilities, 4) power transmission and distribution infrastructure and 5) electricity markets.

Energy carriers: Being prerequisite for the generation of electricity, the characteristics of the energy carrier for electricity generation, its availability, transportability and storability determine the structure of the power system. As much as hydroelectric plants are bound by the availability of the elevation energy of water, fossil-fuel power stations require a steady supply of oil, gas and coal in order to be economically viable. Renewables make no exception in this regard, yet the characteristics of the respective energy carriers differ strongly from fossil fuels. Investors, decision makers and land use planning have to take these differences into account when setting up new plants.

Supply lines: Generation units are deployed where the respective energy carrier is best available and where markets are big enough to allow profitable operation. Distribution of generation units therefore will in any case be unequally over a given territory. The transport system can make a difference here, since it helps to supply large spaces, and therefore allows the deployment of generation units close(r) to electricity markets. But as the existing transport system has been set up during the era of fossil energy carriers, its topology may not match the requirements of renewables.

With the switch from fossil to renewable energies the established supply lines therefore will either have to be adjusted to the characteristics of the new energy carrier, or replaced by new ones. In case of renewable energies, such as biomass or biofuel, which share some characteristic with oil, gas and coal, the transition will be gradual, because existing supply lines are adjustable and therefore can stay in place. Yet other renewables, such as wind and solar, have very few characteristics in common with the traditional fuels when it comes to availability, transportability and storability, and therefore make entirely new supply lines necessary.

Generation facilities: The same holds true for power stations. Whereas some plants are adjustable for the use of renewable energy carriers and/or lower carbon emissions, others will have to be phased out and replaced by low carbon stations. Hand in hand with this replacement goes the adjustment of the power system to the characteristics of the new energy carriers, their availability, supply lines and storability; and since renewable energies, especially wind and solar energy, display other characteristics than fossil fuels, their large scale use inevitably has consequences for the functioning and geography of the power system, which also has implications for industry and transport.

Power transmission and distribution infrastructure: Yet not only the functioning and geography of the electricity sector changes with switch to new energy carriers, but also its product. Whereas the fossil fuel power plants allow the flexible adjustment of the power output to the power needs in the system/market, renewable energy plants are much less flexible to such external requirements. In contrast to carbon-based plants, where standardised units of coal, oil or gas make the operators of the power system partially independent from meteorological effects, many renewable energy plants depend on erratically changing elemental forces such as wind and sun.

The high fluctuations of some of the renewable power sources therefore poses problems for systems operators in those regions, where the respective generation units are concentrated; but these fluctuations do not necessarily signify a volatile system as such, if grid management is able to counterbalance the ups and downs in one region with those in others. In order to make decarbonisation possible the power grid therefore will have develop beyond a mere tool for the transmission of the generated electricity to the consumers and become a ‘living organism’ which instantly reacts to state changes. The larger the network, the smarter the operation and the quicker transmission, the better the power network will be able to absorb fluctuations.

Electricity markets: Decarbonisation of Europe’s power system will not only increase the volumes of electricity that can be expected to be generated, transmitted and consumed, but will also affect power markets. Liberalisation, self generation of electricity, new storage facilities and smart metering will increase the flexibility of consumers to react to the changing fabric of Europe’s energy system. Industry will also have to play its part in this transition process and adjust to the new policy requirements and the new characteristics of the power system. Electricity prices and security of supply are major factors in this regard.

These (and other) elements of the energy system interact with each other and pose several questions of technical, economic and political nature for the development of Europe’s power system: What is needed in terms of infrastructure upgrades? Can infrastructure development keep pace with requirements under decarbonisation? What adaptations of the transport system are necessary? How should industry react to the developments in the power sector? Which market players, regions and countries will be winners and losers of EU’s decarbonisation strategy? How do policy developments in the EU (both national and supranational) respond to given challenges and strains?

With a methodological approach based on economic geography and scenario analysis, the author will address these questions, evaluate the interaction of the above outlined factors and extrapolate likely trends in the energy sector. With statistical and qualitative methods the author will first evaluate how EU’s decarbonisation strategy will presumably change the topology of Europe’s power system; in a secondary step, the author will evaluate the link between the power sector on one side, industry and transport on the other. Central to the entire  analysis is the question, how the energy sector’s changing spatial topology will affect the structure of these key sectors of Europe’s economy.

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