Frits

Verh

eij,

EU

Roadm

ap 2

050,

KIV

I N

IRIA

+ U

SI, A

pril 16,

2013

EU Power Roadmap 2050 How to get to a prosperous, low-carbon Europe

Frits Verheij

KIVI NIRIA + Utrecht Sustainability Institute

April 16, 2013

EU Roadmao 2050

April 16, 2013

2

The changing world of energy

EU Roadmao 2050

April 16, 2013

Macro trends driving change

Complexity Globalisation Energy transition

3

EU Roadmao 2050

April 16, 2013

The energy transition playing field

Liberalization, Gas & Electricity

Directives (and related legal

and regulatory framework and

arrangements)

Regional integration and

harmonization

Climate policy (support of

renewable energies, CO2

emission trading, energy

efficiency)

Security of supply

Political

Political trends reflect the major

elements of energy policies.

Technological

Enhancement of renewable

technologies

Increasing efficiency

(conventional generation)

End-use energy efficiency

Network technology (DC)

Electric vehicles

Dispersed generation

Smart metering / smart grids

Energy storage

Technological trends are mainly

driven by the climate policy and

technological progress.

Economic

Aging assets & replacement

needs

Increasing regional trade but

still fragmented markets

Demand growth

Regional harmonization

Corporate consolidation

Convergence of gas and

electricity markets

Economic trends are mainly

driven by general economic

development, sector specifics and

energy policy.

The energy transition is taking shape in the context of

political, technological and economic trends.

4

EU Roadmao 2050

April 16, 2013

Electricity generation by fuel and region in IEA’s New

Policies Scenario in 2035 vs. 2008 (WEO 2010)

Source: IEA World Energy Outlook 2010

5

EU Roadmao 2050

April 16, 2013

Share of renewable energy sources in electricity generation

Source: IEA Energy Technology Perspective from 2012 (June 11)

Fuel mix in electricity generation, by scenario

6

EU Roadmao 2050

April 16, 2013

From fossil fuels to renewables

7

Concerns about our global environment

Europe wants to be less dependent on energy imports

EU Roadmao 2050

April 16, 2013

EU Energy policy development

Competitiveness

Security

of supply

Climate/

Environment

A

low-carbon

economy

by 2050

Energy

Infrastructure

Instrument

Roadmap

2050

Energy

Efficiency plan

External

Energy Policy

Communication

on Smart Grids

8

EU Roadmao 2050

April 16, 2013

Europe’s focuses

Clear distinction between public and private activities:

unbundling

Competitiveness of Europe in global market:

sustainability

Empowering customers: smartening

9

EU Roadmao 2050

April 16, 2013

The scale, and the priority of the business is shifting …

Europeanization: increase of

interconnection capacity and of cross-

border trading; cooperation between

European industries and institutions

Decentralization: local energy (DG);

new initiatives from small companies,

citizens, and municipalities; innovative

business models

10

EU Roadmao 2050

April 16, 2013

… and dependency on data in a digital world is increasing

Both work and private life has become digitalized which offers many

advantages …

… however, also creates larger dependencies on data or power interruptions

11

EU Roadmao 2050

April 16, 2013

Many developments influencing the energy transition system

12

CLIMATE CHANGE

INTERMITTENT GENERATION

DEMAND GROWTH

AGING ASSETS AND WORKFORCE

POPULATION GROWTH

DECLINING FOSSIL FUEL SUPPLIES

MAINTAIN RELIABILITY

ADVANCING TECHNOLOGY

SECURITY THREATS

RENEWABLE INTEGRATION

ESCALATING CONSUMER EXPECTATIONS

NATURAL GAS

NIMBYISM

HOW DO WE GET THERE FROM HERE?

EU Roadmao 2050

April 16, 2013

13

Europeanization: One internal market, decarbonization

EU Roadmao 2050

April 16, 2013

80% Decarbonization overall means nearly full

decarbonization in power, road transport and buildings

14

EU Roadmao 2050

April 16, 2013

Power demand will go down due to higher efficiency and up

due to additional demand from transport and building heating

15

EU Roadmao 2050

April 16, 2013

4.900

500

8003.400450

950

3.450

4,800

Baseline

power

demand

2050

Buildings Power

demand

2005

Power demand

in decarbonized

pathways 2050

Industry3

200

Buil-

dings2

EVs in

transport1

Power

genera-

tion

including

energy

efficiency

Industry

Efficiency Fuel shift

Power demand will go down due to higher efficiency and up

due to additional demand from transport and building heating EU-27 plus Norway and Switzerland power demand, TWh per year

1 Electrification of 100% LDVs and MDVs (partially plug-in hybrids); HDVs remain emitting ~10% while switching largely to biofuel or hydrogen fuel cells

2 90% of remaining primary energy demand converted to electricity (heating/cooling from heat pumps); assumed 4 times as effic ient as primary fuel

3 10% of remaining primary energy demand for combustion converted to electricity (heating from heat pumps); assumed 2.5 times as efficient as primary fuel

EU Roadmao 2050

April 16, 2013

Additional 850 TWh/yr of production is required by 2020,

and even 4,200 TWh/yr in 2050

17

Existing nuclear

Existing fossil Existing RES

Total power demand

EU-27 plus Norway and Switzerland, TWh1

5,000

4,000

3,000

2,000

1,000

0

4,500

2030

4,200

2020 2010

3,250

4,900

3,650

2050 2040

850

700

Power supply of existing power plants1 and forecasted power demand

1 Assumes no change in reserve margin from 2010 to 2050

2 Existing capacity includes new builds until 2010

Additional power generation that is

needed to meet 2020 demand

EU Roadmao 2050

April 16, 2013

A combination of solar & wind is beneficial for balancing

purposes

18

Energy production mix over the year, TWh per week

40% RES

30% CCS

30% nuclear

60% RES

20% CCS

20% nuclear

80% RES

10% CCS

10% nuclear

-

20

40

60

80

100

120

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51

En

erg

y [

TW

h]

Week

OCGT

Storage

Hydro

CSP

PV

Wind

Geothermal

Biomass

Oil

Gas

Coal

Nuclear

Demand-

20

40

60

80

100

120

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51

En

erg

y [

TW

h]

Week

OCGT

Storage

Hydro

CSP

PV

Wind

Geothermal

Biomass

Oil

Gas

Coal

Nuclear

Demand-

20

40

60

80

100

120

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51

En

erg

y [

TW

h]

Week

OCGT

Storage

Hydro

CSP

PV

Wind

Geothermal

Biomass

Oil

Gas

Coal

Nuclear

Demand

1

PV Wind

EU Roadmao 2050

April 16, 2013

Grid capacity reduces variability in both daily & seasonal

demand fluctuations

19

EU Roadmao 2050

April 16, 2013

Inter-regional transmission requirements

20

Wider coordination of investments and

operations is essential to maximise the

benefit of renewable sources

EU Roadmao 2050

April 16, 2013

The rate of grid investments compared to historic levels

21

EU Roadmao 2050

April 16, 2013

22

Region

UK & Ireland

France

Iberia

Nordic

Benelux & Germany

Central-Europe

Poland & Baltic

South East Europe

Italy & Malta

Total EU27

Maximal reserve requirement1, GW

60% RES 80% RES

Total with reserve sharing

between regions 183

281

-35%

125

191

-35%

Benefit of reserve sharing

80

-40%

40% RES

An EU approach requires about 40% less reserve capacity

EU Roadmao 2050

April 16, 2013

Curtailment is kept low through grid expansion and back-up

capacity

23

3

2

2

1

2

2

2

0

20

0

20

0

20

0

Requirements on top of the baseline

2050 figures, in GW

40% RES 30% CCS 30% nuclear

80% RES 10% CCS 10% nuclear

60% RES 20% CCS 20% nuclear

Transmission & generation capacity requirements

Transmission Back-up and balancing

RES curtail-

ment1, % DR, % Pathways

Baseline

EU Roadmao 2050

April 16, 2013

Demand response can reduce grid and back up investments

by 20–30%

24

0

50

100

150

200

250

300

0 20 40 60 80 100

Percentage RES %

Additional transmission and and back up capex

EUR bn over 40 years

0

50

100

150

200

250

300

350

400

0 20 40 60 80 100

Percentage RES %

0

50

100

150

200

250

300

350

400

0 20 40 60 80 100

Additional back up capacity GW

Percentage RES %

baseline

20%

DR

Additional back up capacity GW

Percentage RES %

20% DR

0% DR 0% DR

baseline

Optimized, DR assumptions: Baseline – 0%, 40, 60 & 80% RES - 0% to 20%

EU Roadmao 2050

April 16, 2013

The cost of the decarbonized pathways and the baseline are

likely to differ less than € 250 per year per household

25

EU Roadmao 2050

April 16, 2013

Capital for power generation would more than double in the

next 15 years

26

EU Roadmao 2050

April 16, 2013

Efficiency and fuel shift could result in a lower energy bill

on the long term

27

NOTE: Energy prices are a weighted average of prices faced by

consumers weighted by the shares of consumption of different fuels

EU Roadmao 2050

April 16, 2013

About 400,000 jobs are created in clean tech, versus

potentially 250,000 job losses in fossil fuel supply chains

28

EU Roadmao 2050

April 16, 2013

29

Power perspectives 2030

EU Roadmao 2050

April 16, 2013

Current plans for 2020 are an adequate first step

30

ENTSO-E + NREAPs = Balanced power system

with low RES curtailment (0.6%)

EU Roadmao 2050

April 16, 2013

Transmission grid needs to be extended by another 47% in

the next decade

31

EU Roadmao 2050

April 16, 2013

Higher shares of RES is technically possible at similar cost

32

Increased investments is off-set by

decreased fuel costs

EU Roadmao 2050

April 16, 2013

Demand response and energy efficiency make a real

difference in overall cost

33

EU Roadmao 2050

April 16, 2013

34

Decentralization: Flexibility, cooperation, interoperability, consumer participation

EU Roadmao 2050

April 16, 2013

Flexibility of our energy system

Fast controllable power generation, including curtailment of e.g.

wind power

More grid capacity, including interconnection capacity, and cross-

border trading

Energy storage, small-scale and large-scale systems and services

Smart local energy, including integration of DG, demand response,

and active participation of end-users

35

EU Roadmao 2050

April 16, 2013

Cooperation, e.g. between energy industry, housing &

transportation

Significant reduction in CO2 emissions globally (e.g. in Europe 80% by 2050)

Electricity makes up half of our total energy demand

Energy use is reduced overall

Renewable energy sources compose the majority of our portfolio

Fossil fuels are used in the most efficient and clean way possible

36

Transportation Local energy Housing

Smart home appliances,

innovative services, etc.

E.g. micro CHP’s: local

heating and electricity

production

Electric vehicles will become

mainstream

Green gas application

EU Roadmao 2050

April 16, 2013

Sm

art

Energ

y

Syste

ms

Smart domestic appliances

Smart

Grids

Electricity

storage

Consumer > prosumer

Interoperability

Infor-

mation

Incre

ased

energ

y

dem

an

d

by n

ew

applic

ations

EV

Domotica

Heat

Pump

Airco

Adde

d

Busin

ess

Valu

es

•V2G

•G2V Second life applications

of EV batteries

Dis

trib

ute

d

Energ

y

Resourc

es

PV

CSP

HRe

Wind

m-CHP

37

EU Roadmao 2050

April 16, 2013

Interoperability

Sm

art

Energ

y

Syste

ms

Smart domestic appliances

Smart

Grids

Infor-

mation

Electricity

storage

Consumer > prosumer

Incre

ased

energ

y

dem

an

d

by n

ew

applic

ations

EV

Domotica

Heat

Pump

Airco

Adde

d

Busin

ess

Valu

es

•V2G

•G2V Second life applications

of EV batteries

Dis

trib

ute

d

Ene

rgy

Re

sou

rces

PV

CSP

HRe

Wind

m-CHP

38

EU Roadmao 2050

April 16, 2013

Consumer participation

We are participating

producers of energy

(prosumers)

Matched by

information and

communication

technology

We like

electric cars

Smart home

appliances

Save money

with smart use of

energy

39

EU Roadmao 2050

April 16, 2013

Ultimately moving to Smart Energy Cities

Apply ‘open

innovation’ to

accelerate

developments

Integrate energy

infrastructures

Transfer energy

consumers to

energy down- and

uploaders

Organize local

energy markets

Join forces, and

be willing to really

cooperate

Install ICT

systems to enable

local control

40

New Market Roles

41

‘Yellow is the new green’

42

EU Roadmao 2050

April 16, 2013

Concluding remarks

43

Energy

Transition

Energy

Sector

‘Soft’

Enablers

From a centralized, one-directional energy system

To a partly decentralized, two-directional system

The future energy system will embrace

• Automotive industry and transportation sector

• Building industry

• End-users, and its behavior

A common vision

Collaboration, and open innovation

Societal permission

EU Roadmao 2050

April 16, 2013

Thank you

Visit us at www.dnvkema.com

Frits Verheij

Director Smart Energy

DNV KEMA Energy & Sustainability

Tel. +31 - 26 356 2445

E-mail: frits.verheij@dnvkema.com

www.dnvkema.com