European Union leaders are among the most enthusiastic proponents of maximum electrification to reduce dependence on imported energy commodities. A lot of EU policy pursues precisely that. Yet EU electricity prices last week surged to over 600 euros per MWh on a wind drought, and the bloc still gets over 70% of its final energy consumption from hydrocarbons. Electrification is much easier said than done.
In July this year, the European Commission released a plan to turn Europe into the first “electro continent” by boosting the share of electricity in final energy consumption from 23% currently to 46%, and doing that by 2040. The target means that the share of electricity in final energy consumption needs to double—but that is not any electricity that the EC is after. In line with Brussels energy policies from the past decade, which have accelerated since 2022, the goal is to source as much of the bloc’s electricity from alternative sources such as solar and wind installations.
Theoretically, the plan is sound. It involves reducing dependence on energy imported from other countries that either the EU views as enemies or are in a state of war, which is affecting the price of that energy. Obviously, domestically sourced electricity would be a much better choice in this context. However, domestically sourced electricity generated from alternative sources with a view to reducing generation-related emissions is a bit harder.
We need look no further than the recent swing in European wholesale electricity prices. Last Monday evening, prices surged to top 600 per MWh, and the only reason for that was that the wind powering turbines in Northwestern Europe died down. The energy transition is frequently being advertised as a way to make energy cheaper without compromising reliability, but last week’s incident—which is far from a rarity—shows otherwise.
As Bloomberg put it, “Wind and solar generation are set to remain low across northwest and central Europe through Wednesday, as a slow-moving weather front brings still, cloudy conditions across some of the region’s biggest power markets.” This means that leaning into wind and solar during the winter is perhaps not the smartest thing to do. With a view to long-term electrification plans, these seasonal weather patterns are also worth considering before setting targets.
Yet instead of making these considerations, the EU is spreading the ambition, with this year’s COP host, Turkey, throwing its support behind faster electrification. The lead argument now is energy security, rather than emission reduction. The way to electrify, as noted by several attendees of COP31, is through more electric cars, switching from gas heating to heat pumps, and deploying more wind and solar to generate the electricity that a highly electrified economy would inevitably need.
This is where the question of seasonal variations in wind and solar output—and grid upgrades—needs to come into the conversation and it has, indeed, come into it. However, besides estimating that grid upgrades, for instance, would require investments of over half a trillion euros by 2030, little has been done in the practical aspect of it all. That’s probably because it is difficult to do anything practical about something that costs so much money and that would make electricity so much more expensive.
As for seasonal output variations for that twin Holy Grail of the EU’s energy transition plan, wind and solar, the dark doldrums, as media like to call the winter lull in wind and much lower solar irradiation, descend on Europe every single year. Every single year, they force those with the biggest wind capacities to lean more heavily on either hydrocarbon alternatives or imports from neighbors—which have nuclear, for example. This also comes at a cost, of course.
The European Union is this year entering winter with the lowest natural gas stockpile on record. Analyst John Kemp has warned that the EU could see this stockpile drop to a critical low before winter is over—and it probably will, even if the weather is milder than feared. Winter in the Northern Hemisphere, even if it is mild, is still the coldest season of the year.
In other words, theorizing about the electrification of final energy consumption is one thing, but actually applying it in real life is quite another. Some believe the financial aspect of the problem is “daunting but manageable”, as described by Reuters’ Ron Bousso. Those who would be paying for that aspect, however, may feel otherwise. They were, after all, promised cheap, clean, and reliable energy—for years. We are still nowhere near cheap and reliable, and clean in this combination may not be the top priority that politicians think it is.
Electrification to reduce dependence on imported energy makes sense. Electrification with a special clause for wind and solar, not so much. Developing domestic energy resources wherever these are available is something that is not being talked about a lot, yet even Germany signaled its readiness to develop its natural gas resources in the North Sea. Europeans could do with a little more of this kind of common sense when it comes to energy security.
By Irina Slav for Oilprice.com
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