Understanding the “great clean acceleration” - Power Summit 2024
The second day of Eurelectric’s Power Summit brought industry leaders together for an invigorating ‘Electric Talk’. The session kicked off with a stark statistic: electrification currently accounts for only 23% of Europe’s final energy consumption. To meet the European Commission’s goal of a 90% emissions reduction by 2040, this figure must increase to 50%.
Our Decarbonisation Speedways study presents an even more ambitious scenario, showing that electricity capacity will have to triple by 2040, together with a six-fold expansion in renewables and a stable basis of firm capacity to match around 4,600 TWh of final electricity demand by 2040.
The Electric Talk was chaired by Michael Liebreich, CEO of Liebreich Associates who delved into the urgent need for accelerated electrification by looking at the global investment landscape in renewable energy. Over the past few years, investments have stagnated, hovering at around $300 billion annually. Yet, despite this financial plateau, renewable capacity installations have surged, hitting 188 GW in 2019. Liebreich aptly dubs this phenomenon ‘the great clean energy acceleration’.
In the past year alone, half a terawatt of renewable energy has been installed worldwide, highlighting that this speeding momentum, shows no sign of slowing down. To sustain this accelerating shift, however, investment must not only continue but also increase.
Electrify to save your energy wallet
One compelling way to showcase the benefits of investing in electrification is to highlight its energy savings benefits. Arshad Mansoor, President and CEO of EPRI, introduced the concept of an ‘energy wallet’ to demonstrate how electrification can slash household energy costs, making it both economically and environmentally beneficial. He explained that the average U.S. household, earning $38,000 annually, spends around $5,500 a year on energy, including $1,000 on vehicle maintenance and $4,500 on other energy costs. Through electrification, these energy costs could drop significantly, from $4,500 to $3,000.
Mansoor also highlighted the role of using heat pumps, which could save households an additional $300 to $500.
‘Leveraging the energy transition to improve affordability is crucial,’ Mansoor states. ‘Electrification stands out as the most effective way to reduce costs for households.’
Beyond cost savings for households, affordable clean electrification can also improve a country’s energy security by reducing risky dependencies on fossil fuels imports. An issue especially dear to Europe’s hearth after international events in recent years have put EU countries’ energy security in jeopardy.
Kristian Ruby, Secretary General at Eurelectric, affirms:
‘These cost savings are key at a time when we are concerned about energy prices, supply, and dependencies’.
Moving from households to businesses, the potential of direct electrification was made loud and clear throughout the Talk.
The sectors to watch out for: transport, heating, and industry
Exploring the sectors where electrification is gaining momentum reveals the profound transformation underway. In a thought provoking dialogue, Liebreich and Mansoor highlighted the critical roles of transport, heating, and industry in advancing clean and renewable energy deployment, shedding light on the path forward for the green transition.
On the global stage, the transport sector has made remarkable strides in electrification.
‘Over 40% of cars sold in China are electric, and this trend isn’t confined to China, it marks a global shift towards electric vehicles (EVs)’, declares Liebreich.
Europe mirrors this transformative trend, propelled by advancements in battery technology and a surge in EV purchases.
In heating, Liebreich noted a dramatic acceleration in the adoption of heat pumps, particularly in the US, where they now outpace gas furnaces in sales. This trend is now taking hold in Europe, where electrification of heating emerging as an important strategy for emission reduction. The advantages are undeniable: getting a heat pump results in a 78% reduction in primary energy demand.
Mansoor shares this perspective, emphasising the versatility of heat pumps as a flexible resource that not only cuts household energy costs but also bolsters grid stability.
The industrial sector also stands poised for substantial gains.
'Electricity holds immense potential for decarbonising industry, particularly in terms of enhancing competitiveness’ - stresses Ruby.
An IRENA report underscores this potential, revealing that heat pumps can effectively address 45% of industrial heat demand, particularly for temperature industrial heat. However, the remaining 55% poses a challenge due to the competitive pricing of gas, which fails to reflect its carbon emissions. Despite this daunting hurdle, Liebreich offers a glimmer of hope, asserting that 78% of industrial emissions could be eliminated by electrification and existing technologies in Europe.
Eurelectric’s Policy Director further details the untapped potential of electrification in decarbonising industrial processes in an article:
“of all the fuel that industrial companies use for energy, at least 50% could be replaced with electricity, using technologies available today. This includes all energy required to generate heat for industrial processes up to 1000℃ approximately.
Notably, the electrification of industrial processes does not require a fundamental change in the overall setup, but rather a replacement of a piece of equipment, running on conventional fuel, such as a boiler or furnace, with a piece of electric equipment.”
The path to electrification requires flexibility and modernisation
To untap the full potential of the great clean acceleration, addressing the power system’s flexibility issues remains crucial.
Ruby emphasises this, stating, - ‘Flexibility is a key issue. It’s not just about choosing between gas peakers and batteries; we need to focus on a variety of technologies.’
Our Grids for Speed study shows that implementing flexibility solutions along with diversified approach to energy demand management and anticipatory investments into grid’s expansion is essential to meet future power needs. This strategy could reduce the projected €67 billion annual investment by around 18%, bringing it down to €55 billion.
Mansoor confirms, ‘enabling load flexibility puts money back into the customer’s pocket', further underscoring the financial advantages of a flexible power system.
Ana Paula Marques, Executive Board Member of EDP called for immediate action to overcome bottlenecks and ensure a resilient power grid capable of supporting future demands.
‘Transforming Europe’s ageing power grid is crucial for achieving flexibility […] In Europe, 40% of our networks are over 40 years old. While we see significant investment in renewables, grid investment has been stagnant globally.’
A resounding call to action
Power Summit’s Electric Talk concluded with a resounding call to action,: the path to a sustainable future lies in smart investments, innovative technologies, and a collective commitment to electrification. Ruby succinctly captured the sentiment by observing that massive increase in power demand is to be expected whether from heating, industry or transport:
‘they’re coming – even if demand is flat right now. So, let’s build grids for that future with speed and collaborate on a catalogue of technological solutions.’
This Electric Talk served as a powerful reminder that while challenges are significant, the opportunities for growth, savings, and environmental stewardship are even greater.
