âA target of 38% to 40% renewable energy by 2030 would be significant. The target will support the growth of solar auctions and PPAs also in emerging markets such as Bulgaria, Croatia, Romania and Hungary. But electricity is the easy part – the new target should also support the decarbonization of the heating, cooling and transport sectors, âsaid Coralie Laurencin, Senior Director of European Energy, Renewable Energy and Climate at IHS Markit. pv magazine.
The 20% target by 2020 was binding and broken down into national targets based on Member States’ starting point and renewable resources. The 2030 target, on the other hand, is an EU-wide target and is not legally binding. Still, many believe that this looser regime will be enough to support growth at least in mature renewable technologies.
âI don’t think it’s a big deal for solar PV that the target isn’t legally binding on member states. Solar faces far fewer obstacles than wind power in terms of building permits and public opposition. And governments are very much aware of this, âLaurencin said.
Some even say that a 40% renewable energy target might be too modest to align with the 55% GHG target for 2030 and the net zero target for 2050. The WWF, for example, claims a target of 50%, while SolarPower Europe calls for an even higher target of 55%. Yet an overall target of 38% to 40% would likely mean doubling the share of renewable energy production.
â(A) 38% to 40% renewables is a significant increase from current levels, especially since 2030 is only nine years away. I think we could see greater regional cooperation, such as statistical transfers and joint projects, to attract foreign investment, âsaid Dalia Majumder-Russell, partner in the energy, projects and construction team at the firm. CMS lawyers. pv magazine. “There is a lot of goodwill towards renewables at the political level and solar should benefit as it is an established technology with a relatively well understood regulatory framework.”
Carbon Price Rally
The July package will include a number of other legislation relevant to the PV industry. A further reform of the EU Emissions Trading System (EU ETS), for example, could help further price increases seen in recent months. EU carbon prices have reached unprecedented levels despite the Covid-19 pandemic and declining demand for energy. The DEC 21 Benchmark contract closed above â¬ 56 / t on the ICE exchange on Friday May 14, compared to around â¬ 20 / t at the same period last year.
The rise in prices was prompted by regulatory reforms and the decision of the European institutions to limit the supply of allowances and withdraw credits from the market if the number reaches certain thresholds, also known as the market stability reserve. Soaring carbon prices have led to a sharp reduction in coal-fired power generation across Europe, in favor of solar and wind power. Even older gas-fired power plants could struggle to be profitable if carbon prices continue to rise.
Coal-fired production fell 20% year-on-year in the 27 EU countries in 2020, according to data from the European Commission and Agora Energiewende. At the same time, production from solar installations increased by 15%.
The July package will include a proposal to further limit the supply of allowances – the linear reduction factor – and possibly to include the shipping sector in the ETS. The latter could further support demand for quotas. The inclusion of maritime transport in the ETS has the support of the European Parliament, but the question is whether Member States will also participate.
âThe solar industry is not immune to ETS reform, as higher carbon prices could affect the supply and cost of materials. But the EU ETS needs reform if governments are to meet their net zero targets. Higher carbon prices are useful in changing the mindsets of investors. Including shipping is a good idea, but it will be difficult as it is a very international industry with many stakeholder interests to manage, âsaid Majumder-Russell.
Brussels can also file a separate ETS for transport and buildings. The directive on the energy performance of buildings is also due to be revised this summer and more ambitious targets for reducing energy consumption are expected. It would be a boost for solar panel installations in buildings, for example.
The building sector is one of the biggest energy consumers in Europe, accounting for around 40% of energy demand. Many aging and inefficient buildings in Europe depend on fossil fuels for heating and cooling. But the EU’s â¬ 672.5 billion post-Covid-19 stimulus package could help speed up building renovations. Support will also come from the European Structural and Investment Funds and the European Fund for Strategic Investments, according to European Energy Commissioner Kadri Simson.
âOver the next few years, we are going to see funds from a number of sources pouring into building renovations,â Simson said in a recent speech.
The European gas directive is obsolete and a new proposal is expected in the fourth quarter of this year. The revised directive aims to describe how green hydrogen transport networks will be operated and establish rules for the modernization of existing gas networks as well as for gas blending. It is a key element for scaling up green hydrogen projects.
One of the main sticking points is whether transmission system operators (TSOs) should be allowed to own and operate electrolysis facilities that convert water into hydrogen using renewable energy. The unbundling obligation under the current gas package – which entered into force in 2012 – states that companies cannot operate generation, supply and transport assets as a vertically integrated company. This is to avoid conflicts of interest by restricting competitors’ access to pipelines, for example.
A stakeholder consultation revealed that many energy companies want the principles of the existing gas package to be transferred to the hydrogen sector. For example, solar power producers should have fair access to electrolyser capacity if they want to convert electricity and ship it to customers as hydrogen or whatever.
âThis package should reinforce the key principles of liberalization,â said E.On in his response to the stakeholder consultation. âRegarding unbundling, it should be clarified that emerging technologies such as electrolysers are not natural monopolies and, therefore, cannot be owned or controlled by TSOs / DSOs. “
A number of energy companies have also asked the commission to set specific targets for renewable gases – for example, 11% of European gas demand by 2030, as proposed by Eurogas. Many players – EDF, Engie, Shell and Total among them – also support a European market for negotiable guarantees of origin for low-carbon gas and electricity. These measures may fall within the scope of both RED III and the Gas Package. The stakeholder consultation for the Gas Package ends on June 18.