(The author is a Reuters market analyst. The views expressed
are his own.)
By Gerard Wynn
LONDON Dec 15 Ambitious targets for
renewable electricity in the medium-term are likely unfeasible,
given they demand forced, early write-offs of fossil fuel power
plants and may downplay rival shale gas and the unpredictability
of wind and solar power.
The European Commission on Thursday unveiled its "Energy
Roadmap 2050" laying out options for making sweeping carbon
emissions cuts through a combination of efficiency and renewable
energy and other low-carbon technology.
At present renewable energy (mostly hydropower)
accounts for about a fifth of both global and European Union
Estimates for its share in the next decades hinge on two
1. How much new electricity generating capacity is needed?
This depends on stock retirement (how much of the present
generating capacity is shut down) and new demand (how far energy
demand rises above present levels);
2. How much of that new power generation is from renewable
This depends on price competitiveness; public and political
appetite for low-carbon technologies; the level of fossil fuel
back-up needed for wind and solar power; and trends in
development of unconventional gas.
Forecasts by the International Energy Agency (IEA), McKinsey
and Greenpeace offer recent scenarios for meeting more ambitious
, according to current and more ambitious carbon emissions
targets. The EU's 2050 Roadmap on Thursday also saw different
combinations of technologies.
The IEA presented two scenarios in its World Energy Outlook
(WEO) in November: renewable energy technologies would account
for nearly a third or a half of global power generation in
2035climate targets respectively.
McKinsey also sees renewable power providing nearly half of
global electricity generation in 2030, in its more ambitious,
"climate response" case.
Greenpeace looks further ahead and with a more ambitious
scenario, which rules out nuclear power in the medium-term and
where renewable energy accounts for 95 percent of global power
production by 2050.
The European Commission in its Roadmap also looked to 2050,
and assumed action to stay within similar, safer global warming
limits. It saw renewables accounting for 64-97 percent of power
consumption in the European Union.
The International Energy Agency (IEA) estimates that nearly
40 percent of the world's present power generation will reach
the end of its natural life by 2035, while electricity demand
would also rise, requiring additional new capacity.
But its more ambitious climate response scenario would also
need premature retirement of fossil fuel power, without a
political urgency at present nowhere in sight where global
carbon emissions would have to start falling before 2020.
Greenpeace looks further out to 2050, when more fossil fuel
power plants have reached their natural end of life.
Its scenario also demanded premature closure of coal-fired
power plants, however, including some of the 400 GW of coal
capacity that China has built in the past decade, and coal-fired
power which the country continues to build from now on.
While these are long timescales and are hard to predict,
it's difficult to see Beijing writing off fully depreciated,
perfectly functioning assets just to take care of global carbon
emissions except in the most catastrophic climate change
The EU's 2050 Roadmap included a scenario of huge investment
in energy efficiency which would cut the required deployment of
Besides forcing expensive closure of valuable assets, other
possible pinch points for high renewable energy deployment
include: price competitiveness (for example with shale gas);
intermittency; and transmission costs.
The good news for renewable energy is price/ cost: greater
demand for fossil fuels will likely increase costs, as this is a
The opposite is true for renewable energy where faster
deployment will accelerate equipment price falls due to
economies of scale and a technology learning curve, while by
definition the fuel is free.
A doubling of installed capacity leads to unit cost
reductions of around 20 percent for solar photovoltaic (PV) and
around 10 percent for onshore and offshore wind, as cited in the
recent McKinsey review, "Resource Revolution: Meeting the
world's energy, materials, food and water needs".
However, shale gas will jostle with renewable energy for new
capacity: falling gas prices have undercut wind power projects
in the United States.
Consultants Wood Mackenzie forecast rapidly expanding
production of unconventional gas in North America, to 800
billion cubic metres by 2025 from about 450 bcm now, and a much
more gradual ramping up in Europe and Asia.
Contrast that with McKinsey's high-renewables case, which
sees the share of gas actually falling from today's 22 percent
of global power generation to 21 percent in 2030 - the
contradiction is clear.
Finally, transmission costs, storage and fossil fuel back-up
are multiple sides of the same problem: wind and solar power are
To some degree they can be backed up by other, baseload
(constant) sources of renewable power (hydro, biomass and in the
future tidal), while costly grid interconnectors would also help
by shuffling renewable electricity across borders according to
variable supply and demand.
But such large infrastructure projects push the timing of
costs towards the nearer term (and don't forget the planning
permission required), adding more reasons for lawmakers to
prefer a diversified energy mix with fossil fuels, nuclear and
As the EU Roadmap finds: "The high energy efficiency
scenario and also the diversified supply technology scenario
have the lowest electricity prices."
"Gas will be critical for the transformation of the energy
system," it adds, contradicting its own "high renewables"
(Reporting by Gerard Wynn)