April 19. 2024. 9:21

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Brussels eyes grid flexibility to reduce reliance on pricey fossil fuels

The European Commission is proposing new measures to help the EU power grid adapt to changes in demand, aiming to reduce reliance on pricey fossil fuels and enable more renewables to come online.

As Europe moves away from fossil fuels, its power market is shifting from a model dominated by a few big power plants to a more dispersed energy system with a growing number of intermittent producers of solar and wind energy.

Consumption patterns are shifting too. As households massively turn to electric cars and solar rooftop systems, they are becoming active consumers – or “prosumers” – able to store electricity and feed it back into the grid.

To enable a smoother transition, the European Commission tabled a revision of the EU power market in March, with measures to improve the grid’s ability to respond to changes in supply and demand – known as flexibility.

The need for short-term flexibility will drastically increase as more renewables come online because they are variable and weather forecasts get more accurate closer to the time of delivery, said Mathilde Lallemand-Dupuy, a policy officer working on the internal energy market at the European Commission.

“Today, it’s possible [to trade] cross border until up to one hour before the time of delivery. We want to push it towards 30 minutes,” she said at a recent EURACTIV event on the topic.

As part of the reform, the European Commission introduced a definition for flexibility as the “ability of an electricity system to adjust to the variability of generation and consumption patterns and grid availability, across relevant market timeframes”.

The reform will also require EU countries to set an indicative objective for their demand response and storage. Alongside this, national regulatory authorities will need to carry out periodic assessments of the flexibility needed to guarantee security of supply with a focus on non-fossil measures.

“In some member states, we have an increase of demand response and storage, but in some others, not at all. It’s really uneven and rather slow,” said Lallemand-Dupuy.

“The idea of having this objective is to give a further boost to this part of the market because the generation side has mechanisms, like the capacity mechanism. We see it’s really dominated by the generation side,” she explained.

The reform also includes measures to improve the functioning of Europe’s grids, which will be key for a renewables-dominated energy mix. Under the law, system operators will need to develop the grid, use flexibility to enhance operation and be more transparent around connections.

Power grid flexibility vital to ‘avoid blackouts’, EU’s Sefcovic says

Batteries and hydrogen can provide the necessary flexibility for Europe’s electricity grid to avoid blackouts in an energy system increasingly dominated by intermittent wind and solar, said Maroš Šefčovič, the European Commission vice-president in charge of foresight.

Addressing supply-side flexibility

But there are concerns that short-term measures will not be enough and that the European Commission has overlooked actions that would support the grid over longer periods of supply shortages.

While Europe needs to invest in renewables, storage and demand-side management, these are only part of the solution, said Christoph Gatzen, director at Frontier Economics, who spoke at the EURACTIV event.

Europe will also need long-term flexibility for ‘dunkelflaute’ periods when renewable generation is low or non-existent, he added.

For this, Europe will need power generation to come online and fill the gap whenever needed, said Ralf Wezel, the secretary general of EUTurbines – the association of European gas and steam turbine manufacturers – and EUGINE, representing Europe’s engine power plant industry.

However, he told participants that the Commission’s proposal lacks support for this.

“This is a tool foreseen as a temporary measure to fix temporary adequacy gaps or problems. The way it’s formulated, it’s not foreseen as the tool to provide predictable support for long term flexibility investments,” said Wezel.

According to Wezel, one way to fill the gap would be to use existing technology, like fossil gas-fired power plants that could ultimately run on renewable gases, like biomethane and hydrogen.

“The big advantage of those power plants is that they provide this dispatchable, plannable electricity, and we can operate the same plants with renewable gases as well,” he said.

The European Union wants biomethane production to hit 35 billion cubic metres and green hydrogen production to reach 10 million tonnes by 2030, with a further 10 million tonnes of imported green hydrogen by the same date.

However, production of those renewable fuels is still being scaled up and it is unclear which sectors renewable gases will be used in.

For instance, hydrogen is envisaged to provide, at most, 8.4% of power by mid-century, according to reports compiled by the European Commission’s research body (JRC), with the International Energy Agency and the International Renewable Energy Agency expecting it to only provide to 2.5% of total power.

Gas-fired power plants may also have to be adapted to use hydrogen.

GE eyes 100% hydrogen-fuelled power plants by 2030

While fossil gas is often seen as a transition fuel towards a fully decarbonised energy mix, GE Gas Power sees low-carbon gas as “a destination technology” with a potential to convert power plants to run 100% on clean hydrogen by 2030.

Clarity for long-term flexibility providers

Another missing element in filling the long-term flexibility gap is the clarity around the role of thermal, nuclear and hydropower plants, which is needed to ensure certainty for project developers, according to Martin O’Neill from GE Vernova.

“We need to think about this longer-term generation gap because, ultimately, if we can’t connect financiers to operators to actually get those projects moving, we are heading towards a big problem fast,” he warned.

However, Lallemand-Dupuy pushed back on this, explaining the European Commission’s focus was to “give an extra push” to short-term measures to displace fossil gas and that capacity mechanisms “would be an answer” for long-term solutions.

Capacity mechanisms are financial support schemes that governments provide to power generators for remaining on standby in case of a supply shortage.

However, the EU’s last electricity market reform, agreed in 2018, placed a limit on capacity mechanisms for backup coal and gas generators by introducing a CO2 emissions performance standard of 550g per kilowatt hour.

The standard started applying immediately for all new power stations and will apply as of 1 July 2025 to existing generation facilities, effectively ruling out state support for coal and the most polluting gas power plants.

Alongside this, Miapetra Kumpula-Natri, a Finnish member of the European Parliament’s energy committee, warned against conflating the flexibility challenges of EU countries.

“Not all the markets face the same needs,” she explained, saying the reform needs to address the different markets, not risk security of supply and speed up the green transition.

> Watch the full EURACTIV event below: