The debate over global warming has been won in Europe, and what now remains is to work out the best way of transitioning to a zero-carbon energy system. Europe’s Director of the Internal Energy Market, Dr Klaus-Dieter Borchardt, believes that the optimum solution involves a dual gas-power network – and the Commission plans to encourage its development.
Much of Europe has made considerable progress in reducing carbon emissions and mitigating the impact of global warming over recent decades. The UK, for example, has now cut emissions by 38% compared to 1990 levels. Further additions to offshore wind capacity and an accelerating switch to EVs will further boost that over coming years.
However, there are clearly areas where little progress has been made, and where innovative thinking appears to be needed to get the transition moving. Problems remain, such as how to address the intermittent nature of most renewables; the huge potential cost of electrifying heating systems; how to avoid stranded assets; and the impossibility of using electricity (which must eventually be 100% green) in some areas, such as high-temperature industrial processes.
The European Commission, guided by Klaus Dieter Borchardt, Director of the Internal Energy Market, believes that the optimum solution is a “dual” power and gas energy system. In this kind of system gas is used to backup renewable power, and is steadily decarbonised beyond 2030 in both heating and power systems - including through the use of Carbon Capture and Storage (CCS).
Surplus renewable power would be converted to zero-carbon gases, including green methane and hydrogen, with the gas network acting as a form of power storage system (with gases able to be drawn upon when required to fire combined cycle gas turbines), as well as continuing to supply customers with (eventually) decarbonised gases.
This would not only address all the problems outlined above, but it would also be more cyber-secure. The gas system would act as a backup to the power system, which is more digitalised than gas – and so more open to cyber-attacks.
Development of the plan at EU level is still in the early phases and full support in the European Parliament has yet to be secured. But the aim is to establish a comprehensive and stable framework to encourage investment in such a dual system.
Dr Borchardt also wants to see a larger scale power-to-gas plant developed to test the hydrogen production technology at scale: “I would like most of the regulatory restraints stripped away, so a company can develop such a project more freely - on the condition that [the] results are available to everybody.”
He said that incorporating gas into the energy system of the future would also make use of existing infrastructure, reducing expense and stranded assets: “If you kick out gas you make the whole gas grid a stranded asset. We are still investing heavily, but we should stop immediately if we [are] only looking at a 5 - 10 year use for the infrastructure. If you want to do things in the most cost-effective way, you need to use both power and gas.”
Driven by carbon price
One important driver is expected to be the carbon price, which, in the case of the EU’s Emissions Trading Scheme (ETS), has risen by over 400% in the last 18 months, to around Eur24/tCO2.
“The ETS price has gone up, and we hope it will increase further, which will make coal less competitive compared to gas. If that does not happen, then more action may be needed," Dr Borchardt said.
"We also believe that gas prices will go down again, and that the recent rises were not a long-term development. We’re working to bring more competition into the market to keep gas prices in check, but we will not directly intervene in the markets to achieve the desired result.”
As the carbon price rises further, there will be strong commercial incentives for industrial users to cut CO2 emissions or to invest in carbon capture and storage (CCS).
This has been the case in front-runner Norway, where industry around Oslo now pipes waste CO2 to depleted offshore fields in the North Sea. Paying for carbon storage accounts is only a small step up from refuse collection and even data storage, and could eventually be extended to individual customers.
However, Dr Borchardt cautioned that, with renewables charges already making up 50-60% of an average consumers’ bill across the continent, there was a risk that consumers would balk at any further charges, despite strong support across the continent for policies aimed at tackling global warming.
“The transition will cost a lot of tax-payers’ money, so we need clear agreement from the member states… We will see increases in network charges, but not so much in the commodity component, I expect.” Dr Borchardt said.
“But with taxes and levies already at 50-60% of the final energy price, that is already too high and not the right means to fund the required investments in the energy transition - that has to change… Support for the energy transition is very strong among the European population. But you have to explain, and you cannot expect the consumer to bear all the cost.”
Nevertheless, no subsidy flow or public funds are planned, with the transition to be conducted entirely through levies, carbon taxes and the development of new low carbon approaches that prove themselves in the market.
This sets up a healthy competition between carbon storage and low-carbon fuels, in pursuit of the most efficient way to cut carbon emissions in the gas system, with opportunities for companies in both areas. The Commission will also use its TSO/DSO (Transmission/Distribution System Operators) platform and an EU DSO entity to help achieve the dual-system goal.
The Commission is keen to get things moving. European network operators will now have to provide an inter-linked gas and power model as part of their ten-year network development plan, rather than separately as in the past.
They will also have to make an assessment of where existing infrastructure could be used most productively in a possible future joint system, including the storage of hydrogen from surplus renewable power in the gas pipeline and storage network.
Support for the plan has come from many stakeholders, including member states, industry groups and even Eurelectric, Europe’s electric industry association. At a recent gathering in Madrid, held to discuss the plans, Eurelectric said its members would only be able to meet 65-68% of zero-carbon energy demand by 2050.
They noted that there would be a seasonal storage problem if they didn’t have a “super-battery”, and asked the gas sector to help them overcome the problem; potentially by using gas as energy storage, according to Dr Borchardt.
National Grid in the UK recently pointed out that installed capacity would need to increase six-fold if peak winter heating demand were to be met by the power grid, rather than gas, along with the cost of converting all boilers to electricity.
However, some in the European Parliament remain opposed to using gas, and are not engaging in the discussion on biomethane or even green hydrogen from surplus renewables.
Hydrogen for industry, heating and power generation
Hydrogen development will take time and is likely to be scattered and focused on industrial areas close to large intermittent renewable sites (mostly wind in northern Europe). Currently it must be mixed with methane in the gas distribution network, and can also be used in power generation.
There are already some examples of projects underway, including the HyNet methane reforming project (brown hydrogen plus CCS) in northwest England, and a small one in Orkney that will produce green hydrogen from surplus tidal and wind power.
Dr Borchardt noted that it cost Eur260 million per year just to curtail a single wind farm in northern Germany, “which is money that could go towards investing in hydrogen production, which will be consumed in that region, with development of local demand and distribution.”
Eventually, green hydrogen would provide an alternative revenue stream to renewable generators, offsetting the problem of low power prices during periods of high renewable output, and lifting income (as well as stopping curtailment).
While the dual-system may not be perfect, the main alternative appears to be wholesale electrification and reliance on intermittent renewables and batteries.
As Eurelectirc pointed out, with current technology, that cannot technically cover all demand at certain times of year, and would be extremely expensive, especially to cover peak heating demand. The dual system addresses these problems and so could be the engineering solution that those concerned about climate change have been waiting for.
Hear more from Dr Klaus-Dieter Borchardt at Flame, Europe's leading midstream gas & LNG conference.