Covid-19 bolsters an EU Green Deal
The European Commission, headed by Ursula von der Leyen, proposed a €1.85 trillion economic recovery plan tying economic stimulus to the energy transition. Source: European Commission
This article appeared in the June 2020 print edition of PV Magazine. The article archive can be found here.
For the European electricity system, the biggest immediate effect of the Covid-19 crisis has been the demand shock, according to Florian Ziel, assistant professor of environmental economics and renewable energy at the University of Duisburg-Essen. Ziel explained that countries with strict lockdowns like Italy and Spain have seen a 20-25% reduction in demand; whereas, in countries such as Germany where industry has kept up some level of activity, the demand reductions have been around 10%. “On average, we have seen around a 15% demand reduction across Europe,” stated Ziel.
At a recent workshop on Tackling Climate Change with Machine Learning hosted by Climate Change AI, a group of academic and industry professionals, Jack Kelly, the founder of the not-for- profit Open Climate Fix, spoke of how the Covid-19 crisis has had uneven effects on different parts of the economy. “With more people working remotely or out of work, residential use has increased but this has not offset reductions in commercial and industrial loads”, said Kelly. He also notes that nationally-coordinated events such as the round of applause for healthcare workers in the U.K. in April resulted in a nearly 1 GW spike in electricity demand over 10 minutes.
Fossils out
The reduction in demand has meant many generators, mainly fossil-fuel plants, have been unable to sell electricity into the market. The low operating cost of renewables has resulted solar and wind being procured before fossil-fuel generators.
“Natural gas peaker plants that provide power during peak demand have suffered the most”, said Ziel. “The steep drop in oil prices has brought down the price of fossil fuels providing some respite for fossil-fuel power plants, but plummeting demand has overwhelmed any benefit from lower natural gas and coal prices.”
Solargis, a data company, expects high solar irradiation levels across Europe to continue throughout the summer, which coupled with the demand reduction have resulted in record levels of renewable energy penetration in Europe. A recent report by the International Energy Agency (IEA) explains that Italy, Belgium, and Austria reaching record-high levels of 63%, 67%, and 70% of total electricity coming from variable renewable energy on an hourly basis. Germany also reported a 90% share of electricity from variable renewable energy – though it achieved this in 2019 as well.
Despite the dramatic declines in electricity demand, Florian Ziel explained that “the long-term effects of the Covid-19 crisis will be only around a one-digit percentage change in electricity demand assuming new policies don’t dramatically reshape society.” The policy arena may be where the Covid-19 crisis has the strongest and longest-lasting impact, according to Bjarne Steffen, senior researcher at the energy politics group at ETH Zürich.
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| A recent IEA report plots the number of hours spent at a given percentage share of variable renewable electricity (VRE) in Italy, California, and Germany. The blue and green lines show the share of renewables for a time period during a lockdown and the same period in 2019, respectively, indicating the share of renewable energy in these regions has increased while under lockdowns. Source: IEA. |
“In my view, whether the crisis leaves a lasting impact on the electricity system doesn’t depend on any temporary change in demand but rather on structural changes in the electricity system. The policy reaction to the crisis can accelerate or slow structural changes that are already underway,” explained Steffen, speaking at the Climate Change AI workshop.
“The Covid-19 crisis hit at a time when energy policies were experiencing increasing momentum towards climate action, especially in Europe,” said Steffen. He was initially concerned that the crisis would delay climate action as interest groups from carbon-intensive industries pushed to remove or weaken green policies. “As the crisis has unfolded, I have felt more optimistic as national governments and the European Commission have kept to the climate policy frameworks decided before the crisis,” Steffen said.
In late May, the European Commission proposed a recovery plan that ties economic stimulus to the energy transition with support for energy efficiency, renewables, green hydrogen, and electric vehicles. The recovery plan totals €1.85 trillion and consists of a €1.1 trillion expansion of the EU budget for 2021-27 and a new €750 billion economic recovery fund. One promising area of the recovery plan for the solar industry is the Strategic Investment Facility, which seeks to unlock €150 billion for investments in renewables and energy storage technologies.
To come into effect, the recovery package must be approved by the European Council. The plan may also require ratification in national parliaments which could take until the end of the year. While the specifics of the proposed plan may change, Steffen expects orientation towards green investments to remain in place as action on climate change is a high priority for both France and Germany.
As is clear in the recovery plan, the EU sees climate action as key. Ursula von der Leyen, president of the European Commission, underscored this conviction in a speech in May. “Sooner or later our scientists and researchers will develop a vaccine against coronavirus,” she said. “For climate change, however, there is no vaccine. This is why Europe must now invest in a clean future.”
