The European electricity sector expects to invest €1,800 trillion between 2010 and 2050 in the modernisation of the European power system1 to meet Europe’s decarbonisation commitments in line with the Paris Climate Agreement. The session will explore the opportunities of a power sector moving towards zero carbon.
In March 2009, sixty-one Chief Executives from key utilities across Europe, representing well over 70% of total power generation in the EU at that time, signed a declaration committing to deliver a carbon-neutral power supply by 2050. EURELECTRIC statistics show that in 2015, 56% of net electricity generation in the EU came from carbon-free sources, a rise of 8% in relative terms since 2009. Carbon-neutral electricity can support the decarbonisation of other sectors. To maximise the value of these investments, the electricity sector believes that progressive electrification of the transport and heating/cooling sectors is needed. Electricity is a scalable and increasingly less carbon-intensive energy source which, if allowed to penetrate these sectors, can reduce further decarbonisation investment needs and increase the value return of committed investments in the electricity transition.
Is 50% electrification of the European economy by 2050 achievable or is this not ambitious enough? Are there a sufficient number of main drivers for investment? Do investors buy the sector’s rationale for increasing electrification? What impact will the transformation have on owners of classic generation portfolios?
1 Transformation of Europe’s Power System until 2050 – McKinsey & Co., 2010
Today, 3 billion people across the world are connected to the internet; by 2019 this number is expected to reach 5 billion. In an increasingly digitalised world, people are continuously online, moving seamlessly among the web, telephony, social media and messaging across multiple devices2. Despite the heterogeneity of consumers, they expect a similar, seamless experience from their energy providers, and the ability to effortlessly and intuitively navigate and perform transactions.
In parallel, energy is becoming democratised and decentralised. There are 5 million prosumers in the EU today and this figure is predicted to increase in the next years. The greater transparency and scope to utilise flexibility in the grid, enabled by ICT connectivity, will open up new options on the market.
How will companies manage these changes? How can companies appeal to the consumers of tomorrow? How should they refocus retail and DSO activities?
2 The New Energy Consumer – Accenture, 2016
The sharing economy (the use of digital platforms, portals, etc) facilitated around €30 billion of transactions in 2015. Today it is dominated by peer-to-peer accommodation and transportation and on demand household services.
In the energy sector, in the next 5 years, 47% of consumers plan to sign up for community solar programmes managed by a third party which allows them to benefit from solar power even if they do not have solar panels on their property3. Will we see an Uber or Airbnb equivalent in the electricity sector? Will community micro-grids develop in Europe? How does the sector recover costs for underlying infrastructure which is vital to provide new service offerings?
New technologies including artificial intelligence will facilitate innovation in the value chain. Will the blockchain technology only bring incremental innovation in some niche applications or will it facilitate disruptive forces in the energy landscape 5 years from now?
3 The New Energy Consumer – Accenture, 2016
Following up on the previous sessions, the conference will have explored three key themes that currently rule the corridors of power companies across Europe: What opportunities are there for electricity as a low-carbon energy carrier in the context of the Paris Climate Agreement? What will the customer proposition look like in the future? How is the core purpose of a utility changing when technological change allows consumers to sell and purchase electricity from each other? In this context, CEOs will be called upon to develop their vision of the future and show the audience how they are future-proofing their businesses.
What regulatory toolsets and market design principles are necessary to ensure security of supply throughout the energy transition and in a zero carbon electricity system? Where is the value for utility businesses in 10, 20, and 30 years’ time?