Europe could save up to €20 billion with renewables redesign

10 June 2014

LONDON: Europe could save up to €20 billion each year if a cohesive renewable energy system was developed, Accenture has claimed in a new energy study.

In the new report, which was commissioned by EURELECTRIC, the leading management consultancy argues that by re-designing the energy system, the EU stands to save between €27 billion to €81 billion annually by 2030.

The analysis points to four areas which must be addressed; namely, renewable energy, market integration, grid management and demand response and energy efficiency.

Rising costs

Forging a joint commitment to sustainable and cost-efficient energy transition in Europe’ highlights that Europe’s current expenditure on electricity and gas has increased by more than 18% in recent years, and notes that electricity is primarily responsible for this increase. The analysts caution that unless the system is overhauled, energy expenditure will continue to escalate - and could rise by as much as 50% by 2030.

The researchers attribute this rise in price to current charges for renewables support, but acknowledge that a greater degree of coordination between member states could bring down these costs significantly. To this end, meaningful collaboration on optimal locations for wind and solar projects could play a major role in driving down costs for all EU citizens – while also guaranteeing the best use of Europe’s natural resources. 

Aligned to this, the authors recommend that deeper market integration be prioritized, and this in turn would facilitate cross-border trade as well as reduce the associated costs of managing an “increasingly variable” supply of energy.

Competitive renewables

The report calls for a ‘gradual’ exposure of renewables to the electricity market, meaning that state subsidies for renewable energy should continue until the point where the sustainable energy alternatives can compete with fossil fuels.

In fact, grid parity has actually been achieved in a number of European countries and with the right supporting framework could be feasible in others. A recent study by consulting firm Eclareon, reported that the price of solar energy is now competitive with retail electricity prices in the commercial sectors of Germany Italy and Spain.

It is important to note that although an upfront investment is necessary for renewable energy expansion, given that there are no fuel costs associated with sustainable energy, long term savings can be achieved.

Energy transition

Sander van Ginkel, Managing Director in Accenture’s utilities strategy practice, has suggested that “over time, an effective CO2 price mechanism could gradually replace national renewable support”. Indeed, Accenture's report advocates that the EU wide Emissions Trading Scheme (ETS) be strengthened by a meaningful and stable carbon price.

Cap-and-trade systems which offer a market style solution to global warming have been subject to debate, but just last week the World Bank released a report which found that globally the total value of the current emission trading schemes is now approximately US$30 billion. Europe and China’s ETS together cover 12% of annual global greenhouse gas emissions.

Hans ten Berge, Secretary General of EURELECTRIC, emphasized that Europe must recognize and act on Accenture’s solutions to ensure that European consumers receive the best value for money.

“Our study shows that with the right policies in place, the energy transition could cost each European citizen over €100 less a year than if we continue with business as usual”, the company head asserted.

Responding to Accenture’s analysis Damian Ryan, Policy Manager at The Climate Group, commented: “This report highlights a number of critical messages for decision makers. First and foremost it underlines yet again the evidence we have that a transition to a low carbon electricity system in Europe is a wise investment, delivering long term savings for businesses and consumers.”

“Secondly, it shows that to achieve this requires a system’s approach that brings together all stakeholders in a coordinated way to avoid piecemeal and inefficient development. And thirdly, it points to the importance of consumer electricity prices in shaping the debate on the low carbon transition, highlighting that ‘cost of living’ issues are as important to the transition as the technical or policy measures that are also required.

Image credit: Flickr//MPD06105 (Bobby Hiddy)

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By Alana Ryan

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