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Energy market reforms required for EU to achieve net zero goals

  • 1 year, 4 months ago (2023-02-28)
  • David Flin
Europe 1071 Gas engine plant 62 Renewables 758

Wärtsilä has released a study stating that the European Commission needs to reform its electricity market design to encourage flexible balancing power capacity if the EU is to achieve its net zero targets and improve energy security.

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According to the Wärtsilä study, Europe will require at least 1100 GW of renewable capacity by 2030 to continue its decarbonisation and ensure energy security. However, the study suggests that a renewable-based system of this scale will need to be supported by 19 GW of new flexible gas capacity and 50 GW of energy storage in order to operate reliably. To enable 100 per cent renewable energy systems, the grid balancing gas engines can be converted to run on sustainable fuels such as hydrogen, when these become readily available.

Håkan Agnevall, President and CEO of Wärtsilä, said: “We stand at the precipice of a transformational shift in European electricity systems, as wind and solar become the dominant power source to achieve net zero. However, the transition cannot be delivered by renewables alone. For the EU to continue to benefit from the competitive cost of renewable energy, we urgently need market reform to ensure security of supply and to give clear market signals to investors to encourage much greater investment in flexible balancing power technologies.”

The study includes a number of key recommendations for market reform, including calls for the European Commission to:

  • Define a technology agnostic regulatory framework, creating a new capability market to attract investments in flexible balancing power capacity to support renewables.
  • Improve price transparency to stimulate growth for flexible balancing power capacity services to support renewables.
  • Enable strong, granular price signals.