Countries in the Organization for Economic Cooperation and Development – i.e,. the developed world – will be decoupling economic growth from energy consumption over the next 25 years or so. Non-OECD countries, in contrast, will be responsible for most of the increase in energy consumption globally, and the most important driver for this increase will be economic growth. Burgeoning middle classes in many of the non-OECD countries will adopt energy-intensive lifestyles similar to those found in high-income economies. The absolute cost of energy is bound to increase over time, and the burden on infrastructure will expose frailties in grid infrastructure that were easy to ignore before. The end of the world is nigh.
Or maybe not. Economies such as Germany, France, the United Kingdom, and the rest of Western Europe fall into the OECD classification, along with other major economies such as Japan, Australia, Korea, Canada and the United States. These countries make up a staggeringly large percentage of the wealth in the world, and the majority of these countries are planning to use less energy The key to doing less with more is to improve efficiency and energy storage improves the efficiency of the grid as a system. Therefore, in the broad terms, the answer to the question “Why do we need storage?” is illustrated by the chart below.
Europe, or more specifically, the European Union is in an even more difficult position than North America or OECD Asia thanks to the federation’s 20/20/20 initiative – and even more ambitious targets are on the table for 2050. Truthfully, EU policymakers have seen the writing on the wall in terms of non-OECD economies’ voracious appetite for energy over the next 10 to 40 years. Resources will become scarcer, efficiency will be king, and energy diversity will mean energy security.
In true European Union fashion, the Commission gives a guideline for Europe to follow and then works with individual countries to develop specific targets for each nation that take into account that country’s resources. Once targets are agreed upon (or rather, negotiated), it’s up to each national government to decide how to reach the targets. It comes as no surprise, therefore, that there are such great disparities between countries and targets.
Countries such as Sweden will rely heavily on biomass whereas Germany and Denmark will rely significantly on wind and even solar. Hydro will undoubtedly play a large role in reaching the 20/20/20 targets, which will include a significant amount of pumped storage.
Some of these projects will expand upon existing hydro and pumped storage installations. However, hydro and pumped storage still require a long lead time for permitting – we would expect that a quarter to a half of the capacity additions for hydro and pumped storage will in fact be in the form of upgrades of existing facilities. Thus, solar and wind (along with other renewables) will continue see significant uptake, as it’s easier to add incremental capacity to these resources.
The chart below shows the stark difference in the renewables burden on each country within the EU. Countries such as Sweden and Latvia stand out because of their impressively high renewables burden. However, the greatest opportunity for energy storage will be provided by the countries that show the highest disparity between 2008 shares and 2020 shares. These include Belgium, Denmark, Germany, Ireland, Greece, Spain, France, Italy, Cyprus, Malta (N.B. small island nations present their own special value proposition for energy storage), the Netherlands, and the United Kingdom.
Europe’s energy burden is severe, but as a result, the continent will lead the way in innovation. Europe has been known to take the long view on economic issues, and the 20/20/20 initiative is a classic example of ambitious, long-term policymaking. Other major economies plan on time horizons ranging from every two years (the United States) to every five years (China); in many cases, this does not give the market the clear signals investors require in order to invest in long-term projects. One of the benefits of Europe’s energy burden is that it gives the cleantech industry a clear signal that Europe is open for business.
Tags: Climate Change, Europe, Grid-Tied Energy Storage, Policy & Regulation, Renewable Energy
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