New gas-fired capacity in Europe caught between emissions reductions targets and electricity demand
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Combustion Industry News Editor
Reuters has published a look at the peculiar situation the gas-fired power generation industry finds itself in in Europe. Utilities across the continent are already worried about power shortages as coal and nuclear power is phased out, while added renewables capacity may not have the necessary backup storage capacity to cover intermittency, pointing towards added gas-fired capacity being installed. In fact, more than 60 GW of gas-fired capacity has been announced by developers in Britain, France, Germany, Italy and Spain, yet the International Energy Agency has predicted 8% less demand for gas by 2030 from 2019 levels, and the European Commission’s executive vice-president, Frans Timmermans, has said that there will only be a “marginal role for fossil gas” as the EU works towards its net-zero 2050 target.
Consideration is underway as to whether the EC will classify carbon capture and storage-enabled gas-fired capacity as “green” or not, and therefore able to attract finance more easily. Developers are worried about building gas-fired plants in the region because of the risk of them becoming ‘stranded’ assets and also because of the elevated cost of carbon permits under the EU Emissions Trading System. These oddly competing forces create a situation of uncertainty, and governments are considering ways of re-incentivising investment in capacity, such as compensation for standby capacity, although they are also looking at importing additional power from outside the bloc. Murray Douglas, research director at consultancy Wood Mackenzie, perhaps summed it up best in telling Reuters that the “window for (building) conventional gas generation does seem to be narrowing. We have the feeling you have to get material gas investments done by the mid-decade unless pairing it with CCS or doing something creative with hydrogen. But we still need something to plug the (supply) gap over the next 10-15 years, so gas will have to remain part of the power mix.” One thing that might reliably be counted upon is that power prices will rise.