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European Electricity Review 2023

Ember’s analysis of the EU electricity transition in 2022: what happened in 2022, what can we expect for 2023?
Dave Jones Head of Data Insights Ember
Sarah Brown Europe Programme Director
Dr Paweł Czyżak Senior Energy & Climate Data Analyst

31 January 2023 | 35 min read

Highlights

4
Months of falling coal power generation since September
+3%
Rise in EU fossil generation in 2022
-20%
Predicted fall in EU fossil generation in 2023

About

The European Electricity Review analyses full-year electricity generation and demand data for 2022 in all EU-27 countries to understand the region’s progress in transitioning from fossil fuels to clean electricity. It is the seventh annual report on the EU power sector published by Ember (previously as Sandbag). Our data is free and easily downloadable, and is available at annual and monthly granularity. We hope others also find the data useful for their own analysis.

Executive summary

Europe's electricity transition emerges from the energy crisis stronger than ever

Coal generation has been falling since the start of winter, and as the electricity transition heats up, falling fossil fuel power—especially gas— is set to be the story of 2023.

Europe’s political response to Russia’s invasion of Ukraine in 2022 was to accelerate its electricity transition. There is now a focus on rapidly cutting gas demand—at the same time as phasing out coal. This means a massive scale-up in clean energy is on its way.

In 2022, wind and solar generated a record fifth of EU electricity (22%), for the first time overtaking fossil gas (20%), and remaining above coal power (16%).

However, the shift away from fossil fuels was put on hold by the twin crises in Europe’s electricity system in 2022. A 1-in-500 year drought across Europe led to the lowest level of hydro generation since at least 2000, and there were widespread unexpected French nuclear outages just as German nuclear units were closing. This created a large 185 TWh gap in generation, equal to 7% of Europe’s total electricity demand in 2022. Five-sixths of the gap was made up by more wind and solar generation and a fall in electricity demand. But the remaining sixth was met by increased fossil generation. Since coal was less expensive than gas, coal accounted for the majority of the increase, rising 7% (+28 TWh) in 2022, compared to 2021. As a result, EU power sector emissions rose by 3.9% (+26 MtCO2) in 2022 compared to 2021. Gas generation was almost unchanged (+0.8%), and because gas was already more expensive than coal in 2021, there was no further switching from gas into coal in 2022. 

It could have been much worse: wind, solar and a fall in electricity demand prevented a much larger return to coal. In context, the rise was not substantial: coal power increased by just 1.5 percentage points to generate 16% of EU electricity in 2022, remaining below 2018 levels. The 28 TWh rise in EU’s coal generation added only 0.3% to global coal generation.

2023 will be quite the opposite. Hydro generation will rebound, French nuclear units will return, wind and solar deployment will accelerate, and electricity demand will likely continue to fall over the coming months. In 2023, Europe is set to witness a huge fall in fossil fuels— of coal power, yes, but especially gas power.

  • 01

    Europe’s coal power is now falling

    Coal generation fell in all four of the final months of 2022. It dropped by 6% (-9.6 TWh) from September to December compared to the same months in 2021. This was primarily caused by falling electricity demand. The 26 coal units brought back as emergency standby ran at just 18% average utilisation throughout Q4 2022; nine of the 26 units did not provide any generation. These standby additions added only 0.9% to EU coal generation in 2022. Despite importing 22 million tonnes of extra coal throughout 2022, the EU only used a third of this and the surplus two-thirds remained unused. Perhaps most encouragingly, countries remain as committed to phasing out coal as they were before the crisis.

  • 02

    Electricity demand started to fall fast

    EU electricity demand has begun to fall fast—dropping by 7.9% in Q4 2022 compared to the same period the previous year—close in scale to the 9.6% fall witnessed in Q2 2020 when Europe was in lockdown. This trend was observed in all EU countries. Prior to October, the fall was much less notable. All three months of Q4 2022 were warmer than in 2021, but weather alone would not explain such large falls. It is likely that temporary cuts were driven largely by affordability concerns, alongside solidarity by many citizens to cut energy demand in a time of crisis and improvements in energy efficiency. The transition will ultimately bring a major rise in demand through electrification. And with the step up in heat pumps, EVs and electrolysers in 2022, it is apparent that this change will happen quickly. We must not allow the current fall in demand to slow down the roll-out of clean energy.

  • 03

    Solar’s surge is only just starting

    Solar generation rose by a record 39 TWh (+24%) in 2022, helping to avoid €10 billion in gas costs. This was due to record installations of 41 GW in 2022, 47% more than was added in 2021. Twenty EU countries achieved their highest ever share of solar electricity. The Netherlands was the leader, producing 14% of its power from solar—overtaking coal generation for the first time. Greece ran solely on renewables for five hours in October and is expected to reach its 2030 solar capacity target of 8 GW by the end of 2023, seven years early. For the first time, wind and solar reached over a fifth (22%) of EU electricity in 2022.

  • 04

    Gas generation set for a record fall in 2023

    Fossil generation rose 3% in 2022. Based on the latest industry projections, this will not be repeated in 2023. EDF forecasts many of its French nuclear plants will return in 2023 (and many are already back online already), Europe’s wind and solar industry groups show solar and wind generation should rise by about 20%, hydro stocks have nearly normalised and electricity demand will likely continue to fall in the short term. The only brakes will be the fall in nuclear as Germany completes its phase-out. Based on these indications from the industry, Ember estimates that fossil generation could plummet by 20% in 2023, double the previous record from 2020. Coal generation will fall, but gas generation will fall the fastest, since it is expected to remain more expensive than coal until at least 2025 based on current forward prices. The power sector is likely to be the fastest falling segment of gas demand during 2023, helping to bring calm to European gas markets as Europe adjusts to life without Russian gas.

Europe has avoided the worst of the energy crisis. The shocks of 2022 only caused a minor ripple in coal power and a huge wave of support for renewables. Any fears of a coal rebound are now dead. Europe's clean power transition emerges from this crisis stronger than ever. Not only are European countries still committed to phasing out coal, they are now striving to phase out gas as well. The energy crisis has undoubtedly sped up Europe’s electricity transition. Europe is hurtling towards a clean, electrified economy, and this will be on full display in 2023. Change is coming fast, and everyone needs to be ready for it.

Dave Jones Head of Data Insights, Ember

Chapter 1 | Pathway for 1.5C

Shifting to clean electricity by 2035

Transforming Europe’s electricity sector will be a critical part of building a new energy system that addresses the triple crisis of climate, energy security and affordability.

Action this decade is critical, not only to address the immediate fossil fuel crisis, but to quickly bend the curve on emissions. This is a necessity if Europe is to make a fair contribution to the goals of the Paris Agreement. Decarbonising and expanding Europe’s electricity supply is the most effective way to displace fossil fuels across the economy, reducing reliance on imported energy. The good news is all the technologies required to supercharge the transition are available and affordable, with wind and solar power forming the backbone of the transition.

There is ample evidence that Europe must achieve a fully decarbonised power system by the mid 2030s for a pathway that keeps 1.5C in reach. This conclusion is reached both by the and an used by the IPCC. The UK and Germany are already aiming for completely decarbonised power by 2035 and the G7 have set a similar , however a unified signal from Europe and the EU is lacking. 

Modelling by Ember shows that this is possible. Europe can achieve a clean power system by 2035; at no extra cost above stated plans and without compromising security of supply. 

Making this vision a reality will require investment above and beyond existing plans, as well as immediate action to address barriers to the expansion of clean energy infrastructure. Such a mobilistion would boost the European economy, cement the EU’s position as a climate leader and send a vital international message that these challenges can be overcome.

Chapter 2 | The Big Picture

Insights

The biggest stories of 2022: the return to coal that wasn’t, winter demand collapse and solar’s surge. And looking forward, 2023 should be the year that the full scale of the transition becomes clear.

Following Russia’s invasion of Ukraine, it was immediately obvious that Europe’s energy system would have to change forever. Some expected that this new geopolitical landscape would mean that the transition from fossil fuels to clean power would be put on pause. Instead, the EU made an ambitious energy transition an immediate priority, central to its response to multiple emerging crises. Across Europe, the cost of fossil fuel reliance came into focus, with attention on how this fed into security vulnerabilities and cost of living increases, as well as unprecedented disasters stemming from extreme weather. Annual power sector data reflects the impact of these crises, but indicators looking towards the next year suggest that 2022 was the start of a profound shift that will continue long beyond the emergency responses of the moment. 

Insight 1: The fallacy of Europe’s “return to coal”


The background to Europe’s “return to coal”

When Russia invaded Ukraine in February 2022, it quickly became apparent that Europe was facing a gas crisis. There were numerous, rapid responses at an EU and Member State level to mitigate the risks and reduce the scale of the crisis. Among a host of other measures, these included reactivating coal units, importing more coal and diversifying fossil fuel supplies. Combined with rising coal generation at the start of summer (the EU’s coal burn in March was 35% higher than in March 2021), this created international speculation that Europe was “returning to coal”. 

Coal power has been in structural decline in the EU for the past decade. Even with the rise in 2022, coal generation was still 37% below 2015 levels, producing just 16% of the EU’s electricity. The temporary uptick in 2022 was a small bump in the path to phasing out coal in Europe, with a wider view showing why it is inaccurate to say Europe “returned to coal”. 

The winter coal surge did not materialise

EU coal generation fell in each of the last four months of 2022, compared to the same months in 2021. In September it fell by 2%, October by 13%, November by 7% and December by 2%. Across the fourth quarter of 2022, this meant a fall of 7% in EU coal generation. Gas generation fell even further over the same period, by 10%.

The fall in coal power this winter was due to a major decrease in electricity demand. This can be attributed to the efforts of households and industry to reduce electricity consumption, combined with mild weather. Had French nuclear power not seen reduced generation persist well into December, the falls in coal in Q4 would undoubtedly have been even greater. Insight 2 provides more detail on this decline in demand.

Across the year, total EU coal generation rose by 7% in 2022 compared to 2021. There were large rises in coal generation earlier in the year, as high as 35% in March 2022 versus March 2021. While many commentators speculated this early trend could continue into winter, the opposite happened.

Low hydro and nuclear generation drove rise in coal burn

Understanding coal’s 7% rise as part of the response to the shortfall in nuclear and hydro puts it into perspective. Nuclear and hydro generation in 2022 fell by 185 TWh compared to the previous year, six times more than coal’s rise in generation (28 TWh). To give some context of the scale, 185 TWh is equal to 7% of the EU’s total generation in 2022.

Five-sixths of the gap from nuclear and hydro was met by increased wind and solar generation and falling electricity demand, whereas only one-sixth was made up from increased coal generation. Gas generation was almost unchanged (+0.8%).

While any rise in coal causes understandable alarm, coal had a relatively minor role in responding to these shortfalls. And given that these are not recurring factors, 2023 is likely to play out very differently [see Insight 4].

The shortfall in hydro power

In 2022, Europe faced its , pushing hydro generation to its lowest level since at least 2000.

Hydro generation was 66 TWh below 2021, leading to a 19% year-on-year fall, from 349 TWh in 2021 to 283 TWh in 2022. 2021 was slightly wetter than average, however hydropower generation in 2022 was 50 TWh below the 2000-2021 average.

The Alpine region was the worst hit, with generation 9% below the lowest year so far this century. The Iberian region saw the fourth lowest level of hydro generation this century, and the Nordic region saw generation slightly above average. Of the 50 TWh shortfall against average 2000-2021 levels, 15 TWh was in Italy, 13 TWh in France and 11 TWh in Spain.

The situation is now almost remediated. By September 2022, hydro generation was back to the levels seen in 2021. 2023 has started with hydro stocks only slightly lower than the historical averages.

The shortfall in nuclear power

EU nuclear power fell by 16% (119 TWh) in 2022. Of this fall, 69% was in France from outages, and 27% of it was as a result of German nuclear plants.

In 2022, a , resulting in the lowest output in 30 years. This was 82 TWh below 2021 levels, leading to a 22% year-on-year fall, from 379 TWh in 2021 to 297 TWh in 2022. The situation improved towards the end of the year when a slew of reactors returned to the market. By January 9th of 2023, 72% of total capacity was operational (44 GW), compared to just 48% on average across 2022.

Germany’s nuclear generation almost halved from 69 TWh in 2021 to 37 TWh in 2022, following units closing in December 2021. The final units will come offline in April 2023.

Two-thirds of France’s nuclear and hydro shortfall was made up by other countries

France is historically the biggest exporter of electricity in Europe. However, for the first time since at least 2000, France became a net importer with total flows switching by 59 TWh. Germany, Spain and the UK all flipped from being net importers from France to net exporters to France for the first time since at least 2015.

That means almost two-thirds (59 TWh) of the 96 TWh fall in France’s year-on-year nuclear and hydro generation was replaced by imported electricity from other countries. Coal generation in Spain rose by 3 TWh, but with 15 TWh more electricity sent to France than in 2021. Without France’s issues, it is highly likely that coal generation would not have risen in Spain. In Germany, coal rose by 17 TWh, but 11 TWh more electricity was sent to France than in 2021; France undoubtedly contributed to some of the rise in German coal generation.

With these changes, 2022 highlighted how important interconnectors are helping to achieve security of supply.

Gas-to-coal switching played little role in coal’s rise in 2022

Switching from gas-fired generation back to dirtier coal played little part in coal’s rise in 2022. Gas generation for 2022 as a whole was almost unchanged (+0.8%) from 2021.

From July 2021, when Russia first began curtailing European gas flows, the gas price rose significantly above coal. This led to switching from gas to hard coal generation in 2021. Consequently, there was little coal-gas switching in 2022, because most of it had already happened.

Reactivated coal units barely impacted the EU’s coal generation 

With Russia’s invasion of Ukraine and associated , Europe was compelled to activate temporary emergency measures to ensure energy security, especially for this current winter. These included the creation of strategic reserves by several governments, allowing coal plants to remain operational beyond scheduled shutdown dates or mothballed plants to be placed on standby.

In total, 26 coal units with 11 GW of capacity that should have been offline in the fourth quarter of 2022 were permitted to return to or remain in the market. These units span across seven countries, with 19 (73%) in Germany. The average utilisation of the 26 units during this period was just 18%. Since coming back online, these units have generated 4 TWh. That is predominately lignite generation in Germany. This represents only 0.9% of the EU’s total 2022 coal generation of 447 TWh. EU coal power rose by 28 TWh in 2022, so only 14% of this rise can be attributed to the reactivation of these coal units.

A further 11 GW of plants in Italy and the Netherlands had load factor limits removed to enable them to run more if required. In the Netherlands, a law was passed in June 2022 revoking an order from December 2021 that limited coal plants to 35% capacity. Since then, the four remaining Dutch coal plants have generated at 45% capacity, lower than the 65% capacity over the same period in 2021. In Italy, capacity limits on coal plants were lifted in August 2022, lasting until March 2023. There was no observable change since this decree—coal units ran at an average of 30% capacity in 2022, the same as in 2021.

Two-thirds of the surge in imported coal was stockpiled, not burnt

Imports of thermal coal into the EU increased by 51% in 2022, as Europe sought to increase stock levels. Imports rose from 43 million tonnes (Mt) in 2021 to 65 Mt in 2022. However, Russian coal imports were banned in August 2022, resulting in an even larger pick-up in coal imports from other countries. Imports from South Africa and Australia rose sixfold from 2 to 13 Mt and 1 to 6 Mt respectively; from Indonesia they rose from near-zero to 6 Mt; from Colombia they rose by 80% from 8 to 14 Mt. 

Although this increase was large, it led to some wildly exaggerated claims. In June, Indonesia’s Ministry of Energy and Mineral Resources revealed a following a supposed request from Germany to buy up to 150 Mt from Indonesia. A later from the Indonesian embassy in Berlin stated the figure was only 5-6 Mt. 

However, while coal imports rose by 22 Mt last year, hard coal power plants burned only 8 Mt more coal (excluding Poland, which mostly supplies its hard coal plants with domestic coal). Therefore, only just over a third of the extra coal that was imported was burned. The remaining two-thirds of the extra coal imported was implicitly added to stockpiles.

Europe’s strategy was to replenish low stock levels from last winter, which began with relatively low stockpiles, and to enter this winter with extra high stockpiles. This was in case there was an emergency in the gas system during winter, although fortunately this scenario did not materialise.  As a result, coal is now piling up. With stocks already high going into 2023, coal imports are unlikely to stay high.

Europe’s coal phase-out is still very much alive

The restarting of coal plants is only a temporary, emergency measure. The majority of coal units in reserve facilities have only been granted permission to continue operating over this winter until the end of March 2023. 

Germany is allowing its emergency reserve plants to be available until March 2024 but remains firmly committed to its coal exit plan. The government has , “the coal exit in 2030 isn’t wobbling at all. It is more important than ever that it happens in 2030.” has made this even more of a reality by agreeing to phase out all of its coal plants eight years earlier than expected, in—2030 instead of 2038. Romania also moved its coal exit date forward from 2032 to 2030. 

The Netherlands and Czechia are not amending their respective coal phase-out dates of 2029 and 2033. France is only allowing the Emile Huchet 6 unit (595 MW) to be in reserve for this winter. And Austria has clearly stated that the Mellach plant is coming out of retirement “so that in an emergency it can once again produce electricity from coal (not gas)”.

These actions indicate that Europe has no intention of returning to coal. The consensus in Europe is that the only way to permanently extricate itself from the cost and security crises it faces is to get off all fossil fuels, both coal and gas, and to do so as quickly as possible.

Insight 2: Europe’s big fall in demand this winter


Towards the end of 2022, the EU saw a fall in electricity demand on the same scale witnessed during the deepest Covid-19 lockdowns. It was the reason why coal and gas generation fell in the final months of 2022. Falling electricity demand will be a major theme into 2023, and more work is needed to understand how structural this demand shift is, or if we can expect to see a rebound like with the economic recovery from the Covid-19 pandemic.

Europe saw a substantial fall in electricity demand of 7.9% in the fourth quarter of 2022, close in scale to that witnessed during the most extreme lockdowns, when demand fell by 10.2% in Q2 2020.

Electricity demand in the EU for October dropped by 10%, November by 9% and December by 7% year-on-year. Although these were less than the , which were 25% in October and 23% in November, the decreases in electricity demand necessitate a closer look.

Mild temperatures played a role in lower demand: October, November and December in 2022 were by 1.9, 0.8 and 0.9 degrees celsius respectively across Europe compared to 2021. However, temperature explains only part of this fall in demand.

The fall in electricity demand in the last quarter of the year occurred at a similar magnitude in most EU countries. Likewise, the majority of countries had not seen a large demand fall in 2022 prior to Q4.

The 8% drop in electricity demand in Q4 2022 was the primary factor in the 9% fall in coal and gas generation over the same period. Coal generation fell for four consecutive months, and gas generation for two. This was despite French nuclear availability remaining low until late December. Had French nuclear plants run at the same levels as 2021, the demand fall would have cut the EU’s fossil generation twice as fast, by 18% in Q4.

What does the demand fall tell us?

Broadly, the reasons behind the fall in demand are clear. Incidental actions reducing electricity demand over the winter have been in the press and elsewhere, but detailed quantification is challenging. Some of the reduction may be attributed to investments into efficiency. Some to reductions in industrial and commercial output. Much of it is likely to be a change in behaviour with cost-of-living challenges, electricity prices rising and actions in solidarity against Russia’s invasion. Some of that is voluntary, as well as some mandated electricity demand reductions introduced for the winter by the in September 2022. These currently only apply until 31 March 2023. 

It is hard to predict the permanence or longevity of the shift in demand. When the and the analysed the ways to urgently reduce Russian gas imports in 2022, it was assumed that behaviour change related to energy savings, such as turning down heating thermostats, would be temporary and not sustained into 2023. There are multiple uncertainties related to forecasting future demand. Will summer equally see shifts in demand with changes to air conditioning use? Will the reductions grow as electricity bills rise further in 2023, or could demand quickly rebound back like it did following Covid-19 impacts? This fall in electricity demand is unprecedented, but these uncertainties complicate planning into the years ahead.

What is already evident though is that the crisis will spur faster electrification. in Poland, Italy, Austria and the Netherlands during the first half of 2022, , and in 2022. This shift may add to electricity demand faster this decade than many experts previously thought. One thing is certain: the current lull in electricity demand must not be an excuse to slow down the roll out of clean energy.

Insight 3: Solar shielded Europe from the energy crisis


Russia’s invasion of Ukraine had a profound impact on Europe in 2022, with the resulting gas shortages and all-time-high fossil fuel prices pushing the continent into a cost of living crisis. While both wind and solar delivered through the energy crunch, for the first time generating more than a fifth of EU electricity in 2022 (22%), it was solar power that really shined, setting electricity generation records and saving billions in imported gas costs. 

Solar set generation records across the continent

The year 2022 saw the largest ever absolute increase in solar electricity generation. It rose by 39 TWh (+24%), which was almost double the rise of any year so far. 

That mirrored the 25% rise in capacity from 168 GW to 209 GW. New installations rose by a 41 GW in 2022, which was 47% more than was installed in 2021.

Solar produced 7.3% (203 TWh) of EU electricity in 2022, up from 5.7% in 2021. Between May and August, 12% of the EU’s power came from solar, exceeding 10% for the first summer in history. These four months were sweltering, setting new temperature records. As hydro generation fell short due to the drought and nuclear output was cut because of water temperature constraints, solar reliably delivered.

Effective policies drove solar growth

The Netherlands was the unquestionable solar energy leader of 2022, generating 14% of its electricity from the sun and surpassing previous leader Spain, typically a much sunnier country, by two percentage points (12%). For the first time, solar generation in both the Netherlands and Greece surpassed that of coal generation. Overall, twenty EU countries set new solar share records in 2022.

For 2022 solar capacity additions, the top five countries were Germany (7.9 GW), Spain (7.5 GW), Poland (4.9 GW), the Netherlands (4 GW) and France (2.7 GW).

The Netherlands has demonstrated how simple and effective policies drive solar growth. Since 2020, it has been supporting residential solar through net-metering. This enabled a rapid expansion of rooftop solar, with 1.8 GW of capacity added in 2022, 38% more than in 2021 (1.3 GW). Other solar segments are thriving as well, with one million consumers taking part in energy cooperatives. Commercial and utility-scale solar are subsidised by a tendering scheme, with 2.3 GW of these projects applying for financing in 2022 alone. 

These supportive policies led to substantial growth in Dutch solar generation: rising from just 1% of the power mix in 2015 to 14% in 2022. In absolute terms, solar generation grew by 51% in 2022 alone (from 12 TWh to 17 TWh). Some barriers, such as grid congestion, are being swiftly removed by the government. The Netherlands also announced a rapid in response to Russia’s invasion of Ukraine that puts the country in line with a target for a 100% clean power system by 2030. Solar deployment is expected to remain strong, with an 11 GW large-scale project pipeline and annual capacity additions expected to stay above 4 GW until 2026.

A spectacular example of the strength of renewables in 2022 also came from Greece, where the electricity grid ran for five hours in October. This was possible due to solar’s share in power generation increasing from 9.6% in 2021 to 12.6%, placing Greece in second place on Europe’s solar leaderboard. Greece added a record 1.3 GW in solar capacity, partly as a result of the , bringing its cumulative capacity to 5.5 GW. Similarly to other regions in Europe, grid congestion is emerging as a major bottleneck, and the government is tackling it through a grid expansion plan and a support scheme for energy storage units. The solar project pipeline is also strong, with around 3 GW of solar projects auctioned in 2022 alone. Greece is expected to reach its 2030 total installed solar target of 7.7 GW by the end of 2023, seven years early.

European citizens stepped up, deploying rooftop solar at scale

European governments quickly responded to Russia’s invasion of Ukraine, accelerating climate policies and cutting both electricity demand and Russian fossil fuel imports. But in the shadow of top-level action, a quiet revolution started. European households massively invested in rooftop solar panels, adding 25 GW in 2022, 8 GW more than in 2021. Rooftop solar now represents 66% of the EU’s total installed solar capacity of 209 GW. 

New government initiatives helped accelerate rooftop solar’s growth in 2022: Belgium provided to households who could not afford them, and several states in Germany introduced a on new buildings. The European Commission published its , aiming to overcome workforce bottlenecks, accelerate rooftop solar deployment and streamline permitting. 

Several governments also raised their 2030 renewable energy targets in 2022, including , , , , , and .

Solar avoided billions in gas import costs

Without the record solar generation of 203 TWh, the EU would have required an additional 35 billion cubic metres (bcm) of gas imports to produce that electricity with gas. That is the equivalent of around 25% of the EU’s Russian gas imports in 2021. Applying the average European benchmark TTF gas price for 2022 of €121/MWh, this equates to €49 billion in avoided gas costs. The year-on-year solar growth of 39 TWh alone delivered savings of 7 bcm and €10 billion.

Keeping the solar momentum going

It is crucial the EU maintains the momentum around solar and implements new measures in 2023 to enable even faster deployment. As Ember’s previous research shows, permitting times for solar in some EU countries are double the two year limit set in the . The European Council approved temporary emergency measures to limit permitting times in December 2022. Future amendments to the Renewable Energy Directive must also address a key bottleneck for industrial scale solar: grid connection times. 

In 2022, many EU countries demonstrated that rooftop solar can ramp-up at speed. Now is the time for an EU-wide solar mandate on all new and renovated buildings, as well as existing non-residential buildings. While this would be a substantial initiative, these targets build on those already set in the and would have an immediate impact on households in the coming winters.

The future is even brighter

In 2018, the EU had 103 GW of installed solar capacity. In just four years that doubled, reaching 209 GW at the end of 2022. Four years from now, and it is possible that solar will have tripled again to nearly 600 GW.

Solar Power Europe’s latest sees installed solar capacity growing by 54 GW in 2023 (medium scenario) and by up to 68 GW (high scenario). This is 30-65% higher than the record 41 GW installed in 2022. And this growth accelerates. By 2026, annual capacity additions are anticipated to reach 85 GW (medium) and 120 GW (high).

As part of its to expedite renewables deployment and replace fossil fuels, the European Commission has set solar capacity targets of 400 GW by 2025 and 740 GW by 2030. Solar Power Europe‘s high scenario shows that this is not ambitious enough, and capacity will reach 484 GW by 2026 and 920 GW by 2030—even under its medium scenario—and 591 GW by 2026 and 1184 GW by 2030 under its high scenario.

Solar growth has consistently exceeded expectations, and policies are continuously evolving to enable higher targets. The current ambition from REPowerEU and Solar Power Europe is aligned with and even overshooting the requirements for 1.5C.

It is now imperative that these EU goals translate into local action. Member States must ensure that regulation and infrastructure is fit for purpose to enable the rapid rate of deployment of renewables that is not only necessary but inevitable.

Insight 4: Coal and gas generation to plummet in 2023


Coal generation rose by 7% in 2022, and gas generation rose by 0.8%. The increase in fossil generation of 3% was necessary due to two electricity crises in 2022: large-scale outages of France’s nuclear power plants, and a 1-in-500 year drought. 

However, 2023 will be a very different story, even as Germany completes its nuclear phase-out. French nuclear plants should return, even more solar and wind generation will be added, hydro should return to normal and electricity demand will continue to fall.

Much remains unpredictable in our current period of heightened economic, geopolitical and climate volatility. But if our assumptions below based on current indications come to fruition, fossil generation across the EU would plummet by 20% (211 TWh) in 2023. That would be almost double the record 11% drop seen in 2020 when Covid-19 struck. 

What to expect for 2023

We assume that total nuclear generation will remain unchanged in 2023. In line with , we can expect French nuclear generation to rise by 40 TWh, however German nuclear phase-out will complete in April, knocking 30 TWh off 2023 production. German nuclear generation in 2022 was 37 TWh, but two (2.7 GW) units were given extensions until April 2023, at which point German nuclear generation falls to zero. We assume a 10 TWh decrease in other EU countries. Belgium’s Tihange 2 (1 GW) will close on 31st January, although there should be increases elsewhere as Finland’s nuclear plant begins commercial operation.

We assume that hydro rises by 40 TWh. In 2023, hydro should rebound back to seasonal norms, which was 50 TWh higher than in 2022. But stocks entered the year a little lower, still lingering from lower rainfall in 2022.

The confirmed growth in capacity from 2022 into 2023 from WindEurope and Solar Power Europe, shows an increase 19% higher than the 72 TWh rise in 2022. Based on this, we assume that wind and solar rises by 86 TWh in 2023.

Electricity demand is perhaps the biggest uncertainty. Demand only began falling in earnest in 2022 in Q4, which recorded an unprecedented 8% fall. If we assume a 6% fall in Q1 2023, a 3% fall in summer 2023, with Q4 2023 the same as in 2022, then this would be a 3% total annual fall across 2023, or 84 TWh.

Across the EU power sector, this trajectory would mean a substantial decline in fossil generation, falling by 20% (211 TWh) in 2023.

What this means for Europe

Gas generation will fall the fastest, as it is expected to remain more expensive than coal until at least 2025 (based on current forward prices). If total fossil generation falls by 20%, that means an even larger percentage fall in gas.

However, there will be many hours when gas power is not required, especially with even more wind and solar added and decreased demand. This means coal generation will very likely fall as well.

The large fall in gas generation means the power sector is likely to be the fastest falling segment of gas demand during 2023, helping to bring calm to European gas markets as Europe adjusts to life without Russian gas. A decrease of 20% in EU gas generation would reduce the EU’s economy-wide gas demand by 5%, thereby contributing to a more secure gas system in 2023.

The first two weeks of 2023, at the time of writing, had already seen a 29% fall in fossil generation compared to the same period in 2022, although the weather has been mild and windy across Europe.

Conclusion

An accelerator year for the EU’s transition to clean power

There is no doubt that 2022 was an extremely challenging year for the EU. Russia’s invasion of Ukraine created massive shockwaves and caused an unprecedented energy crisis, which in turn fuelled a crippling hike in living costs. One outcome has been a rush to cut dependence on Russian fossil fuel imports.

This can only be achieved through an accelerated clean energy transition. It became abundantly clear that fossil fuels are not the solution. Instead, they cause skyrocketing electricity prices and energy insecurity. Coal power did increase year-on-year, but this was due to hydro and nuclear issues rather than any appetite to revitalise the role of coal. Some coal-fired units may have been placed on standby for the winter but this is a short-term, emergency measure, resulting in minimal generation. The anticipated coal resurgence failed to materialise and current high stock levels will limit coal import requirements for 2023. Europe’s coal phase-out is well and truly still alive.

Electricity demand dropped significantly in the fourth quarter of 2022 due to both mandated and voluntary energy savings and mild weather. However, we do not know how long this will last and, ultimately, the transition will increase electricity demand. This higher consumption must be met through renewable energy sources.

So it is extremely encouraging that 2022 saw record generation and capacity additions for wind and solar. Both played a critical role in mitigating the impact of the energy crisis— from a financial, security and climate perspective—with solar leading the charge. And the outlook is even brighter with acknowledgement that even more ambitious targets are achievable over the coming years.

The transition will gain even more momentum in 2023 and beyond. It is not only necessary but inevitable. The EU must now step up to ensure the right policies, investments and infrastructure are in place to enable this.

Supporting Material



Methodology

The data in this report is curated by Ember. The full dataset is available to download. Please address any data queries to [email protected].

Generation, imports and demand

Annual data from 2000 to 2020 is gross generation, published by . More recent data is an estimate of gross generation, based on net generation gathered from monthly data. This estimate is calculated by applying absolute changes in net generation to the most recent gross baseline.

Net imports from 2000 to 2020 are also published by Eurostat, with recent data estimated in the same manner as generation. Demand is calculated as the sum of generation and net imports, and validated against direct demand figures published by ENTSO-E.

Monthly data is gathered from a number of sources, including both centrally reported data and directly reported national transmission system operators. In some cases data is published on a monthly lag; here we have estimated recent months based on relative changes in previous years. These cases are flagged in the dataset.

Monthly published data is often reported provisionally, and is far from perfect. Every effort has been made to ensure accuracy, and where possible we compare multiple sources to confirm their agreement. 

Below is a list of countries included, and sources for recent monthly data. A complete country-by-country methodology for all countries, including those outside of Europe, is available for download .

  • Austria: ENTSO-E
  • Belgium: ENTSO-E
  • Bulgaria: ENTSO-E
  • Croatia: ENTSO-E
  • Cyprus: Eurostat
  • Czechia: ENTSO-E
  • Denmark: ENTSO-E
  • Estonia: ENTSO-E
  • Finland: Biomass, gas, hydro, solar and wind from Eurostat; other fuels from ENTSO-E
  • France: ENTSO-E
  • Germany: Biomass and gas from ; other fuels from ENTSO-E
  • Greece: ENTSO-E
  • Hungary: Solar data before 2020 from Eurostat; other fuels from ENTSO-E
  • Ireland:
  • Italy: Biomass and solar from ; other fuels from ENTSO-E. Flow data from Terna
  • Latvia: ENTSO-E
  • Lithuania: ENTSO-E
  • Luxembourg: Eurostat
  • Malta: Eurostat
  • Netherlands:
  • Poland: Solar data from ARE via ; other fuels from ENTSO-E
  • Portugal: ENTSO-E
  • Romania: ENTSO-E
  • Slovakia: ENTSO-E
  • Slovenia: ENTSO-E
  • Spain: ENTSO-E. Flow data from
  • Sweden: ENTSO-E

Emissions

Note: this methodology differs slightly from our global methodology, in that it uses emissions factors more specific to EU countries. As a result, figures provided in this report will differ slightly from those we report elsewhere.

We report emissions values by fuel type, and emissions intensity by country. These values are calculated by multiplying our generation numbers by the below emissions factors:

  • Hard coal 830gCO2eq/kWh 
  • Lignite 1100gCO2eq/kWh 
  • Fossil gas 370gCO2eq/kWh 
  • Other fossil fuels 700gCO2eq/kWh. 

These factors are calculated with reference to data on the greenhouse gas emission intensity of electricity generation from the and gross electricity production and electricity production by fuel type from . These factors reproduce recent historic emissions at an EU level, but for a number of reasons will not be completely accurate at country level. In particular, thermal plant efficiency and the carbon content of fuels varies by country. 

N.b. due to the methodology used by the EEA for the historic dataset, the values do not include CO2eq emissions from the combustion of biomass; nor do they include upstream emissions (e.g. fugitive emissions due to methane leaks).

Emissions intensity is calculated as total emissions divided by total generation.

Short Run Marginal Cost (SRMC) of generation

SRMC is calculated as the cost of fuel per MWh of generation, plus the cost of carbon credits (EU-ETS) per MWh. Variable operating and maintenance costs are not included.

The following plant efficiency rates have been applied:

  • Gas plant efficiency rate = 55% (Lower Heating Value)
  • Coal plant efficiency rate = 40%

Coal (API2), gas (TTF) and CO2 (EU-ETS) prices are provided by Montel.

Solar and gas savings

All solar capacity data is in gigawatts (DC)

1 Net Calorific Value = 0.9 Gross Calorific Value

Calorific value of Russian gas = 37.83 MJ/m3

1 billion cubic metre = 10.5 Terawatt hours




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