The roadmap of the energy transition 2021-2030

The Council of Ministers approved last Friday, February 22, the referral to the European Commission of the draft National Integrated Energy and Climate Plan 2021-2030 (NIECP).

The road map drawn by the government for the 2030 energy transition has its origin in the Paris agreement of 2015, and the subsequent ratification through the strategic framework on climate and energy for the period 2020-2030 of the EU.

Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the promotion of the use of energy from renewable sources, to establish a binding Union target of a share of at least 32 % of renewable energies by 2030. Furthermore, it reserves to the commission the power to revise this target upwards in function of the reduction of costs in the production of renewable energy, the international commitments of the Union for decarbonisation, or in the case of a significant decrease in energy consumption. in the Union. It also establishes that each member state must prepare an Integrated National Energy and Climate Plan 2021-2030.

National Integrated Energy and Climate Plan 2021-2030 (NIECP)

The Integrated National Energy and Climate Plan 2021-2030 (NIECP) presented last Wednesday, February 20, establishes the objectives in the same areas as the EU:

1. Decarbonisation, including renewable energy
2. Energy efficiency
3. Energy safety
4. The internal energy market
5. Research, innovation and competitiveness

The National Energy and Climate Plan establishes 2030 objectives:

• 21% reduction in greenhouse gas (GHG) emissions compared to 1990.
• 42% of renewables on the final use of energy.
• 39.6% improvement in energy efficiency.
• 74% renewable energy in electricity generation in 2030, 100% renewable in 2050.

CO2 emissions

For the period 2008-2012 according to the Kyoto protocol, Spain should limit the increase of its greenhouse gas emissions so that the average of net emissions did not exceed 15% of the base year emissions level (1990/1995). The objective at EU level to reduce these emissions by 8% compared to the base year (1990/1995). In 2013-2020, a reduction commitment is established for the following eight years. Recall that the goal at European level 2020 is to reduce the levels of 2005 by 10% and by 2030 by 26% compared to the same levels. With respect to the 1990 level, the 2020 target is the 20% reduction. Currently 75% of GHGs are produced in the energy system, decarbonization is key to achieving this goal. Therefore, it foresees the total closure of coal plants by the year 2030 in an environment conditioned by EU market instruments (emission rights). But we must bear in mind that since the proprietary companies are making decisions not to make the investments corresponding to the requirements of the European Union regarding polluting emissions, it is probable that 9 of the 15 coal plants are not operational in 2021. The following graph shows the CO2 emissions associated with each technology.

The Plan also takes into account the difficulty of competing with fossil fuels in a European environment. According to the plan, with prices of 35 €/ t the coal plants would not be competitive with other technologies. The following graph shows the cost of generation by technologies of the 2025 scenarios with a CO2 price of 23.3 €/t.

The following graph shows the cost of generation by technologies of the 2030 scenarios with a CO2 price of 34.7 €/t.

As shown in the previous graph, the cost of generating CCTGs will also be increased by the increase in prices of emission rights, if we take into account that our grid is marginal and therefore the spot price is marked by the latest technology that enter in it, the daily market price will be affected as a consequence of the PNIEC.

We must bear in mind that today the price of the EUA is around  20 €/ t, but that in the last year its price has been more than doubled and coal plants continue to participate in the mix of generation.

Therefore, this is not the only factor that influences, the price of coal is a much more important item, and right now it is at levels of 77.53 $/ t.

What really conditions the closure of coal-fired power plants is the investments necessary to continue functioning beyond 2020.

Power Installed by technologies

The NIECP 2021-2030 establishes 74% of renewable energy as the target in electricity generation in 2030, 100% renewable in 2050.

The following graphs show the trend evolution and the target of the installed capacity in MW, of the technologies that vary the most or most relevant in the Integrated National Energy and Climate Plan 2021-2030. Other technologies show minor variations. Below we show the evolution in two renewable graphs and one of traditional technologist.

The following graph shows the evolution of renewables that play a crucial role. As we can see, photovoltaic solar shows a greater objective of expected growth, with 339%, therefore it will play an essential role. Second thermoelectric with 217%, but this variation is due to the fact that in 2020 part of a level of installed power very low. In terms of wind, the goal is 50 GW, therefore, growth of 80% is expected in 2030.

Regarding traditional technologies, the objective is disparate.

It is expected that CCTG will play a fundamental role in the energy transition, the Plan foresees that it will not be necessary to install additional thermal backup power as a complement to the generation mix, therefore variations in installed power are not expected.

In relation to coal, the goal is decarbonization in 2030, although it does not rule out the operation of those that undertake investments to comply with the community framework.

Nuclear power will be another technology that will begin to be progressively dismantled although there is still a lot of uncertainty regarding the date of closure of nuclear power plants in Spain as well as the extension of their useful life. The plan takes into account the closure of 4 of the 7 nuclear reactors by 2030 and estimates the closure of the other 3 before 2035.

NIECP data show how renewable technologies will gradually replace generation through fossil technologies.

Estimated generation

The following graph shows the electricity generation estimated by the NIECP. The data up to 2018 belongs to the REE statistics.

 

Regarding the generation of renewable origin, wind energy goes from generating 20% ​​of energy in 2020, to 30% in 2025 and to 35% in 2030. Solar photovoltaic goes from generating 5.2% in 2020, to 13.8 in 2025 and would reach 19.7% in 2030.

It is worth mentioning the low participation of the CCTG in 2025, the cycle operation factor going from 13.8% in 2020, to 6.4% in 2025 and even 14.7% in 2030.

The following table, prepared from NIECP data, table shows the evolution of operating hours by technology and year.

Financing

According to the NIECP Total investments to achieve the objectives of the Plan reach € 236,124 M between 2021 and 2030. Of this disbursement 42% corresponds to investment in renewable and according to the ministry data 80% of the investment will be made by the sector private, leaving 20% ​​in the hands of the public sector.

Next steps

Once approved by the Council of Ministers, this draft is sent to the European Commission. The Commission and Spain start a structured process of dialogue that will culminate with the final approval of the Plan at the end of this year. Every two years, progress reports will be issued.

The energy transition leaves some questions:

Can the system with 74% of installed renewable power continue to guarantee safety of supply?

Will the high penetration of renewables affect the cost overruns of the system?

Will the price of the spot market rise due to the Emission allow increase?

How will the backup technologies be encouraged if, in 2025, Central Circles Turbine Gas are expected to have 564 hours of operation?

Marta Serrano | Energy Consultant