Since 2007, Europe has pursued its stated ambition to transform itself into a low carbon economy. The EU’s greenhouse gas emissions were to be reduced by 80-95% by 2050, compared to 1990. The Paris Agreement will require even more ambitious targets.
Change is happening. The share of green energy in Europe has increased from 11% in 2007 to 17% in 2016. This development is driven primarily by changes in the European power sector. In 2016, for instance, 86% of new generation capacity installed in Europe was renewable.
Even so, carbon reductions are not happening fast enough in the power sector. In 2016, for instance, almost half of European power production came from fossil assets. In other sectors such as transport, industry and buildings, respectively making up 34, 18 and 16% of energy related emissions in Europe, change is even slower. With the current pace, it will prove difficult to reach the EU’s carbon reduction target for 2050.
However, in recent years, something remarkable has happened in Europe, which has implications for the whole world: new-built green energy became cheaper than newbuilt black energy. For the first time in history, utility scale wind and solar power can outcompete coal and natural gas in power generation across many European countries.
Wind and solar energy have become less expensive as a result of large scale deployment and as a result of a period of great political push for renewables. Renewable energy targets and economic support from governments have provided the necessary scale and clarity on buildout ambitions. This allowed the green energy industry to take up the challenge, to invest, invent and bring down costs.
This also goes for offshore wind, a technology which until a few years ago was largely unknown or regarded as rather exotic and costly by policy makers and the public.
But the unprecedented recent cost reductions have changed all that. In 2012, the industry promised to drive costs for contracted wind farms below EUR 100 per MWh before 2020. This goal was reached and surpassed well ahead of time – costs of energy actually dropped to EUR 65 per MWh in just six years.
For example, in 2011, Ørsted committed to building West of Duddon Sands wind farm in the UK, with a projected cost of electricity of EUR 177 per MWh. Six years later, in 2017, we committed to building the Hornsea 2 project with an expected cost of energy of only EUR 65 per MWh – equal to a 63% cost reduction. In Germany (April 2017 and April 2018) and in the Netherlands (March 2018), where transmission costs are excluded from the projects, contracts were granted without subsidies at all.
Offshore wind power is now among technologies that offer cost effective and scalable renewable energy, alongside onshore wind and solar power. This development has enormous potential to change Europe’s energy system, by turning the seas into green power plants. Rapidly falling cost means renewable energy offers a foundation on which Europe’s green economy can be built.
Abundant, domestic and cost efficient renewable energy offers the key to many of the societal ambitions of European countries. A key to maintaining a modern and competitive economy; a key to Europe continuing to take on its global responsibility and combat climate change; a key to a Europe less dependent on imported fossil energy and a key to reducing the negative health and environmental impacts of burning fossil fuels.
Several renewable technologies are already contributing to Europe’s energy system and will play a role going forward. Of these, none today offer both the scalability and cost-efficiency of solar, onshore and offshore wind power to sustain an accelerated transformation and become the backbone of the European energy system. In 2017, these three alone made up 77% of new European power generation capacity.
By 2040, European power production from solar, onshore and offshore wind is expected to grow by 190% compared to today, whereas other renewable sources are projected 35% growth.
Development on the scale required, however, depends on a strong and open transmission grid to integrate and transmit the energy to European consumers.