Europe's electricity generation shifting from a monopolized ownership to a liberalized environment -----Transformation primarily driven by Directive 2009/28/EC, which 'promotes the growth of renewable energy generation,' says analyst
LONDON, UK (GlobalData), 7 October 2013 - Technological, economic and business forces are steering Europe's electricity system toward major transformations, including the decentralization of its power systems, says research and consulting firm GlobalData.
According to Sameer Joshi, GlobalData's Research Director, initiatives such as carbon emissions reduction targets, investments in Renewable Energy Sources (RES) and the development of increasingly advanced power Transmission and Distribution (T&D) technologies, along with growing electricity demand, are transforming Europe's electricity.
GlobalData forecasts that electricity generation from RES is expected to grow at a Compound Annual Growth Rate (CAGR) of 8.6% during the 2013–2020 period, due to more widespread adoption of wind and solar power. This is much higher than the growth in coal-fired electricity generation, which is estimated to increase at a CAGR of 3.7% during the same period.
Moreover, there is a shift in terms of electricity generation and transmission, from a monopolized and concentrated ownership, comprised of large and regulated power stations, to a competitive and liberalized environment with a number of energy producers, micro-generation facilities and unbundled electricity systems.
"This transformation in Europe was primarily driven by Directive 2009/28/EC, which promotes the growth of renewable energy generation. The EU has set the ‘20-20-20' target, which comprises three objectives to be achieved by 2020: to reduce Greenhouse Gas (GHG) emissions by 20% compared with 1990 levels; to increase the share of energy obtained from RES to 20% and improve the EU's overall energy efficiency by 20%," says Joshi.
Since RES is becoming increasingly integrated into the grid, many European countries are conducting research programs and demonstrations to encourage the use of Distributed Generation (DG) and smart grids. For example, on February 2, 2013, the Spanish company Iberdrola, together with around 11 utilities and research institutions in Europe, developed the European iGREENGrid project to enhance the reliability, stability and quality of power supply in the distribution network through the integration of RES into the grid.
However, Joshi states: "Despite increased funding and support for smart grid demonstrations, along with more investment in RES and a decline in coal-fired generation, it is too early to predict the fall of the large centralized electricity systems and the start of a new era of DG."
Additionally, DG grid integration faces major barriers, such as challenges involved in connecting to the grid, a lack of curtailment rules, compensation issues and an expected increase in curtailment in the future, as well as low consideration for RES in national transmission system development plans.