IRENA director: Major investment in gas power plants is not advisable

The EU needs to get it approach to gas right and commit to a long-term strategy. [Bilfinger SE/Flickr]

In the short term, gas is useful. But in the long run, it will not be prominent, the International Renewable Energy Agency’s Henning Wuester told EURACTIV Slovakia.

Henning Wuester is the director of Knowledge, Policy & Finance Centre at the International Renewable Energy Agency.

Wuester spoke to Senior Editor Pavol Szalai.

What are the main messages of the report?

The report is about energy transition to meet climate objectives. The objective of the Paris Agreement is to keep global temperature increase below 2 degrees Celsius. That basically requires decarbonization of the energy sector. The report looks at how it can happen. We have found that the decarbonization is possible with existing technologies. It is economically affordable and beneficial for the economies because it can create economic growth and generate additional employment. And all that driven by renewable energy and energy efficiency.

What do you mean exactly by decarbonisation and what time frame are we talking about?

We looked at scenario up to 2050 and reduced emissions in the energy sector by 90%. We predicted that by 2060, emissions could be eliminated completely in the energy sector. That is actually required. Unless you assume that later this century, you will have technologies that can create negative emissions. Some do, but we are sceptical. We believe we should rely on existing technologies.

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Europe’s problem today is that electricity wholesale prices are depressed. Critics say it is because of subsidies for the renewables. It is hard for anyone in the energy sector to invest. However, we have high consumer prices because of taxes. How can Europe exit the vicious circle?

In 2016, we saw record investment in European offshore wind. Investors still find a lot of interesting opportunities. Europe is of course not a growing market, so the investment opportunities are limited. They will mean, in most cases, shifting investment from other sources or early retirement of capacity, which investors are not very keen on. The growth markets are clearly outside Europe. I am just off to an investors conference where there is a lot of interest in solar investments in India, the Middle East, Africa. Clearly, in Europe, there will be some transition impacts for those with existing fossil fuel assets. Coal power plants will have to be phased out, some of them prematurely. We are saying in the study that policymakers shouldn’t wait for the decisions. They should send signals now, early on. That will minimise the investments that have gone off track.

Can you imagine coal power plants in Europe after 2030?

To be honest, new investment in coal does not make sense, according to our scenario.

What about modernising coal power plants?

Modernisation is something else. Investments that modernise and increase the efficiency of existing plants still make sense. Investments targeted at increasing lifetime of plants for long periods or new plants do not fit in our scenario.

Can you imagine coal plants, old or new, still in operation after 2030?

In our scenario, coal will be phased out after 2050.

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Countries do invest in new energy capacities. For example, United Kingdom, Slovakia and the Czech Republic invested in nuclear energy. Gas is not considered a profitable investment. Who is the best ally for renewables in the future – nuclear, gas or something else?

Currently, gas-fired power plants fit well together with renewable energies, because they are flexible. Nuclear is not helpful. With nuclear, you create a very solid capacity in your mix, which does not allow the flexibility benefiting variable renewables. If you compare the feed-in tariff for the nuclear in the UK with prices achievable by solar and wind, you can see it is not a very cost-effective proposition. In the short term, gas is useful. But in the longer run, gas will not be prominent in the energy mix either. In our scenario, 80% of power in 2050 will be from renewable sources. The rest will be a mix of energies including nuclear.

Are you ruling out nuclear energy in China, because it is not cost-effective?

In Europe, it is not cost effective. But we know that combining nuclear with renewables is not an ideal mix. Anyway, in most countries, nuclear represents less than 10%.

If gas is the best friend of renewables in the transitional period, what should European governments do to spark investment in gas power plants?

There are gas-fired power plants in Europe. Those can serve. They might need some investment to keep running. But we would not suggest major additional investment.

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