Utilities see opportunity in EU’s 2050 climate strategy

The Spittelau thermal waste treatment plant in Vienna, Austria. [Shutterstock]

This article is part of our special report Local utilities in the energy transition.

Yesterday, as the European Commission presented its long-term strategy for action on climate change, two main utilities from Vienna presented a study in Brussels on how they see their city’s long-term energy future.

EURACTIV sat down with Michael Strebl, general manager of energy provider Wien Energie, and Peter Weinelt, vice-CEO of infrastructure provider Wiener Stadtwerke, to discuss how utilities will play a role in the EU’s energy transition.

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Why did you commission the study into Vienna’s long-term energy future? What did it reveal, and how are you planning to translate it into your future plans?

Strebl: The main aim was to know how will we as Wien Energie be still on the market in 2050 and how will we be competitive? For us it’s not a question of making the environment better. Of course climate is our focus, but I believe that those utilities which will transform to renewable utilities will be better off in the market in the next years and decades. And that’s why we’re going to do it.

The study was hard work, it took us one and a half year to make. We almost inspected every house in Vienna looking for what the best option could be. What was important to me was not to just give this study to an agency. I wanted that the Wien Energie employees were involved in it also, so they could understand the skills and methods and change their thinking.

Weinelt: From my point of view as an owner of energy infrastructure, it’s import to know what we have to do so that energy stays in the market. We know that consumption will decrease. Maybe not as much in Vienna as in other places because it is growing strongly, but kilowatt hours per customer will decrease very strongly – we have scenarios down to 50%.

If we talk about the next 30 years, we need to increase investment, and also building investments coming from flats and buildings.

How do you encourage private investment from the consumers to undertake some of these changes themselves? Right now we’re seeing a real reluctance from consumers to pay for the energy transition, notably this week in France with the massive protests against fossil fuel price hikes. Are consumers ready to pay for greener energy?

Strebl: There is not ‘the’ consumer, there are many different types of consumers. There are several consumers that want to buy energy at a very good renewable standard, that’s produced efficiently.

Of course there are others that say, the only thing I care about is that it’s cheap. But I think that’s a minority. There are different types of customers, and you can address that with different types of products. For example, we have had a very good experience with customer co-investment. We’ve done this with photovoltaics, and with e-mobility charging infrastructure.

We put 2,500 shares on the market for charging infrastructure, and we were sold out in a day.

It’s important that we do not force people to do something. You have to encourage them to do something. There’s no obligation for investing in electromobility in Vienna, but we give them a chance. It’s better not to put pressure on people and force them to go in one direction or another. We say, here we have an offer for you, take it if it’s suitable to you. If you do not like it, you don’t have to take it.

Weinelt: Our role is to offer opportunities to customers. Our role is not that of a government – we’re a profit-oriented company. The important thing is to explain it to your customers. Vienna energy has a very good customer information centre. People can see how you produce electricity, why storage is not so easy, and what is the price. Most of our customers didn’t understand easily the part of their bill that is taxes – 30-40% in Austria.

Strebl: I think it’s a wrong assumption to say people are always buying the cheapest thing. People have other preferences and considerations. In the ‘90s there was a huge discussion going on in Germany about whether it’s possible to have a gasoline price for 3 deutsche marks, about 1.5 euros. Now we have that price, and nobody bothers about this.

As you presented this study, the Commission was unveiling its long-term climate strategy for 2050. How will this be helpful for local utilities? Which of the pathways outlined by the Commission would you like to see adopted?

Weinelt: It’s helpful for us because the Commission says we’re doing the right things. It makes strong pressure on the governments of member states to discuss the circumstances we need for investment. I hope it won’t be a very long discussion to come to these goals.

Strebl: Yes, it’s positive to us if Brussels is focusing on the same things. The scenarios I think vary from net zero to 85% reduction. To be honest we will see how much the level will be by 2050, but the most important thing is that we start right now. We’ve identified what will be the first most important steps. You do those and then we will see how far we can get. I’m a manager so I’m looking at the next 5-10 years, so I don’t know what’s in store for 2050. But the important thing is to start now and do the right things now.

What kind of timeframe are we looking at for this transition?

Strebl: I think the 2050 timeframe is about right. You have to make very long-term policy when you work in utilities. We have investments that last 40 years or longer. In our case there are several very heavy investments necessary by the end of the 2020s, some power stations have to be replaced then. We have to discuss now – replaced by what? Do we invest in power stations, or other things? Do we split the investments in either power stations or other things? For us the key will be 2022, 2023, because then we have to decide what do we do with our power plants.

Weinelt: And this is a decision we have to make for the next two generations. So it’s important to start work quickly. Whether we reach the goal 100% or not, it’s not so necessary for me. I can live with 80%. But if we want to win, we have to start now, and decide before 2025 how we replace the power plants.

Another main decision is now coming from Germany with the coal commission, to get out of coal within the next 15-20 years. This decision is essential for the whole of Europe I think, because of the signal it will send.

What do you think is the biggest misperception among policymakers here in Brussels about local utilities and what their concerns are?

Strebl: In general I have the feeling that it’s OK. Of course you have to point out that there are regional differences and special needs. You’re coming from different starting points. A city like Vienna with two million inhabitants, rapidly growing, is different than a situation in, say, Western Ireland. This has to be taken into account.

Weinelt: A little bit less dogmatic discussions are necessary think. For instance, we know sector coupling is very necessary to reach this goal. But that means you have to discuss unbundling, where there are strict firewalls between gas and electricity. If you’re doing sector coupling, you have to make links between the companies, because now if you have a regulatory regime like district heating, there it’s not so easy to see sector coupling possibilities.

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