By Michael Rechsteiner, Vice President of Power Services in Europe
The energy ecosystem is experiencing a significant change. The combined forces of decarbonisation and digitisation are bringing about major implications on the European fossil-fuelled power plants as their load factors are being squeezed and profits are being reduced.
Renewable energy is no longer a passing trend. Decarbonisation of the power sector requires deploying significant volumes of renewable power generation. The European Commission has set a binding level of 27% share of renewable energy consumed in the EU by 2030. And while the 30+ countries across the European continent fully support the Paris agreement, they all have different starting points, economic advancements, policies and installed energy systems.
Despite the consensus over the ultimate destination, there is little agreement over how, and when the transformation will occur. What is clear is that we cannot abandon our existing energy system and associated assets in the near future.
It is tempting to think of fossil-fuelled plants as a casualty of the energy system transformation, embarking on a glide path towards closure. However, GE thinks differently. We believe the existing fleet is an important facilitator of system change that should be invested in to support the transformation. It is almost impossible to simply switch off existing power generation assets and turn on renewable power generation, from one day to another without risking affordable and reliable energy. This is a journey, and the existing installed base plays a very important role in this transformation. Today, most electricity is produced by a thermal fleet that is 30 to 40 years old – and will continue to be needed for many years to come. This existing infrastructure is the backbone of the European power generation and to power the continent, we must enhance this infrastructure to meet today’s challenges.
Investments in efficiency, flexibility, and cleaner power generation will provide the best insurance to secure profitable on-going operations and eventually keep the transformation on track and the costs low. In particular, the costs of inflexibility can be very high since it considerably increases the cost of integrating renewables onto the system. Unless these investments are made, there is a risk that the costs of decarbonising the power system will increase significantly.
Fortunately, technologies exist to help power generation assets rise to the challenge by becoming more flexible and efficient, thereby ensuring that the deployment of renewables can continue without concern. These include both engineering solutions and digital technologies through our Fleet360* total plant solutions approach. Several power plant owners are already implementing these solutions across Europe. These technologies are available now and promise the most value if accepted early – the sooner efficiency and flexibility is improved, the greater the benefits are in terms of emissions avoided and costs saved.
The European power system is embarking on an exciting journey of change. It is important that all actors commit to it by taking the early steps that are available and can be implemented now. GE praises the importance of the existing thermal power plants and the opportunities that exist to create a win-win situation for power generators and policy makers driving the energy system transformation of the European continent.
Accepting and believing in the long-term goal is the only way to ensure a prosperous, safe and financially viable bridge to our future.