The UK experience is a poor argument for introducing capacity markets, according to Ralf Wezel, secretary general of EUTurbines and EUGINE, European lobby groups for gas and steam turbines and for gas (piston) engines, respectively. “I don’t think it’s a good example. Most support has been given to old power plants. There is little new-build gas, demand response or storage”, he said. In comparison the carbon floor price concept had been very successful at driving change. It was the best UK mechanism and Europe should try to do something like it to support the EU Emissions Trading Scheme (ETS).

Wezel was speaking in Vienna in June as Austria took on the presidency of the EU, meaning it would have the responsibility of getting agreement on the Commission’s latest energy package and the design of the Internal Energy Market (IEM). If the package does not gain agreement by the end of the year it will become bogged down in next year’s European Parliament elections.

The key issue for Wezel and his colleagues in the gas-fired generation sector was that “the market should be the main driver”, and the package should avoid price caps, capacity payments and other options that stop the electricity price from floating freely. “If you want gas fired plants to earn money they have limited opportunities. The investment must be attractive so we need scarcity pricing”, he said. Austria had the same view, he said, but passing the package would require compromise. He thought capacity markets would be a likely point where Austria would have to give way, as several other countries are already working on implementing such mechanisms. Wezel hoped that they could be regarded as a temporary measure.

“Lots of countries refer to the UK as a good example of a working capacity market”, he said, but it was not. As elsewhere in Europe, “capacity markets have mainly supported old, existing power plants, not flexible power plants and they are not helping to drive the electricity system” to meet future needs, he said.

Other likely points of contention are forcing market participants to be responsible for balancing – not previously a requirement for renewable energy generators. Wezel wanted that to apply even down to smaller ‘prosumers’ (except domestic ones with only one or two PV panels), arguing that such participants would pass the responsibility to their aggregators in any case. He also wanted to ensure that network companies are barred from owning batteries. “We think it is unnecessary. They can buy flexibility on the market and there is no reason why they should own one specific technology, while they can’t own power plants”, he contends.

The UK, he noted, remained at the table and was an important voice among those who wanted to ensure ‘market orientated forces’ underpin the IEM. But as the year wore on, “the UK won’t have the strongest voice” as Brexit draws closer. “They will be weakened but we hope they will contribute”, he said.

What is the long term role for gas? European energy grids may be able to rely on gas plant – large turbines or small reciprocating engines – while they meet goals on decarbonisation, Wezel said. There will be a need to remove natural gas from power generation, but to retain the system benefits of gas plant and their ability to back up renewables. That could be achieved in the medium term by using ‘green’ gas – replacing natural gas with hydrogen and biogas. That “process has already started”, he said, and a recent joint press release from EUTurbines, EUGINE and ETE (formerly EPPSA) identifies this as a very promising way for Europe to achieve its 2050 climate change goals without disrupting operation of the grid (see panel, below left).

Wezel cited a recent French report that suggested up to about 30% of gas used in France by 2030 could be replaced with biogas produced from waste and agricultural sources. But he thought hydrogen would also be a major component of a green gas network, produced using electrolysis at times when there was excess renewable energy. Both hydrogen and biogas would be injected into the gas network instead of used to fuel local plants.

He also suggested that gas-fired power plants could be used to produce hydrogen – not in bulk, but as a byproduct, so that when gas fired plants were being used to support renewables they could run at maximum efficiency, rather than ramping up and down.

Gas generators that want to remain on the system will have to ensure they can accept green gas, he said. Some might require retrofitting, although most plant currently in operation can handle 3-5% of hydrogen in their feedstock.

Potentially a bigger challenge than technical retrofits will be the availability of fuel, he said. Biogas will always be limited. And until the cost of electrolysis and other parts of the hydrogen supply chain start to come down “there will be competition over who gets it”, he said. 

Carbon-neutral gas is the way forward, say EUGINE, EUTurbines and ETE

Ahead of the European Commission’s consultation on the EU Long-term Decarbonisation Strategy, the gas-based power generation sector highlights what it believes is one of the most promising approaches to reducing greenhouse gas emissions and tackling climate change: switching gas-based power generation to carbon-neutral gases.

The political consensus to continue increasing the share of volatile wind and solar in the energy mix will challenge the reliability of Europe’s energy system. To ensure grid stability while further reducing GHG emissions, Europe will need to enlarge its renewables-based dispatchable power generation capacity.

The transformation of the gas system into a renewable gas system would make an attractive scenario a reality: CO2-neutral power plants using renewable fuels to provide reliable and controllable power generation, irrespective of weather conditions.

Already today, dispatchable carbon-neutral electricity and heat are provided by power plants operating on biogas or waste gases. The large-scale supply of biomethane, synthetic methane or hydrogen to the gas grid holds out the prospect of full decarbonisation of dispatchable power generation.

Stable functioning of the grid would be ensured, while EU decarbonisation targets are also met.

This option requires an energy policy that does not one-sidedly favour the electrification path for Europe but develops and integrates all three energy sectors: electricity; gas; and heat.

This is how the EU will achieve its ambitious climate targets for 2050!

Source: 9 July 2018 joint press release from EUGINE, EUTurbines and ETE (Energy Technologies Europe, formerly EPPSA)