Tuesday, 26 January 2021
In Europe last year, Renewable Energy Sources (RES) accounted for more electricity generation than fossil fuels, marking a first for Europe. Think tanks Ember and Agora Energiewende published figures suggesting that the share was 38% and 37% for RES and fossil fuels respectively.
In August 2020, Greenfact reported on the larger EU nations and their growing share of RES in their electricity mix - this trend appears to have held for 2020 and the Union combined.
In the Agora report, the increasing RES share was attributed to mainly to growing wind and solar capacity, as well as shrinking fossil fuel generating capacity. Furthermore, 2020 saw a reduction in electricity usage in general - this lead to much fossil fuel generation being displaced, as RES-E is cheaper per kWh produced.
Coal fired power plant generation has fallen dramatically over the last five years, with 2020 production being half that of 2015 in the EU. Furthermore, 2020 saw a single-year reduction of 20% - with the pandemic effectively accelerating the plans of many EU nations to phase-out coal generation.
“Renewables will keep rising, because we keep installing more and more. The jury’s out as to whether fossil fuels will rebound but if they do rebound it’s not expected to be by a lot,” Dave Jones, Ember’s senior electricity analyst said.
However, the RES share of the different EU nations varied significantly - for instance, while Denmark recorded 61% RES-E share for 2020, with German at 33% and Eastern Europe nations of Slovakia and the Czech Republic around 5%, still heavily reliant on coal, gas and nuclear fuels for electricity generation.
It is unclear how such trends will affect the GO market. If the burgeoning production of renewable electricity continues, it could be reasonably expected for GO volumes in the market to rise, while lowering prices due to excess supply.
However, if demand recovers sharply post Covid-19, renewables generation and associated GOs may be unable to keep up with demand which would lead price rises. Given a moderate demand recovery time (one to two years), we should expect current year vintages to remain low in price, while future year vintages should see an increasing premium.
Sources
Reuters
EUObserver