Within the energy industry, there is widespread consensus that electricity markets in the European Union will grow substantially. After all, demand for electricity will increase significantly before the end of this decade, commensurate with the rising number of new EV registrations and the start of hydrogen production. In view of the European Green Deal, there will thus be a greater need for electricity from renewable energy sources. Meeting this rising demand will require a massive build-out of generation capacity, which will draw billions in investment – another apparently inevitable development. What remains uncertain, however, is the design of the future European energy system and whether the EU will achieve its self-imposed goal of net-zero emissions by 2050. Consulting firm Deloitte has developed various scenarios and published them in its latest study entitled ‘The Future of Energy is Growth’.
Based on calculations by the study’s authors, a walloping four billion euros must be spent on the EU-wide expansion of renewable energy through to 2050. They find that this sum is required to ensure that generation capacity is increased enough for 90 percent of demand for electricity to be met by zero-emissions sources of energy. Working in tandem with carbon capture, e.g. through reforestation, this would put the climate target within reach. Funds earmarked to hit it should be invested in new solar farms as well as wind turbines on land and at sea. Photovoltaic (PV) capacity would have to grow from an estimated 280 gigawatts (GW) in 2025 to 860 GW in 2050. During the same period, offshore wind would have to jump from 20 GW to 350 GW, with onshore wind advancing from 200 GW to 580 GW.
Experts predict the need to start investing up to 70 billion euros per year (€bn/yr) in wind energy and up to €40 bn/yr in solar PV very soon. They believe capital expenditure should have reached a level of about €180 bn/yr by as early as the end of the decade. Conversely, in the period thereafter, a significant decline in the cost of renewable technologies is anticipated. This is the long-term trend identified by the experts – irrespective of the price fluctuations caused by the rising cost of raw materials which can be witnessed at present. Furthermore, they state that technological progress and increased availability would ensure that expansion did not lose steam even on the back of a reduced investment volume.
In addition to the level of investment, the real trajectory of the energy transition in the EU and its member states in the years ahead will depend on a host of additional factors. Therefore, the authors also evaluated the most important political, technological, societal and environmental trends. On this foundation, they created four scenarios outlining the potential development of the energy system through to 2050:
The four scenarios demonstrate that determination in taking a common European approach will be key to the success of the energy transition. As set out by the authors at the end of the study, this goes hand in hand with major uncertainties for industry: Power utilities have to prepare for strong growth, but they cannot foresee the challenges they will face along the way. Besides substantial investments, this calls for a flexible strategy that can be adapted to changes in the economic, political and technological landscape.