Could a net zero power system by 2035 offer the cheapest path forward for the UK and Europe?

Confidence is rapidly growing that fully decarbonising the power system across the UK and Europe can be achieved at no additional cost by 2035

Confidence in Europe and the UK’s ability to build a net zero energy system in little over a decade continues to build among investors, engineers, and energy policy wonks – even if it remains to be seen whether political decision makers are willing to deliver the policy frameworks necessary to turbocharge the roll out of clean technologies.

to a compelling new analysis released today by think tank Ember, delivering a near-fully decarbonised power system right across Europe by 2035 – including in the UK – can be achieved according to no extra cost compared to current policy plans, and without compromising the continent’s security of supply.

Modeling undertaken by the think tank of least-cost power system pathways indicates that a 95 per cent clean power system – driven in large part by a huge increase in wind and solar power capacity – can be achieved by 2035. It therefore argues such a vision should be at the core of government’s policy plans as they strive to deliver on their goal of building a net zero emission continent by mid-century.

With the requisite ambition and policy framework, the report contends that wind and solar power could make up 70 to 80 per cent of Europe’s power supply by 2035, leaving only around five per cent to be sourced from gas power plants following an almost entire phaseout of coal capacity.

The upfront investment required for what would effectively be a quadrupling of wind and solar capacity would amount to between €300bn-€750bn, the report additional estimates.

But crucially, however, Ember calculates that these additional costs would be offset by up to €1tr in costs savings from avoided fossil fuel consumption, in addition to multiple benefits in terms of climate impacts, health, and energy security.

Overall, Europe should put itself on a path to a near fully decarbonised power system by 2035, it would halve Europe’s fossil fuel consumption by the end of the current decade, putting the continent on a pathway for achieving net zero emissions by 2050, according to Ember.

“Larger upfront capital costs for wind and solar in the power system are offset by avoided carbon costs and avoided costs associated with new nuclear and fossil capacities,” the think tank’s analysis states. “There is no cost penalty for choosing the clean power path, even when the electricity supply is simultaneously expanded to enable further electrification.”

However, Ember also acknowledges that while near full decarbonisation is economically and technically feasible, delivering on the goal represents a huge challenge.

To meet the target annual growth in wind and solar capacity would have to quadruple across Europe by 2025. Compared to the last decade, reaching 100-165GW of new capacity added each year from 2025-2035, it estimates. That compares to an annual growth rate of 24GW per year between 2010-2020. Permitting times for new renewables projects would therefore need to be slashed, alongside a rapid growth in supply chain and manufacturing capacity, it adds.

Green hydrogen would also have a major role to play, with expanded renewables capacity harnessed to power a huge growth in electrolyser capacity to around 200-400GW by 2035, which Ember estimates would be enough to cover the majority of European demand.

Meanwhile, interconnector capacity to share clean power supplies across Europe would also need to roughly double by 2035, leaving gas power teamed up with carbon capture and storage (CCS) technologies with only a small role to play in Europe’s power system, according to Ember.

At EU level, it contends the proposed pathway would deliver a greater reduction in fossil fuel use than through the bloc’s current REPowerEU plan to ramp up clean power and wean the continent off Russian oil and gas. It also stresses that the estimated fossil fuel cost savings on offer – between €530bn and €1.1tr – are “likely an underestimate given high fossil fuel prices are likely to persist”.

“A clean and expanded power system is the critical enabler of this wider energy sector decarbonisation and the huge potential cost savings that follow,” it states.

It’s a compelling, if bullish, vision, and the confidence appears to be shared by the UK’s renewable industry.

Today trade body RenewableUK published its own manifesto for how the UK could deliver on its aim to decarbonise the power system by 2035, similarly offering plenty of food for thought for policymakers, whom it calls on to “dramatically” accelerate the pace and scale of energy decarbonisation.

Under the trade body’s plan, unabated gas power generation would be totally phased out by 2035, and – as in Ember’s vision – wind and solar power, alongside some nuclear capacity, would make up the lion’s share of power capacity.

How to do it? RenewableUK contents the UK government has a wealth of policy levers available, including reforming the Contracts for Difference scheme to further increase the project pipeline; streamlining consenting process for new projects; ramping up renewables research and development (R&D) funding levels to drive further innovation; and fundamental redesigning “the way we plan and deliver network infrastructure” in order to connect more wind farms to the grid.

On CfD reform specifically, the report warns that the current market set up may not be enough to deliver the volume of projects needed to fully decarbonise by 2035, as surging demand for offshore wind is increasing competition for investment and putting pressure on supply chains. As such, the end of ever-cheaper prices for clean power secured through CfD auctions could well be nigh, according to RenewableUK.

Dan McGrail, CEO at the trade body, argued that major reform to the scheme is needed in order to incentivise long-term investment in major projects, build up supply chains, and deliver on the government’s promise of a fully decarbonised power system by 2035.

“The gas crisis and invasion of Ukraine have pushed up the cost of fossil fuels – and consumer bills – to record highs,” he said. “We need to decarbonise at pace to build a home-grown clean power sector as the cornerstone of the government’s Energy Security Strategy.”

He acknowledged that decarbonising the UK power system by 2035 represented the energy sector’s “biggest challenge yet”, but stressed that the renewables industry “stands ready to deliver”.

“If we get this right, we can attract £200bn in private investment and deliver over 120,000 jobs in wind energy alone over the course of this decade,” he said.

The investment and technical challenges of ramping up capacity for renewables, green hydrogen, flexible grid technologies, and interconnectors, while revamping policy frameworks and driving down reliance on fossil fuel energy sources remain significant. But with high wholesale energy prices set to continue for the foreseeable future – prices are likely to remain higher than 2021 levels until at least 2030, according to analysts at Cornwall Insight – both the geopolitical and economic case for delivering the scenarios sketched out by RenewableUK and Ember’s vision across Europe are stronger than ever.

In any case, as numerous influential organizations have made clear – including the International Energy Agency and the IPCC – nothing less than a scaling up of clean power generation over the current decade is going to put the world on track to meet the goals of the Paris Agreement. The vision for the future of the energy system offered by think tanks, industry insiders, and policy wonks may well be ambitious, but their analysis and evidence base looks credible. Decarbonisation represents not just the optimal, but arguably the only credible, path forward for the energy system.

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