A new report from Eurelectric reveals that three-quarters of electricity generated in the European Union this year came from clean energy sources. While the power sector continues to lead in decarbonisation efforts, concerns are rising over the pace of electrification across the continent.
According to Eurelectric‘s Power Barometer 2024, the EU power sector achieved a remarkable 50% reduction in emissions compared to 2008 levels, marking the largest decrease ever recorded. However, the overall electrification rate has stagnated at 23% over the past decade, significantly below the target of making electricity half of the EU’s final energy consumption by 2040. In stark contrast, China has increased its electrification rate by seven percentage points since 2015.
Electricity demand in the EU saw a decline of 7.5% between 2022 and 2023, primarily attributed to industries shutting down or relocating abroad amid the ongoing energy crisis. As a result, electricity markets have experienced unprecedented negative pricing, posing risks to future clean energy investments.
Eurelectric’s Secretary General, Kristian Ruby, emphasised the need for a robust electrification strategy to decarbonise industries while simultaneously boosting demand and competitiveness. He highlighted the significant potential for further electrification in industrial sectors, pointing to technologies such as electric boilers, arc furnaces, heat pumps, and induction heating that could help electrify energy-intensive processes like steel and aluminium production.
Despite progress, challenges remain in electrifying buildings and the transport sector. The report notes that only 4% of high-emission heating processes in industries have been electrified. In the buildings sector, the sales of heat pumps have decreased by 5% in 2023. While electric vehicle numbers have increased to nine million units, they still fall short of the EU’s target of 30 to 44 million units by 2030.
Another pressing issue highlighted by the report is increased price volatility in electricity markets. As of August 2024, Europe recorded 1,031 hours where electricity prices dipped below zero in at least one bidding zone, predominantly during solar peaks. This scenario has forced power producers to pay to supply electricity to the grid. At the same time, other regions in Europe have experienced unusually high prices, further complicating the investment landscape for renewable energy.
Ruby noted that while negative pricing may encourage the development of storage solutions and flexibility in the market, a significant increase in electricity demand is essential to address the challenges of price volatility. He called for policymakers to take decisive action by implementing the Green Deal, maintaining a market-compatible investment framework, and establishing a clear electrification strategy for a competitive and decarbonised European industry.
Eurelectric’s report serves as a timely reminder of the ongoing challenges facing the EU power sector as it strives to balance decarbonisation goals with the need for increased electrification and market stability.
