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Scenario study suggests increased vehicle electrification in Europe increases demand for gas in power sector; limited ability for power-to-gas

A study published by the Centre on Regulation in Europe (CERRE) has explored the possible impact of increased electrification of road transportation and domestic heating and cooking on the energy system (electricity and gas), as well as on CO2 emissions and on GDP. The study is based on a set of scenarios for 2050 of electrification in five European countries: Austria (AT), Belgium (BE), France (FR), Germany (DE) and the Netherlands (NL).

There are three scenarios: the first where electrification remains limited; the second where the residential and road transport sectors are virtually fully electrified by 2050; and a third intermediate path. Among the main conclusions of the report is that increasing electrification in the transport and heating sectors reduces the consumption of fossil fuels in these sectors but because the demand for power increases significantly, the use of gas as energy resource of last resort gains weight in the generation mix.

Specifically, the authors found that while demand for gas from the residential sector decreases as electrification progresses, because of the planned phasing-out of coal and nuclear generation and limited increase of renewables, overall gas demand rises in the power market. The net effect depends on the countries’ specific policies and current energy mix, with demand for gas increasing in BE, FR and DE, remaining constant in AT and slightly decreasing in NL.

As more renewable sources of generation (biomass, wind, solar) are progressively deployed in the market, the electricity supply becomes more weather-dependent and thus more volatile so that a substantial amount of gas-fired power plant capacity will be necessary for reliability of supply. In BE, FR, DE and NL this capacity should be around 3 to 4 times the current capacity by 2050, while in AT a small increase would be sufficient, the study found.

The current plans of the countries’ governments regarding the expansion of renewable generation capacity, coupled with a full electrification scenario, result in very small amounts of renewable electricity being available to use for power-to-gas. From now to 2050, only under exceptional weather conditions will an oversupply of electricity occur.

As both electricity and gas provision rely heavily on the use of transmission and distribution networks, an increase in power generation and/or gas consumption requires a possibly costly resizing of the networks. In 2050, in a full electrification scenario, the electricity grid capacity would have to increase in BE by 70%, in NL by 50%, in AT by 34%, in FR by 35% and in DE by 37%. Except for NL and possibly BE, the capacity of the gas networks will have to be extended.

Electrification of the residential and road transport sectors will shift CO2 emissions from these sectors to the power sector, with an increased price on carbon as a result. The net effect depends on the technology mix for power generation and is therefore country-specific. In 2050, with a full electrification scenario, CO2 emissions from the residential, road transport and electricity sectors together in BE would decrease only by 11% relative to the corresponding 1990 levels, in AT by 62%, in DE by 70%, in FR by 48%, and in NL by 40%.

The model results show that the social costs of a full electrification path towards 2050 vary significantly, ranging from 0.5% of GDP in FR to close to 7% of GDP in NL, with intermediate rates for AT (2%), DE (4%) and BE (4.5%). The cost per ton of CO2 reduction would be €250 for NL, €146 for BE, €142 for DE, €78 for FR and €54 for AT.

The authors caution that their study is based on a number of assumptions and includes limitations, such as:

  • The limited geographical scope of the study, based on case studies of five Western European, EU member states;

  • The increased carbon price within the EU ETS, as a result of increased gas fuel power production, has not been taken into account; and

  • The gradual introduction of renewable gases has not been fully taken into account.

Scenarios, added the authors, are not forecasts or recommendations for specific policy options. Rather, they illuminate challenges and choices, in this case those to be respectively addressed and made by policymakers and the energy sector to manage in the most efficient way the impact of possible electrification paths.

The Centre on Regulation in Europe (CERRE) promotes robust and consistent regulation in Europe’s network and digital industries. CERRE’s members are regulatory authorities and operators in those industries as well as universities.

The study, by Professor José Luis Moraga (coordinator), CERRE & Vrije Universiteit Amsterdam; Professor Chloé Le Coq, CERRE and Stockholm School of Economics; Professor Machiel Mulder, University of Groningen; and Professor Sebastian Schwenen, CERRE and Technical University Munich, is an independent project which received the financial support from a number of CERRE members.

The views expressed in this CERRE report are attributable only to the authors in a personal capacity and not to any institution with which they are associated. They do not necessarily correspond either to those of CERRE, to any sponsor or to any (other) member of CERRE.



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