Accenture: EU needs energy revamp

Europe could cut energy expenditure by between €27bn and €81bn ($36.7bn-$110bn) a year by 2030 by reshaping its energy systems, according to a new study carried out by Accenture for the trade association Eurelectric.

The study shows that European expenditure on electricity and gas has surged by more than 18% over recent years, from €450bn in 2008 to €532bn in 2012, with electricity accounting for most of this increase.

Accenture says rising prices were almost solely responsible for this jump, driven largely by charges in renewables support, while the volumes consumed remained largely stable.

It says without a concerted effort by industry, policymakers and consumers to more effectively manage the energy system, total energy expenditure in Europe could be 50% higher by 2030 than today.

"A step-change is urgently needed in restructuring the European energy system if we are to gain the support and trust of energy consumers without destroying the competitiveness of our industry," warns Hans ten Berge, secretary general of Eurelectric.

The study shows that changes to European energy policies could save each European citizen more than  €100 a year, compared to business as usual.

Sander van Ginkel, managing director in Accenture's utilities strategy practice, says that the implementation of the energy transition across Europe has so far lacked optimisation.

“This analysis shows the main cause is the lack of a single European energy market, but also slower-than-expected cost reductions in some new technologies and slower deployment of energy efficiency than envisaged."

The report argues renewables could be crucial in bringing down prices and boosting energy security, but that the current system of disparate national policies is unnecessarily pushing up the costs of clean electricity.

Taking a pan-European approach to renewables deployment could save the European Union €10bn at the most conservative estimate, rising to €20bn in the most optimistic scenario, it argues.

These savings could be delivered by scrapping national renewable energy subsidy schemes and national renewables targets, and bringing in a strong, stable carbon price into the EU Emissions Trading Scheme to support the transition to a low-carbon economy.

The study calls for renewables to be gradually exposed to the electricity market and for EU renewable energy targets to be shared across the bloc, rather than across individual member countries.

Coordination of renewables deployments across Europe could significantly reduce costs by ensuring that new capacity is in the optimal location for sun and wind, and at the most appropriate mix, to optimise load factors and integration costs, irrespective of national boundaries.

Full market integration across trading and transmission and increased cross-border infrastructure interconnection could limit the costs of managing increasingly variable load supplies, improve the functioning of the energy market and safeguard security of supply.

"While progress is already being made, the increasing expenditure on energy calls for faster movement. The level of interconnection across current markets will also need to be increased," adds van Ginkel.

Ten Berge says the success of this approach hinges on a genuine commitment by the energy sector, policymakers and regulators, consumer representatives, industrial players, and environmental groups to bridge their differences and to develop a joint agenda.