4

Scenario results

4.2 Supply

The scenarios explore contrasted possible evolutions of the energy market in Europe, and outside Europe, which translate into different primary energy mixes.

As COP 21 and Green Deal compliant scenarios, Global Ambition and Distributed Energy take a holistic approach to the European energy system, including all primary energy carriers, allowing the ENTSOs to compute the GHG emissions of the EU and to assess their compliance with the EU climate and energy targets and to compare them with the carbon budget.

National Trends is based on the different national policies and does not allow for a comprehensive and consistent interpretation of national data for all energy carriers and cannot be entirely assessed in this section.

4.2.1 Primary energy supply

The European energy supply decarbonises with the development of renewable capacities and energy efficiency measures.

Both Distributed Energy and Global Ambition aim at energy efficiency and decarbonisation of the primary energy supply reaching around 15 % and 40 % reduction in primary energy demand in 2030 and 2050 compared to 2015. The electricity and gas production are fully decarbonised by 2040 and coal as well as oil are completely phased out by 2050.

Natural gas supply declines sharply, in particular after 2030. By 2050 only 24 TWh of indigenous abated natural gas production are considered in Global Ambition. Overall, natural gas supply declines with between 89 % and 99 % compared to 2015 level.

Figure 15: Primary energy supply in the two COP 21 scenarios (for energy and non-energy use) for EU27

Figure 16: Primary energy supply mix in the COP 21 scenarios (for energy and non-energy us) for EU27

Both scenarios register a significant increase in renewables energy production. The renewable energy (RES) share in Global Ambition reaches 80 % by 2050 and 96 % in Distributed Energy. The vast majority of the energy supply stems from solar PV and wind generation. Renewable electricity production is complemented with biomass and energy from waste materials.

Low carbon sources like nuclear or blue hydrogen imports also contribute to decarbonise the energy system, especially in the Global Ambition scenario, with a market share between 2 % and 14 % of primary energy supply.

Figure 17: Share of fossil, low carbon and renewable energy

4.2.2 Biomass supply

Both COP 21 scenarios foresee an uptake of biomass supply compared to today’s level. As biomass generally represents a localised supply, the highest growth trajectory is projected in Distributed Energy where biomass also comes from wastes which are locally converted to energy. This is illustrated in Figure 18. Biomass is used for different purposes in the scenarios.

It is directly used for heating and in industrial processes. Furthermore, biomass is used as a feedstock to produce biofuels, biomethane and electricity. As such the biomass is converted to other energy carriers, which are subsequently used in the end use sectors for mobility, heating and other applications.

Figure 18: Biomass utilisation

4.2.3 Electricity supply

For electricity to fully play its role in the achievement of carbon neutrality in 2050, it is necessary to decarbonise its generation possibly before this time horizon. This is of particular importance when synthetic fuels (hydrogen, methane and liquids) are produced based on electrolysis.

Sector coupling induces a faster development of power generation as electricity has to supply both direct electrification and electrolysis-based energy (hydrogen, synthetic methane and liquids).

While all scenarios anticipate a development of electrolysis-based fuels, the magnitude of the associated electricity demand depends on the scenario storyline. The generation figures of the present chapter include the power generation for both final electricity demand and electrolysis.

Figure 19: Electricity demand for final use and electrolysis for EU27

In 2050, electricity demand for electrolysis accounts for close to one third of the overall electricity demand.

Both COP 21 scenarios follow the line of an early reach of carbon neutrality of the power generation mix. In 2040, ­renewable and nuclear power generation amount to around 95 %1 of EU27 electricity supply in Global Ambition and Distributed Energy (including dedicated wind and solar for electrolysis).

In both scenarios, variable renewables (wind and solar) are the major source with respectively 68 % and 75 % of power generation in Global Ambition and Distributed Energy compared to 49 % to 52 % in 2030 and 15 % in 2018. In 2050, the electricity generation is fully decarbonised and amounts to 5,933 and 5,593 TWh for respectively Distributed Energy and Global Ambition.

1 Assuming a share of renewable methane of 46 % in Distributed Energy and 34 % in Global Ambition in 2040

Figure 20: Share of electricity demand covered by low carbon generation in EU27

While wind, solar and nuclear capacity differs between the COP 21 scenarios, these technologies are complemented by a wide range of other renewable energy sources (e. g. hydro, biomass … ) which capacity is the same for all scenarios based on bottom-up data as strongly influenced by country specifics. Among these other renewable energy sources, hydro is the most prominent. It is currently the largest source of renewable energy, with 342 TWh2 produced in 2018. While its share will reduce with the development of wind and solar, the capacity will continue to increase from 136 GW in 2018 to 169 GW in 2030 and 174 GW in 2040.

A strong increase in wind and solar capacity is constitutive of all scenarios, but the magnitude depends on the storyline of each scenario.

In Distributed Energy, a focus on lowering nuclear capacity and energy imports supplement the decarbonisation objective. As a result, investment in wind and solar capacity reaches the highest level in order to meet both direct electrification and the need for synthetic fuels to replace imports. From a technology perspective, there is an emphasis on decentralised sources such as onshore wind and solar PV. As they have lower load factors than offshore wind, the need for installed capacity increases sharply. In accordance with more developed prosumer behavior in Distributed Energy, rooftop PV capacity reached 363 GW in 2050 for Distributed Energy in comparison with 325 GW for Global Ambition.

Even if offshore wind is more expensive in this scenario compared to Global Ambition, the renewable electricity needs are such that this technology sees a significant development.

In Global Ambition, final electricity demand is slightly lower than in Distributed Energy while electricity demand for synthetic fuels is much lower due to the ability to import low-carbon molecules therefore the total electricity supply increases slower. In addition, nuclear capacity will decrease in some extent compared to today (moving from 139 GW in 2018 to 86 GW in 2050) as new nuclear units will partly compensate the decommissioning of existing ones. As a result, the need for wind and solar capacity will be strong but lower than in Distributed Energy (2,087 GW in 2050 to compare with 252 GW in 2018 and 2,497 GW in 2050 for Distributed Energy).

As part of the renewable capacity, offshore wind will be the second source in 2050 with 408 GW generating 1,545 TWh in 2050 (28 % of power generation) shortly after onshore wind (1,781 TWh).

National Trends, based on national strategies and policies, shows a higher ambition in terms of electricity demand and renewable generation share compared to the TYNDP 2020 edition. It illustrates the integration of the Green Deal ambition at national level. In 2030, electricity generation3 reaches 3,152 TWh compared to 2,775 TWh in 2018. The share of renewable and nuclear generation reaches 79 %4 (2,550 TWh) with solar and wind accounting respectively for 423 TWh and 989 TWh in 2030. At that time horizon their capacity reaches 352 GW for solar and 349 GW of wind.

2 including reservoir, run-of-river and pump storage
3 excluding batteries, DSR and hydro pump storage
4 Assuming a share of renewable methane of 4 % National Trends in 2030

Figure 21: Capacity mix for EU27 (including prosumer PV, hybrid and dedicated RES for electrolysis)5

5 Thermal capacity in the graph does not fully take into account adequacy needs. A first evaluation on climatic years 1995, 2008 and 2009 shows an additional need of around 80 GW in Distributed Energy and 60 GW in Global Ambition in 2050 to ensure a LOLE below 5 hours in average. The quantification of such capacity will be further investigated in a later stage of the scenario building process. All figures in the report are not taking into account this additional capacity.

Figure 22: Power generation mix for EU27 (including prosumer PV, hybrid and dedicated RES for electrolysis)

In all scenarios, coal and lignite are under pressure of phase-out policies in many countries as well as high CO₂ price. In 2030 beyond small units, they only represent around 170 TWh in Distributed Energy, Global Ambition and National Trends in comparison with 540 TWh in 2018. At European level, the role of these two sources becomes negligible in 2040.

The role of gas in power generation strongly evolves along the time horizon. First there is a need to distinguish methane from hydrogen. In the present scenarios The increasing role of hydrogen in final demand translates into a similar evolution for gas-fired power generation replacing progressively part of methane in this sector for the 2040 and 2050 time horizon.

Secondly methane is progressively decarbonised offering the opportunity of flexible low carbon generation. While methane is now mostly natural gas, the share of biomethane increases along the time horizon to become fully decarbonised by 2050 in Distributed Energy, as illustrated in Figure 27 on Methane supply.

Finally, the development of variable RES at zero marginal cost has a strong influence on the way that thermal plants are operated (which is also true for nuclear in lower extent). Gas-fired power generation moves from an electricity to a flexibility source. It is pictured by the path followed by capacity and generation. For Distributed Energy and Global Ambition, capacity increases up to the 2030 – 2040 period (in parallel to coal and nuclear phase-out) before it decreases in 20506 back to present levels while generation decreases by 53 % on the same period. The subsequent reduction of running hours may trigger new challenges in terms of market design which are beyond the remit of the present report.

6 Not taking into account additional units for adequacy.

Figure 23: Evolution of methane and hydrogen fired power capacity and generation for EU27

Figure 24: Evolution of full load hours of methane and hydrogen fired power generation units for EU27

When Other Non-Renewables (mainly small-scale CHP) play a lesser role in the European electricity system today, they also need to be decarbonised in order to be able to achieve carbon neutrality. For CHP still using fossil fuels, it means either a switch to low-carbon equivalent or decommissioning on the long run.

Flexibility need will increase as well as the range of technologies to answer it. The electrification of the heating sector and the development of wind and solar will increase the climate dependency of the electricity system. At the same time, we already observe the impact of global warming on the variability of weather conditions. As a result, the decarbonisation of the electricity mix must go in parallel with the development of flexibility solutions in order to maintain the security of supply. The extent of the flexibility needs and the development of technologies to meet depend on the scenario storylines. The Scenarios will therefore differ in the balance between upstream flexibility (generation side) as today and downstream flexibility (consumer side).

In Distributed Energy, the climatic exposure will be at the highest as a result of heating electrification and maximum wind and solar development. At the same time flexible power generation (including nuclear) will strongly decrease. In addition, the development of prosumer behaviours will result in a high development of battery (being residential or EV) providing shortterm storage solutions. The development of district heating will also contribute to an optimised use of connected heat pumps enabling to switch them off for a certain duration thanks to alternative heat sources. Finally, the need to produce synthetic fuels to replace imports will also offer the opportunity of seasonal flexibility by coupling the electricity and hydrogen systems. Electrolysis and hydrogen storage will then be beneficial to the security of the energy system.

In Global Ambition, the climatic exposure of the electricity system will increase relatively slower both on the demand and supply side. The commissioning of new nuclear units will also provide some degree of flexibility. The development of flexible demand (EV, demand-side response …) will be less critical.

Figure 25: Main flexibility sources for adequacy for EU277

7 Peaking units are to be understood at methane-fired open cycle units and Battery cover utility-scale, prosumer and V2G batteries.

4.2.4 Gas supply

All renewable and decarbonisation technologies are needed to meet the EU energy and climate objectives.

The decarbonisation of the gas supply can be done in many ways. Gas can either be produced from renewable energy such as biomass producing biomethane or wind and solar energy producing hydrogen. Furthermore, decarbonised hydrogen can be produced with natural gas with different technologies such as steam methane reforming associated with carbon capture and storage technologies8.

Both COP 21 scenarios consider all types of technologies to a greater or lesser extent following their storyline. Each technology comes with its level of decarbonisation that is considered in the computation of the GHG emissions of each scenario to keep track of their carbon budget expenses. For instance, biomethane can be considered as carbon neutral or carbon negative if associated with CCS9.

8 For steam methane reforming an efficiency factor of 77 % is used. For CCS processes a conservative capture rate of 90 % is considered, to account for the part of the CO that cannot be captured in the process and that is therefore released in the atmosphere.
9 Also known as bio-energy carbon capture and sequestration (BECCS).

The EU gas production can decarbonise by 2040 in both COP 21 scenarios.

With the development of renewable hydrogen, biomethane and decarbonisation technologies, the EU can decarbonise its gas production by 2030 in Global Ambition and by 2040 in Distributed Energy. The EU indigenous production is largely decarbonised in 2040 in National Trends but not entirely with 100 TWh of remaining unabated Natural gas.

Distributed Energy shows the highest development of indigenous production capacities (2,400 TWh produced in 2050) and a higher role for biomethane and hydrogen since local production is prioritised. In Global Ambition, the indigenous production of methane and hydrogen also ­significantly increases (roughly 2,000 TWh produced in 2050) but to a lesser extent compared to Distributed Energy.

Figure 26: EU27 annual gas production per scenario

The contrasted approach towards the supply configurations is essential when assessing the infrastructure for the next twenty years since it directly impacts the energy flows and way the European gas system is used. Distributed Energy represents an evolution of the energy system towards more autonomy with shorter flow distribution with more frequent changes and higher variations in the flow patterns.

Whereas Global Ambition represents an evolution of the energy system towards more integration in the global transition with large scale solutions with longer destinations but more steady flow patterns.

4.2.4.1 Methane supply

Figure 27 provides an overview of the methane supply in all three TYNDP 2022 scenarios. All scenarios consider similar decrease of the conventional indigenous natural gas production. The indigenous renewable methane production, such as biomethane and synthetic methane, differ across the scenarios in accordance with the storylines.

National Trends shows an increase of biomethane production over time and the production of synthetic methane through electrolysis is rather limited. The overall production of renewable gases is enough to compensate for the decline in conventional natural gas, in order to maintain current EU gas production. However, as the reduction in the methane demand starts later than in the other scenarios, National Trends shows the highest import dependence on methane until 204010.

10 As the GHG emissions are not assessed for National Trends, the production means of the imported methane (fossil, low carbon, renewable) is not specified.

Biomethane: an essential source of renewable methane.

The transport sector represents about 35 % of the energy consumed in the EU and is largely dominated by Internal Combustion Engines (ICE) using oil or other liquid derivatives as fuel and those liquid fuels are mainly fossil and almost entirely imported.Biomethane plays a major role in the decarbonisation of the methane supply and is the main source of decarbonisation of the gas supply in both COP 21 scenarios until 2035. Synthetic methane and renewable imports are key to complement the supply needs and reach carbon neutrality by 2050.

Import levels are reduced and decarbonised by 2050 in both COP 21 scenarios.

As a scenario focusing on energy autonomy, Distributed Energy considers a high level of indigenous production of renewable and decarbonised methane. With around 902 TWh in 2050, Distributed Energy projects the highest biomethane production of all scenarios. The same ­accounts for the production of synthetic methane, with an amount of 130 TWh in 2050. On the other side, imports are reduced from 75 % to 11 % between 2020 and 2050, accounting for3,125 TWh in 2040, and 971 TWh in 2050. The level of imports in Distributed Energy is the lowest of all three scenarios and does not consider any natural gas in 2050.

As a scenario focusing on the integration of the EU into the global energy transition, Global Ambition combines both high decarbonisation levels and access to global and diversified markets for renewable methane (1,010 TWh in 2050). Furthermore, thanks to energy efficiency measures, methane imports decrease from 76 % to 26 % by 2050 compared to current levels (9,159 TWh) and natural gas imports are reduced to 892 TWh, essentially to be decarbonised to produce hydrogen.

Figure 27: Methane supply for EU27

4.2.4.2 Hydrogen supply

A game changer.

Today the EU-27 hydrogen supply is a domestic production of about 350 TWh, mainly used as a feedstock. About 75 % is produced with SMR, the remaining volumes are by-products from other industrial processes11. However, both COP 21 scenarios consider the hydrogen market will undergo a complete transformation over the next 30 years and be traded mainly as an energy carrier to become the main gas energy carrier by 2050 with a marginal role for its demand as feedstock.

The main drivers of this transformation of the hydrogen market are the significant EU and global potentials for producing hydrogen from variable renewable electricity and water, including sea water. Figure 28 provides an overview of the hydrogen supply in the three TYNDP 2022 scenarios.

11 As part of the hydrogen supply is produced with natural gas, methane and hydrogen demand should not be summed.

Figure 28: Hydrogen supply for EU27

National Trends considers a limited uptake of hydrogen production.

National Policies generally reflect various and shorter-term visions of the EU Member States. And most policies have not been significantly updated since the National Energy and Climate plans were published in 2019. Therefore, the role of hydrogen to meet the 2050 objectives is not fully captured by the National Trends scenario (for some countries this also applies for Distributed Energy and Global Ambition) and only an incomplete picture of the hydrogen supply can be provided.

Most of the current hydrogen produced locally in the industrial clusters is not included in the figures since they are not connected to any regional or national networks. These figures are shown as methane demand.

COP 21 scenarios: the key role of hydrogen to decarbonise the energy system.

Both Distributed Energy and Global Ambition integrate all sectors to provide a holistic vision of the European energy system.

Distributed Energy, as a decentralised scenario with high energy autonomy, considers a high level of domestic production of renewable hydrogen – similar to the high domestic methane production. Since both decarbonisation and a higher self-sufficiency are the main drivers of the Distributed Energy Scenario, it requires a significant increase in renewable electricity generation to meet the P2G demand (1,521 TWh in 2050). The uptake of hydrogen imports is limited (241 TWh renewable hydrogen in 2050), with an import share of 13 %.

Global Ambition, as a scenario considering larger scale solutions and the EU as an actor of the global energy transition, combines both high decarbonisation levels with access to a global and diversified clean hydrogen market. Hydrogen produced from renewables in the EU play an important role in the supply mix (1,366 TWh) and clean hydrogen imports are key to ensure the supply and demand adequacy of the EU, providing 936 TWh of decarbonised and renewable hydrogen, resulting in an import share of 37 %.

Figure 29: Electrolyser capacity for EU27

Figure 30: Origin of the electrolyser supply for EU27 (Hybrid renewables are connected to both the electricity grid as well as to an electrolyser.)

All unabated production of hydrogen is decommissioned by 2030.

These scenarios have in common that until 2030, all SMR without carbon capture and storage will be either decommissioned, retrofitted with CCS or replaced by SMR with CSS. In Distributed Energy low carbon hydrogen plays an important role in the early stage of the transition when supply must be secured while renewable capacities develop. In the longer term SMR will be decreased.

In Global Ambition the supply of low carbon hydrogen remains important for decarbonising energy supply in the longterm, SMR capacity remaining constant over time.