The future of the electricity system

So dear Anna welcome to this course. It’s a pleasure to host you here. The concept of energy transition has already been mentioned by Matteo Di Castelnuovo In the last video. I would like to talk with you about it a bit more extensively. First of all, is there a definition of energy transition? Hi Fulvio, Thanks for having me in your MOOC. I’m not sure that there is a consensus on what is the energy transition. So I rather give you my vision on that. I think that the energy transition is like the path that the energy system has to go through in order to reach decarbonization. What of course, the ideal transition is a dynamic one.

And I, I think it is useful to think about it as an evolution and somehow also a revolution of the energy sector as also Matteo was underlining. And the overall question is, which is the target and at which pace also the energy sector is taking this transformation. Ok? So you’re talking about the energy sector as a whole. Let’s think about the electricity sector a bit more specifically. What role can electricity play for the energy transition. It depends on which is the system we are referring to, much more from the policy point of view.

If we refer, for instance, to what is happening in Europe, well, we have a clear target for the electricity sector decarbonization, which has been implemented through some Directives, as from 2008. And those directives as well are changing progressively. First, we had the objective of integrating 20% of renewables in the final energy, electricity in particular, consumption. Then this target has been made more ambitious, first 27%, and actually it is much more, over 40%.

So the electricity sector is at the heart of the energy transition, basically because we have to change from a mix which is based on fossil fuels combustion, therefore emitting CO2, and other gases which are very dangerous to the climate, towards something that is going to emit, I’m not saying 0 CO2 but the minimum amount of CO2 that is possible, and also that the economy can afford. Okay, so these are the targets for the electricity sector, which are changing as you pointed out. But how can these targets be reached by the electricity sector? And is reaching these targets challenging for the electricity sector itself? It is extremely challenging.

Even if I think that the electricity sector, as nobody, has made a lot of efforts, perhaps more than other sector. Compare. For instance, what is going on in the electricity sector and which are the challenges in the transportation sector. Within Europe, there are several instruments that are going to somehow force or accelerate this transition. On one side, we have the CO2 regulation in the carbon market, which establishes a common system for emitting sectors. And most of these markets for CO2 emissions is taken by the electricity sector. So, putting a CO2 price is one of the main driver of, or it should be one of the drivers of the electricity sector decarbonization.

Then we have other systems that are useful to reach the targets. The policymakers have perhaps judged that the CO2 price was not enough in order to accelerate and to reach the decarbonization of the electricity sector, and they have complemented the CO2 prise by adding up some subsidies to renewables under different forms. First of all, like direct subsidies, which are known under the term feed-in tariffs, and also thre are indirect subsidies as for instance, subsidies to research and development for clean energy. So talking about these electrical renewable energy sources, which are key to reach the targets of energy transition. So, sometimes we read about electricity systems that are all feeded in just by electrical renewable energy sources.

Is there anything like that? And will there ever be a 100% renewable electricity production system? So far, what we have seen is like this kind of scenarios, right? Which describe the electricity sector like in, 2050, 2080. And they dream about an electricity system that is 100% based on renewables. Although I really like renewables, I think that they are really something that we should develop, I’m a little bit less optimistic in having these 100% renewable based electricity sectors. It might be the case. But my point is that perhaps not all the countries, or not all the a geographical areas can sustain such an electricity production. Renewables are really related to natural resources.

So it may not be the case that countries like, for instance, I don’t know, eastern European countries, are really exposed to optimal solar irradiation or wind regimes that make also those sources very productive. Notwithstanding the fact that we have also the challenge of storage. But I think that the challenge of storage is already on his way and it is going to be met by major innovation in the next years.

So my point is that the optimal mix in the future, in the decarbonized electricity sector has to be understood as something that is case-specific, depending exactly on the history, this is the idea of the transition, on the hystory and on the capital involved in building the electricity sector and which is the least cost way to produce decarbonized electricity. Ok Anna, thank you very much. Thanks for being here. Thank you. Thank you. It’s a pleasure.