Energy research firm Rystad Energy suggests that the long-term costs of running gas-fired power plants would be ten times higher than adding new solar photovoltaic (PV) capacity in Europe. Due to the decline in Russian gas exports, natural gas is now horrendously overpriced in the continent, as per Electrek.
Gas prices increased by 187% year-to-date from 2021 in Europe
According to a new study by the Oslo-based research firm, “spot prices on the Netherlands-based Title Transfer Facility (TTF) gas hub, the main reference for Western Europe, have risen from an average of €46 per megawatt-hour (MWh) in 2021 to €134 per MWh so far this year – an increase of 187%.” Despite this cost increase, gas is still expected to provide power generation throughout the winter.
New solar PV facilities’ potential to outpace gas-fired plants
In 2023, it is anticipated that new solar and wind power capacity will total over 50 gigawatts (GW). Additionally, the French multinational utility EDF intends to restart up to 30 GW of nuclear power that is presently offline for maintenance.
On the other hand, TTF prices are expected to stabilize at about €31 per MWh by next year, as per Rystad Energy. The Levelized cost of electricity (LCOE) of existing plants is lowered to a level closer to €150 per MWh. Still, that is three times the LCOE of new solar PV facilities.
That said, gas costs would need to drop closer to €17 per MWh for gas-fired facilities to remain viable. It would also require a drop in carbon costs to €10 per metric ton. However, these instances are “currently unthinkable,” as Rystad Energy claims.
Rystad Energy’s head of power, Carlos Torres Diaz, stated:
“Gas will continue to play an important role in the European energy mix for some time to come, but unless something fundamental shifts, then simple economics, as well as climate concerns, will tip the balance in favor of renewables.”
“This growth in generation only considers output from new capacity developed using ‘funds from gas’ and is on top of Rystad Energy’s base case forecast, which anticipates that 2,385 GW of solar PV and wind capacity, and 520 GW of utility scale batteries are installed by 2050.”
Rystad Energy’s study also revealed that 663 TWh of electricity could be produced by 333 GW of additional renewable energy-producing capacity by 2028. However, it will use the funds that would have otherwise been used for gas generation.
With that in mind, renewable energy production would be sufficient to offset anticipated gas-fired generation in the same year. Furthermore, over 2,000 TWh will be produced by new renewable energy capacity by 2050:
“This growth in generation only considers output from new capacity developed using ‘funds from gas’ and is on top of Rystad Energy’s base case forecast, which anticipates that 2,385 GW of solar PV and wind capacity, and 520 GW of utility scale batteries are installed by 2050.”
In many parts of the world, renewable energy sources are the most economical new technology for generating electricity. For big developments to be effective and eco-friendly, these renewable energy sources would be necessary.
