The European and global energy markets are seeing substantial growth of renewables; increased volatility in wholesale prices, including negative prices becoming more common place; and the growing electrification of EVs and heating as governments seek to decarbonise.The EU’s objective is to achieve carbon neutrality by 2050. The European Commission’s Long-Term Strategy describes a number of pathways to reach between 80% and 100% decarbonisation levels, a 650x increase in Hydrogen (H2) production by 2030, and an 8000x increase by 2050. All of these pathways have major implications for the energy sector and, in particular, for electricity. The need for grid scale storage to offset intermittency in renewable production increases rapidly as renewable generation rises.
McKinsey estimates that variable renewable sources are set to make up almost 40% of world electricity in 2040, up from 7% in 2019, and the EU forecasts between 80% and 95% renewable power in the continent by 2050. In Europe in 2019, 3.6 GW of offshore wind was installed, bringing the total to 22 GW. Scenarios for wind power for Europe range from 240 to 450 GW of generation by 2050 with offshore wind expected to grow rapidly, with some 45 GW capacity in the North Sea expected by 2030 which is a 5x increase compared to 2016.Up to 108GW of energy storage would be necessary for the EU to hit its targets, and these trends are substantially increasing the need for large scale, long duration energy storage within the grid. Bloomberg NEF estimates that energy storage, excluding pumped storage hydropower, will increase 122x by 2040 and require $662 billion of investment.
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