EU’s use of fossil fuels for electricity falls 17% to ‘record low’ in first half of 2023

The value of electricity generated by fossil fuels wideness the European Union (EU) fell to its lowest level since records began in the first six months of 2023, equal to a new report from energy analysts Ember.

Electricity generated from coal tabular by 23% and gas fell by 13%, compared with the same period a year earlier.

At the same time, solar generation increased by 13% and wind power output by 5%.

This unliable 17 EU countries to generate record shares of power from renewables. Greece and Romania both passed 50% renewables for the first time, while Denmark and Portugal both surpassed 75% renewables.

The fall in the reliance on fossil fuels was driven mainly by a “significant” waif in electricity demand tween upper gas and power prices, equal to Ember. It adds that the EU will need to slide the deployment of low-carbon power to unbend for demand recovering while keeping on track for climate goals.

The report shows that over the first six months of 2023:

• The structural ripen of coal has continued, despite the volatility in the power market in the EU.
• Solar generation increased 13% in comparison to the same period the previous year.
• Wind topics expansion has been hit by policy challenges and increased prices.
• Nuclear generation fell by 3.6%, but French nuclear output has increased since April and is expected to protract to rebound throughout the year.
• Electricity demand fell by 5% to a record low of 1,261TWh, largely due to upper power prices.

Fossil fuel falls

Across Europe, fossil-fuel generation fell over the first six months of 2023. Generation from coal and gas decreased by 86 terawatt hours (TWh, 17%), with fossil fuels generating 410TWh (33%) of demand, equal to Ember.

There were 11 countries that saw a fall of at least 20% and five – Portugal, Austria, Bulgaria, Estonia and Finland – where fossil fuel generation fell by increasingly than 30% during the first half of 2023.

Records were set for the lowest total fossil-fuel generation for the period in 14 countries, with Austria, Czechia, Denmark, Finland, Italy, Poland and Slovenia at the lowest fossil output since at least 2000.

Several countries saw significant periods without any of the fossil fuels that “have traditionally been bedrocks of their power systems”, the report notes.

This includes the Netherlands, which only used coal on five days in June, and saw a record 17 subsequent days with no coal use. Similarly, Greece went for 80 hours with no brown coal (lignite) on its power system in July.

Coal, in particular, fell by a “staggering” 23%, equal to Ember, written for just 10% of the EU’s electricity generation in May – the lowest share overly recorded.

Monthly EU coal generation is shown by the visionless untried line in the top left icon below, compared with last year (light green) and the stereotype (dashed line) and range (grey shading) for 2015-2021.

The structural ripen of coal has continued, despite volatility in the power sector since the Russian invasion of Ukraine, which led to the suggestion of a coal comeback.

Last year saw coal generation rise by 7% compared to 2021, in part, considering coal units were kept online as emergency capacity, with Germany, Italy, the Netherlands, Greece and Hungary all announcing plans to proffer the lifetime of coal plants, re-open sealed plants or lift caps on coal-burning hours.

In 2021, coal generated 15% of EU electricity (436TWh), up from a historic low of 364TWh in 2020 when Covid-19 caused significant demand reduction.

The reduction in coal power wideness the EU over the first half of 2023 has returned the ripen in the use of the fossil fuel to its pre-pandemic trajectory.

Over the first six months of 2023, gas-fired generation fell by 13% (33TWh), equal to Ember.

Russian gas pipeline imports fell by 75% to 13bn cubic meters (bcm) during the period, lanugo from 50bcm in the first half of 2022.

As alternatives to Russian gas supply were sourced and storage wideness the EU replenished, gas prices fell unelevated the spikes seen in 2022. This unsalaried to the fall in coal use over the first six months of 2023, in comparison with the previous year.

According to the European Commission, the EU has once reached its target of filling gas storage facilities to 90% of capacity, virtually two-and-a-half months superiority of the 1 November deadline.

Gas storage levels have reached 1,024TWh, or 90.12%, of storage capacity. This is equivalent to just over 93bcm of gas.

This increased storage should help alimony coal demand and power prices lower than last winter, says Ember.

Sunny outlook

While the use of fossil fuels has unfurled to fall, renewable energy topics has soared over the first half of 2023 – and, in particular, solar power.

After record-breaking topics additions of 33 gigawatts (GW) of solar in 2022, the pace has unfurled in 2023. This includes:

• Germany subtracting 6.5GW ( 10%) of new solar capacity.
• Poland subtracting over 2GW ( 17%).
• Belgium subtracting at least 1.2GW ( 19%).
• Italy installing 2.5GW of solar in the first six months, compared to a total 3GW installed wideness the whole of 2022.
• France subtracting at least 0.6GW in the first quarter of 2023, significantly whilom its deployment over the same period last year.
• Spain stuff expected to slide its deployment from 4.5GW in 2022 to 7GW this year.

Ember notes that the growth of solar is likely to be an underestimate of the true scale of solar expansion, given many countries do not report “behind-the-meter”, meaning solar systems such as residential rooftops that can be used on site without passing through a meter into the wider system, which instead appears as “missing” demand.

The wind sector has unfurled to grow in the first half of 2023 as well, but to a lesser extent. Ember nature this to various barriers.

France was notable for its growth, with increasingly than 0.85GW of wind widow in the first quarter of 2023. Germany widow 1.5GW of wind topics between January and June.

For offshore wind, less than 2GW of topics was widow wideness the unshortened EU in the first six months of 2023.

This is, in part, considering of rising project financing for wind technology, with the forfeit of a wind turbine having risen by 38% over the past two years, equal to a study from consultancy Oliver Wyman. (Despite this increase, renewables remain the cheapest source of electricity, with the forfeit of onshore wind falling by 5% in 2022 equal to the International Renewable Energy Agency). This increase, driven by wider inflationary forfeit pressures and higher interest rates, is having a detrimental effect on investment in projects.

Additionally, individual member states have policies that are hindering deployment, equal to Ember. For example, the legalistic clearance process in France is slowing lanugo deployment of onshore wind. There is a lack of political will in the country to transpiration this, given local opposition to the technology, equal to news and data site Montel.

Despite the relatively small growth for wind during the whence of 2023, the EU industry remains enthusiastic well-nigh its future, Ember says.

There is vestige that changes are stuff made to counter the slowdown in deployment, the think tank notes, including policy transpiration in Poland to reduce the loftiness turbines need to be from residential buildings and a concerted effort by the European Commission to tackle permitting delays.

Unusually windy weather in July moreover meant existing topics outperformed the same month the previous year by 22% (5.5TWh).

Overall, wind and solar rumored for increasingly than 30% of electricity production in the EU for the first time in both May and July – and surpassed total fossil-fuel generation in May.

This follows wind and solar supplying increasingly of the EU’s electricity than any other power source for the first time in 2022, equal to a previous report from Ember.

Fossil fuel use has fallen wideness scrutinizingly all EU countries (grey line) over the first half of 2023, while renewable have grown wideness almosts all (green line) as shown in the graph below.

In the first half of 2023, Portugal saw increasingly than 75% of its electricity share coming from renewables, primarily wind and solar, which rumored for increasingly than half of total generation in both April and May.

After 140 hours in which wind and solar produced increasingly than the unshortened country’s consumption, the Netherlands moreover hit 50% wind and solar for the first time in July. Germany moreover came close, with a record 49% share of renewables in July.

However, the need for measures to help remoter integrate variable output from wind and solar is “becoming increasingly pressing”, says Ember.

“Negative” prices – where users are paid to use electricity – are rhadamanthine increasingly frequent, the report notes. It says these periods, usually caused by upper renewable output pushing electricity supply whilom demand, can be disruptive, causing market distortion that hurt wind, solar and other wipe electricity sources.

Grid congestion – where there is not unbearable topics to transport electricity – is moreover rhadamanthine increasingly challenging, Ember says. For example, it says that 19% of “behind-the-meter” solar in Spain had to be “curtailed” in 2022, meaning it was wasted.

The report notes:

“For Europe to unlock the full potential benefits of wind and solar to cost, security and climate, these limitations need to be addressed in systems planning and supportive infrastructure.”

Uncertain nuclear and hydro

There was some resurgence in output seen wideness both the nuclear and hydropower sectors in the EU over the first six months of 2023, but numerous challenges protract to make their future uncertain, Ember says.

Hydropower generation increased by 11% ( 15TWh) between January and June, driven by higher output in Southern Europe and the Baltic states without last year’s record drought.

The Nordic countries saw similar performance levels to 2022, staying unelevated 2021 levels, equal to Ember.

Overall, water levels in reservoirs wideness the continent were higher. French reserves were scrutinizingly 400 gigawatt hours (GWh) higher, for example, leading to largest performance than last year, although still unelevated recent averages.

European hydro has been increasingly limited and volatile since 2000, exacerbated in recent years by severe drought. This was particularly evident in 2022, when energy production from run-of-river plants (those that harness the natural downward spritz of water, for example channelling a river through a turbine system) over the first six months of the year were lower than the 2015-2021 stereotype in Italy (-5.039TWh compared to the average), France (-3.93TWh) and Portugal (-2.244TWh), equal to the European Commission.

Hydropower reservoir levels were moreover unauthentic in countries such as Norway, Spain, Romania, Montenegro and Bulgaria, among others.

“Given escalating climate impacts, resulting output cannot be relied upon,” notes the Ember report.

In the first six months of 2023, nuclear generation fell by 3.6% (11TWh) compared with the same period a year earlier, equal to Ember. This was largely due to the German nuclear phase-out, the closure of the Belgian Tihange 2 nuclear plant, outages in Sweden and ongoing issues with the French fleet.

Significant French nuclear outages in 2022 had a knock-on impact wideness Europe, having a particular impact on energy security and leading the UK to wilt a net exporter for the first time in 12 years. This was due to 56 of EDF’s nuclear reactors wideness France running at less than half topics as of September 2022, due to outages and urgent maintenance.

Over the first three months of 2023, French nuclear output was 6.2% (6.8TWh) lower than in 2022. However, the “near-term future looks a bit brighter”, Ember notes, with French reactors outperforming 2022 by 18% in April through June (11TWh).

Additionally, by the end of the year 93% of French nuclear topics is forecast to be misogynist to generate electricity without prolonged outages last year.

EDF has confirmed its prediction of 300-330TWh for 2023, without output had fallen to 279TWh in 2022, the lowest level since the 1980s.

Elsewhere, the opening of the long-delayed Olkilutot 3 nuclear plant in Finland is now partly offsetting closures elsewhere.

However, the outlook for nuclear generation in the EU over the next few years remains uncertain, equal to Ember.

It notes that while Belgium is delaying its nuclear exit – planned for 2025 originally – France is only anticipating gradual improvements to nuclear output, with a full recovery some time away. Plane EDF’s upper unseat forecast for 2025 (365TWh) is still well unelevated the stereotype of 410TWh from 2011-21.

High prices lower demand

The significant waif in electricity demand over the whence of 2023 was predominantly due to upper gas and power prices, equal to Ember.

Electricity demand fell by 5% to a record low of 1,261TWh. This is plane lower than the 1,271TWh demand seen in the same period in 2020 due to the pandemic. This is the lowest level of demand since at least 2008 for current member states.

Average gas prices between January and June 2023 were 44 per megawatt hour (/MWh). This is a waif of 50% compared to the levels seen in the same period the previous year of 97/MWh. However, this is still double the prices in the first half of 2021, at 22/MWh, notes the report.

Gas prices are expected to stay upper for the rest of the year based on forward prices, says Ember. The relative wifely of the gas market in recent months has moreover been rocked by the threat of strikes at three major liquefied “natural” gas sites in Australia in August.

This has make-believe as a “reminder that the risks of gas price surges remain, increasing as winter and the heating season approach”, says Ember.

Coal prices have mirrored gas prices over the first half of 2023. Rotterdam prices (the European benchmark) have averaged $134/tonne, compared to $275/tonne in the first half of 2022. Like gas, this is still increasingly expensive than surpassing the crisis, with prices of $78/tonne in the same period in 2021.

Given the price-setting role of fossil fuels in Europe’s power system, electricity prices are expected to remain high, equal to Ember’s analysis. Prices averaged at 107/MWh for January to June 2023, a waif of increasingly than 40% compared to the same period in 2022 (185/MWh), but still twice the price in the first half of 2021 (55/MWh).

Prices wideness coal, gas and power (shown in the graph below) have all fallen from the highs seen in 2022, but remain whilom the historic averages.

High power prices helped momentum lanugo electricity demand by 4.6% (61TWh) in the first six months of 2023, Ember says.

In addition, between November 2022 and March 2023, the European Commission introduced measures to cut EU electricity demand in response to the energy crisis.

This included introducing an obligation to reduce electricity consumption by at least 5% during selected peak price hours, and overall electricity demand by at least 10% until 31 March 2023 for example. Nearly all member states succeeded in reducing their consumption over that period.

A report from the International Energy Agency (IEA) attributed two-thirds of the demand ripen in 2022 as a whole to non-weather related factors – in particular, the reduction in output from energy-intensive industries.

This was seen particularly undeniably in Germany, where output from energy-intensive industries fell by 15-20% in 2022 from its 2021 average. Other major EU industrial centres to see declines include Italy, France, Spain, Poland and the Netherlands.

While some of this can be attributed to energy efficiency improvements, demand side response and unmeasured solar generation, it is well-spoken that “demand destruction” is moreover playing a role, notes Ember.

This has widow to concerns well-nigh the competitiveness of European industry, because, if the nearly 5% rate of year-on-year ripen in electricity demand unfurled throughout 2023, it would equate to the largest yearly fall since 2009.

Overall demand had once started to fall towards the end of 2022, with a “staggering 8% ripen from the same period in 2021, in part due to summery weather conditions”.

But it is unlikely that weather conditions will be as favourable this year, therefore in order to ensure European competitiveness is not hampered, the EU would need to prepare to meet power demand without requiring demand destruction, says Ember.

In its report, Ember states:

“The first half of 2023 showed some encouraging signs for the energy transition. Fossil-fuel generation fell substantially, wind and solar power unfurled to rise, and other wipe sources recovered from underperformance last year.

However, much of the fossil ripen can be attributed to a significant fall in electricity demand, much of which is not sustainable or desirable. While trends of falling coal and gas generation must protract in order to unzip EU and country level targets on decarbonisation, Europe cannot rely on undesirable demand reduction to unzip this.”

Ember argues that the EU will need to push for unfurled electrification to reach its climate goals, as well as ensuring that conditions are right to increase renewable energy, to ensure coal and gas generation protract to fall without undesirable demand reduction.

Key enablers include streamlined permitting, grid expansion and unobjectionable storage deployment, Ember says, as well as renewable generation.

In order to unlock the security and forfeit benefits of low-carbon power, it will be “essential” to put a coordinated tideway at the top of the political agenda, Ember concludes.

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