EMBER: EU Fossil Generation to Drop 20% in 2023 // PPA Prices: Wind Slips, Solar Climbs // France's Energy Robin Hoods

EMBER: EU Fossil Generation to Drop 20% in 2023

Ember Climate expects total nuclear generation to remain unchanged with a 40 TWh increase in French nuclear generation and a 10 TWh decrease in other EU countries. But don't forget Germany's complete nuclear phase-out, a 30 TWh loss. Hydro generation is forecasted to rise by 40 TWh across the EU; wind and solar generation to increase by 86 TWh, 19% higher than in 2022. The biggest uncertainty is electricity demand, with a predicted 3% fall across 2023 (84 TWh).

"Across the EU power sector, this trajectory would mean a substantial decline in fossil generation, falling by 20% (211 TWh) in 2023," reports Ember. "The first two weeks of 2023, at the time of writing, had already seen a 29% fall in fossil generation compared to the same period in 2022, although the weather has been mild and windy across Europe."

Ember insists that coal as a replacement for gas was insignificant and that the EU's coal output (only a 7% increase) hardly made a dent in EU emissions last year. The group also expects coal generation to continue to die off in 2023.

But the International Energy Agency disagrees. “In our forecast, despite the recent decline in gas prices, until 2025, coal is still more competitive than gas,” said Carlos Fernández Alvarez, who heads the IEA’s division on gas, coal and power markets. "There is a gap [in power generation capacity] that needs to be filled. And with high gas prices, it’s coal" that will fill the gap.

PPA Prices: Wind Slips, Solar Climbs

Renewable energy power purchase agreements are still high, though wind's average price has dropped. But solar? That's a different story.

In Q4 2022, the average price of North American wind power PPAs fell 1.9%, marking the first price decline in two years, according to a new report from LevelTen Energy. The Inflation Reduction Act has stabilized incentives for wind markets, triggering the dip in wind PPA prices and an increase in the number of wind PPAs on the market.

But solar PPA prices rose 8.2% during the same period, making a 33% increase over the past year. Solar PPA prices have stayed high because of supply chain challenges, forced labor concerns, and interconnection delays. The solar industry faces a possible reckoning in terms of U.S. manufacturing costs.

It's unclear if renewable energy prices will return to pre-pandemic levels. “What we are looking at with solar and wind to a certain extent is trying to understand the true cost of power with equipment that wasn’t made by forced labor,” Gia Clarke, senior director of developer services at LevelTen told Utility Dive.

France's Energy Robin Hoods

France is weathering national strikes over the government's plan to increase the retirement age. Some workers have developed a novel way to strike.

In "Robin des Bois" (Robin Hood) operations, energy workers provide free gas and electricity to schools, universities, low-income households, public sports facilities, and other facilities, according to France24.

“The point of today’s protests is to show that the balance of power is moving up a notch and that, if we wanted to, we could paralyse the country,” said Gwenaël Plagne, CGT representative at a thermal power plant in Cordemais, western France.

Politicians have criticized the tactic. Taxpayers, they claim, will ultimately have to pay for the unauthorized electricity usage.

The strike, part of a cost-of-living crisis in Europe, also cut French power availability by 2GW at three nuclear reactors and disrupted many ports. A second national strike is planned for Jan 31, including teachers, civil servants, and transport workers. More Robin Hood operations are in the cards.

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Conversation Starters

1. South Korea proposes building four nuclear reactors in Turkey. "Korea Electric Power Corporation (KEPCO) has submitted a preliminary proposal to Turkey for the construction of four APR-1400 reactors at an undisclosed site in the northern part of the country," reports World Nuclear News. "KEPCO CEO Seung-il Jeong presented the proposal to Fatih Dönmez, Turkey's Minister of Energy and Natural Resources, on 30 January during a meeting in which they discussed plans for KEPCO to participate in the nuclear power plant project."

2. Russia's gas pipeline exports to Europe are expected to fall further. "Pipeline natural gas exports to Europe by Russian energy giant Gazprom have declined by almost 30% in January from December amid falling prices at the spot market, hitting a new monthly all-time low, Reuters calculations showed on Tuesday," reports Reuters. "Russian commodity exports have become increasingly politicised over the past years amid wider political tensions and have been the main focus for Western sanctions since last February when Moscow sent its troops into Ukraine."

3. European governments are considering cutting EV subsidies. "Electric vehicle sales in Europe's largest passenger car markets increased to record highs in 2022, boosted by government incentives, although a number of countries will likely see subsidies for EVs being reduced or eliminated in 2023, which could have some downside risk," reports S&P Global. "The reduction in subsidies comes at a time when battery metal prices are strong, with lithium prices ending 2022 more than double where they were at the start of the year, boosted in part by the increased global EV demand."

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