Capgemini Annual Global Energy Markets Observatory, 2022 –

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Capgemini’s Annual Global Observatory of Energy Markets, 2022
A balance must be struck between two equally important imperatives:
the security of an affordable energy supply and the fight against climate change

  • Energy reduction initiatives are multiplying in a significant and promising waylily will reduce the risk of brownouts this winter
  • Care must be taken to renewable energies paradox – Europe, in particular, must not trade dependence on Russian gas with dependence on certain key components of the energy transition
  • Acceleration is needed – accelerating the deployment of renewable energy and accelerating investment in key technologies such as green hydrogen electrolyticallyzers and carbon capture and storage technologies

Paris, Octohber 13, 2022Capgemini published the 24e edition of its annual edition Global Observatory of Energy Markets (WEMO)created in partnership withh Of Pardieu Brocas Maffei, Vaasa ETT and Enerdata. According to the report, there is a emergency create a balance between two equally important imperatives – the safety of affordable energy supply and the fight against climate change. This year WEMO explores how achieve this balance is possible youthrough the combination of short-term actions and long term decisions on the reform of the design of the energy market, on the sustainability of energy supplies, and on favorable financing conditions for long-term green investments.
Main observations and recommendations report to understand:

Addressing the energy crisis with energy reduction and gas storage short term
Following the Russian invasion of Ukraine, the long-term risk posed by European dependence on Russian gas has reached a breaking point. Dependence on Russian gas in Europe, particularly in Germany, has worsened over the past two decades through a reduction in European gas production and an increase in gas consumption. This was pushed even further by the need to reduce greenhouse gas (GHG) emissions to advance Net Zero ambitions, the shutdown of nuclear power plants following the Fukushima incident and other economic considerations.

Currently, with the forced withdrawal of Russian gas from Europe, the security of gas supply over the coming winter will depend on three factors: the filling of capacity storage facilities (EU legislation has imposed that gas storage sites must be filled to at least 80% of their capacity by November 1, 2022, including the Rehden facility); identify gas import flows1; and especially the effectiveness of energy reduction campaigns. Energy saving incentives, already launched in many European countries, have the potential to trigger significant change.

Avoiding the Renewable Energy Paradox betweenatlong term
Under new EU plans to accelerate renewable energy deployment to achieve independence from Russian supply and electrification of the economy, an additional €210 billion will be needed for energy investments by 2027. Currently, wind and solar technologies are the most promising solutions2.

According to Colette Lewiner, Senior Advisor Energy and Utilities at Capgemini: A careful balance requires to be hit. Jhis means make good short-term bets solutions like the sun and the windwhile in the longer term, the construction of large third-generation nuclear power plants or SMRs3 in countries that can develop such programs. We have to be realistic about emerging solutions and the impact they can have. For instance, For for economic and technical reasons, hydrogen is not on track to fulfill its role of net zero by mid-century. Therefore, gqueen Hhydrogen should be reserved for industries where CO2 is difficult to reduce.

Among the renewable solutions available, solar has significant growth potential due to advances in materials and innovative methods to maximize solar energy such as bifacial cells, embedded lenses and inverted solar panels, which can generate solar energy. electricity at night. Solar sites are also more acceptable to local communities than wind sites. However, currently 75% of all solar photovoltaic (PV) panels arrive in the EU from China, which has resulted in the decline of EU domestic PV production over the past decade. Europe must be careful not to replace Russia’s gas dependence with a dependence on players like China for key components of the energy transition such as photovoltaic panels, rare earths and rare metals, quotes the ‘Observatory. European governments should create the right technical, financial and regulatory conditions to develop high-end critical national industries such as the production of photovoltaic panels and batteries in order to regain their sovereignty. In addition, a bold electricity market reform should be agreed to encourage investment in low-carbon generation.

Meanwhile, nuclear power is enjoying a renaissance, recognized as a key domestic energy source for the decarbonization of electricity and the stability of the electricity grid, and in the short term countries like Germany and Belgium are expected to keep existing reactors open. According to the report, in the medium term, the governments of the United Kingdom, United States, Japan, EU and China should continue to build nuclear power plants, while long-term compensation systems for the nuclear electricity should be put in place to encourage private players to invest in this industry.

The energy crisis has also delayed the shutdown of coal, which increases CO emissions.2 emissions. Carbon Capture, Utilization and Storage (CCUS) technologies are an essential tool to manage these emissions and the implementation and investments in CCUS plants need to be accelerated. In 2021, 97 new power plants in CCUS operation were announced; the United States and Europe account for three-quarters of all projects in development. Investment must continue as carbon capture capacity must increase by 2030 to align with a trajectory to net zero by 2050; in 2021 the annual carbon capacity having reached only 40 MtCO2.

Redouble our efforts for the climate

The geopolitical disturbance has reinforced the need in Europe to develop domestic energies such as renewables, and nuclear for countries that can develop such programs. Although coal use has increased and GHG emissions in 2022 and 2023 are likely to be higher than in 2021, two factors could counteract its impact. First, the efficiency of energy conservation could have a significant impact on GLG emissions. Second, global economic downturns in H2 2022 are expected to lower energy consumption and correlated GHG emissions.

Despite these trends, the political will to tackle climate change is still present and growing among the world’s largest emitters, as evidenced by EU packages such as Fit for 55 and REPowerEU, the Biden administration’s $430 billion inflation and updated national climate plans. tastes of India.

James Forrest, Global Energy and Utilities Industry Leader at Capgemini, said: “Although energy security has been neglected in favor of the fight against climate change in recent years, the current crisis presents an opportunity for global energy markets and governments to address both issues simultaneously. By activating solutions like energy reduction, short-term solar and wind and by continuing to unlock the biggest climate packages in history, we can make significant progress between these equally important imperatives.”

The World Energy Markets Observatory (WEMO) is an annual Capgemini publication that tracks the development and transformation of electricity and gas markets in Europe, North America, Australia, Southeast Asia, India and China. The 24th edition focuses on the triggers and impact of several successive energy crises, including the Russian-Ukrainian crisis, and the consequences of rising inflation, particularly for Europe. As in previous years, the latest edition of WEMO also includes in-depth coverage of the following topics: commodity markets, climate change and regulatory policies; energy transition and progress in clean technologies; infrastructure and adequacy of supply; supply and end customers; financial; and the impact of crises on utilities and oil and gas companies.
The report, which is written primarily from public data combined with Capgemini’s expertise in the energy sector, refers to data from 2021 and the first half of 2022. Particular expertise on regulation and the behavior of customers, as well as market data were provided by the research teams of De Pardieu Brocas Maffei, VaasaETT and Enerdata.

For more information and to access the report, click here

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1 Including via the Baltic Pipe and an increase in liquefied natural gas from suppliers such as the United States, and in the longer term from Africa, Azerbaijan and Australia
2 Although solar and wind power sources are intermittent (as observed in 2021) and therefore require electricity storage to stabilize the power grid.
3 SMR : Small Modular Reactors

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