European businesses and consumers face at least 20 years of electricity price rises, according to a leaked European Commission report on how the region can meet its green energy targets.
It also forecasts a huge growth in the number of wind farms, which would push up prices even higher.
In an assessment that examines a range of ways in which fossil fuels such as coal can be replaced with cleaner sources of energy, the 112-page report says all scenarios point to wind farms becoming the biggest source of electricity in the bloc by 2050, outstripping both coal and nuclear power.
Wind farms could provide as much as 49 per cent of EU electricity by that date, the report suggests, up from just 5 per cent today.
Average electricity prices for households and businesses would rise “strongly up to 2020-2030” under all scenarios, the document says, and the highest prices would occur after 2030 if renewable sources of power, such as wind and solar, make up a large share of energy production. For example, average prices for households could jump by more than 100 per cent by 2050 if this were the case but only by 43 per cent under a scenario that assumed more nuclear power and carbon capture and storage were used.
The report suggests this would be partly due to new infrastructure investments but it also appears to assume that conventional fuel plants would not run as much as they do now, meaning higher prices would have to be charged to cover initial investment costs.
The report is a draft impact assessment of the sorts of energy policies needed if European Union countries are to meet their goal to cut greenhouse gas emissions by at least 80 per cent from 1990 levels by 2050.
It is now circulating as officials prepare what the commission calls its “Energy Roadmap to 2050”, due to be released by the end of this year.
The assessment shows what would happen to prices, costs and energy sources under five different scenarios to make the EU less dependent on conventional fossil fuels such as coal and gas, which now account for more than half the electricity generated in the bloc.
Nuclear plants are the next biggest source, with a share of 28 per cent, while wind and hydro-electric plants, the two main sources of renewable energy, produce a combined total of 18 per cent.
Of the five scenarios examined, the highest electricity prices are forecast in a “high renewables” scenario which envisages more supply of North Sea off-shore wind plus “significant” concentrated solar power – plants that concentrate the sun’s rays to produce steam and drive a turbine – and micro power generation from solar and wind.
The cheapest prices are predicted in a so-called “diversified supply” scenario, which assumes support for renewable energy but also acceptance of nuclear power and the commercial viability of carbon capture and storage.
A spokeswoman for the European Commission’s energy commissioner, Günther Oettinger, said she was unable to comment on leaked documents.
By Pilita Clark
16 October 2011
@ The Financial Times