The European electricity sector is suffering the consequences of the lack of a clear energy policy in the continent and the uncertainties associated to regulatory frameworks in member countries, said, today, IBERDROLA Chairman, Ignacio Galán, in the course of a conference in Doha, Qatar.
Galán noted that, up to now, the traditional electricity industry has had a solid performance because of the predictability of its returns. However, the increasing risk perceived as a result of changing and non-predictable regulatory frameworks is driving investors towards the U.S. and emerging markets, cautioned the Chairman of IBERDROLA during his speech at the Clean Energy Forum 2013, organized by the International Herald Tribune.
In this line, Ignacio Galán raised the issue that some European countries have taken policy ??decisions that have incentivized a massive deployment of certain immature renewable technologies through support schemes that lack economic rationale. The consequence, he explained, is the closure of power plants with much cheaper production costs and, in many cases, with no CO2emissions.
"Considering the vast impact that too much intervention and wrong energy policy have in the economy as a whole, Governments should focus on defining a clear energy policy, rather than playing politics with energy", stated IBERDROLA Chairman.
Also, Galán reviewed major energy challenges facing the planet, where 1.3 billion people have no access to electricity. In this regard, he highlighted that according to the International Energy Agency, global energy demand will grow by 35% between 2010 and 2035.
This increase, which will be mainly driven by developing and emerging countries, will involve a significant growth of CO2 emissions. "For this reason, reaching a new agreement to tackle climate change by 2015, as targeted in the United Nations Climate Change Conference held last December in Qatar, is absolutely necessary," emphasized the IBERDROLA Chairman, noting that it would not only globalize the effort, but also strengthen the effectiveness of initiatives already in place, such as, the European Trading Scheme.
Generation technologies with a promising future
According Galán's forecast, the winning technologies of the global energy landscape will be hydro, wind, existing nuclear and gas power plants, backed by modernized distribution infrastructures and new smart grids.
Moreover, he highlighted that the most expensive and less efficient technologies today are solar photovoltaic and solar thermal. With regard to solar, he criticized its rapid deployment in some countries, since, if they had waited a few years before massively installing PV plants, costs for the citizens would be much lower. Today, the cost per kW is seven times lower than four years ago.
IBERDROLA Chairman added that reinforcing network infrastructures will allow for improved quality of service and reduced grid losses. "European smart grids alone could require an investment of up to $150 billion in the upcoming decade", said Galán. However, he warned that one of the key issues that might impact network infrastructures is the deployment of distributed generation.
Although this technology is an extremely beneficial solution when applied in remote areas where access to conventional generation is expensive, it is not an efficient solution in areas with well-developed grid systems, since it creates extra costs in the management of networks and, in most cases, they do not reflect a right balance of costs and benefits.
Therefore, Galán argued for regulatory issues to be adequately addressed in order to avoid a deep negative impact in existing network infrastructure: "Distributed generation producers must pay as well the cost of the grid in areas where this grid exists and is providing service to their neighbours".