Electrification and energy flexibility ‘could save Europe €10.5bn a year by 2030’

An ‘ambitious but realistic’ roll-out of demand-side energy flexibility measures across Europe would make the transition to renewables and the electrification of sectors like heat and transport far more affordable, shaving 7% off the average energy bill by 2030.

Electrification and energy flexibility ‘could save Europe €10.5bn a year by 2030’

That is according to a new study conducted by engineering and industrial parts firm Danfoss

The study assessed the potential carbon and cost savings of electrifying as many fossil fuel processes as possible this decade and meeting that increased electricity demand with an ever-increasing share of renewables.

Only processes which are extremely challenge to electrify should instead switch to low-carbon hydrogen, because using energy to manufacture hydrogen is in and of itself less efficient than simply using the energy in the first instance.

The scenario assessed also involves maximising the potential of demand-side flexibility to help maintain energy security as more intermittent generation comes online.

Demand-side flexibility refers to reducing demand during peak hours and there are many options for achieving this. In commercial buildings, AI-driven technologies can predict heating, cooling and ventilation demands. At homes in the UK, families are being financially incentivized to avoid using energy-hungry appliances during the evening peak.

Danfoss found that, in its scenario, the average energy consumer would see a 7% decrease in their annual bill by 2030, against a 2021 baseline. The decrease would reach 10% by 2050.

Of course, there are upfront costs associated with electrification, bringing renewables online and scaling up demand-side flexibility.

But Danfoss is forecasting that these costs could more than be offset by gains such as increased employment and buildings which ensure healthier residents and workers. It predicts annual societal cost savings of €10.5bn by 2030, rising to €15.5bn in 2050.

Planning for the transition

“We are leaving the fossil fuel era, but we haven’t prepared our energy system for the future because we are neglecting energy efficiency as one of the main tools to lower emissions,” said Danfoss’s president and chief executive Kim Fausing.

“We must take steps to utilize energy efficiency solutions – such as demand-side flexibility technologies – that not only help us to use less energy, but to use the right energy at the right time. We have the solutions, but we need action.

“Seeing is believing, and, often, decision makers simply don’t know that we already have the solutions we need to not only reduce carbon emissions, but also to deliver substantial economic savings both at a societal and customer level.”

The study essentially accuses policymakers of taking too narrow a view of energy efficiency and not planning for the new efficiency opportunities that can – and must – be seized to reach net-zero by mid-century.

The International Energy Agency (IEA) recently updated its 1.5C-aligned net-zero roadmap for the global energy sector. It states that, in a net-zero world in 2050, fossil fuel demand would be 80% lower than it is today.

Danfoss has, similarly, calculated that renewables will need to make up 70% of the energy generation mix by 2050 if the temperature limits of the Paris Agreement are to be adhered to.

The IEA emphasised in its pathway that the switch to a more renewable system will necessitate concerted efforts to improve grid infrastructure, energy storage and flexibility in this decade and beyond.

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