Speech at the 2nd EASE Energy Storage Global Conference; Brussels.
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Ladies and Gentlemen,
It is a pleasure to see the energy storage communities from all over the world gather under the same roof for the second time. I am particularly glad that it is happening here in Europe, symbolising the major role of European companies, technologies, and know-how on storage solutions.
Ladies and gentlemen,
As we are having this conversation in September 2016, the energy transition is no longer a vision, a dream, or an abstract concept. It is a reality we are in the midst of building collectively, here in Europe and with our partners around the world.
The strongest indication of the global engagement to act on climate change was the successful Paris Agreement from December, an agreement which has now been ratified by 61 countries representing almost 48% of global emissions. In other words, only 7% away from being triggered into force.
So if we had met a year ago, I would have focused on advocacy, making a case to why this transition is so important. But today we can already talk about the 'how'. We can move from the target-setting to the implementation. And here, the European Association for Storage of Energy is playing an extremely important role.
Every green energy advocate, myself included, knows that in order for renewables to be more reliable, we must be able to store energy in an efficient, reliable and cost-effective manner. In fact, storage is a prerequisite:
For a massive increase of the share of renewables;
For the electrification of our the heat and transport sectors;
For reaching greater flexibility of the market, such as demand response mechanisms;
For empowering consumers to take control over their consumption;
For limiting Europe's dependency on imported energy;
For reducing the risk of blackouts or brownouts;
I can go on and on… And I haven't mentioned the potential of the storage industry in creating new high-quality jobs. I haven't mentioned its potential to help developing countries bring electricity to parts of the population which are energy-deprived.
All of those objectives imply that we must have effective storage solutions put in place. Attaining the necessary level of storage is no easy task. According to IEA estimates, reaching the objectives of the Paris Agreement (of keeping global warming to below 2 degrees) requires increasing global storage capacity from 140 GW in 2014 to 450 GW in 2050. That is a three-fold increase!
So what can we do to get there?
Let me start by commending your work year-round, and today in particular, in bringing the entire storage community together. As you rightly point out in framing today's event, now is the time for "explaining", for "exchanging", for "enabling". This is critical at European level. But of course it has a huge added value at global level.
I also completely agree with your focus on the three pillars of this conference, namely: technology, policy (push), and market (pull). Indeed, this triangular action plan provides a holistic approach, ensuring the technology is developed, promoted, and implemented.
Neither of the three would be enough without the support of the other two. I would just comment that in the case of the EU, our policy is not only about setting the right regulation in place. It is also about the two other legs: promoting research and development, and enabling investment by the market.
In other words, the Commission can and will assist all three pillars. Let me explain:
The European Commission is not going to start conducting research instead of our scientists but there is a lot we can do to support innovation, research and development.
For example, the Innovation framework programme, better known as Horizon 2020, has a strong focus on integrated energy systems, including smart storage. For the first time since this flagship framework programme came into existence in 1982, some €100 million per year are allocated to demonstration projects of grids and storage.
But it is not only investment that is needed for innovation.
That is why we presented our Strategic Energy Technology Plan, last year. It proposed 10 focus areas for action that correspond to the Energy Union research priorities, including: Renewables, Consumers and Energy System, Energy Efficiency and Sustainable Transport – which are highly relevant for the storage sector.
The Commission will build on and complement the work already being done in the SET Plan in the forthcoming Integrated Strategy for Research, Innovation and Competitiveness.
When it comes to regulation, you all know that we are currently in the final phase of preparing two very important legislative proposals with strong impact on storage.
The Renewable Energy Directive will focus at:
Outlining a more coordinated and cost-effective approach to support schemes, particularly for renewable power generation;
Mainstreaming renewable energy in the heating and cooling sector;
Devising a common framework enabling self-supply and consumption of renewable energy by households, business and energy communities in a cost-efficient way.
At the same time we need to make sure that our electricity market is ready for more variable and decentralised production, and for more flexible and active demand.
Our upcoming legislative proposal on a revised electricity market design will seek to produce liquid and well-integrated short-term markets.
It will focus on ensuring well-functioning markets where renewables will be gradually treated on a par with all other market participants, with the same market access and responsibilities. We will also look at empowering consumers and unlocking demand response.
I expect that the two packages would provide not only better harmonisation of the internal energy market but also provide clarity and transparency for investors. If there is one message I constantly hear from investors all across Europe, it is their need to have longer-term regulatory stability.
And the importance of investors brings me to the second leg of the triangle which is the market uptake and investment.
We are still suffering in Europe from an investment gap and we are tackling it through a range of financial mechanisms, aimed at creating a more enabling investment environment. One of the most famous instruments in our hand the famous EFSI or Juncker Funds which have been around since June last year.
During its first 12 months, almost 290 projects were approved by the European Investment Bank (EIB) Group across 26 Member States and committing €20.4 billion. These resources are expected to trigger a total investment value of €115.7 billion. The energy and research, development and innovation sectors represent together almost 50% of EFSI-backed investments so far.
President Juncker recently announced it would expand its investment power to trigger total investments of €500bn by 2020.
This is just one example out of many financing mechanisms that we have at our disposal. But of course the purpose of all these mechanisms is not to replace the private sector but on the contrary, encourage market investment by absorbing some of the risk.
Electricity Storage and Mobility
Let me also say a few words about the transport sector in this regard. Transport is a major energy consumer at EU level, and it is expected to be increasingly powered by electric power trains. A mass-deployment of battery electric vehicles would have a significant impact on the electricity grid. While being a challenge, it can also be seen as an opportunity, as those vehicles could provide various services to the electricity grid. The same is true for hydrogen powered vehicles, where the dynamics on the electricity system are different and coupled with hydrogen energy storage those could provide longer term flexibility to the electricity system.
As you can see, electric vehicles are a very interesting show case for demand response as charging can be (relatively) easily shifted to times of low demand. Battery electric vehicles are therefore considered as any behind-the-meter activity, and the functionalities will be defined through the demand response sections of the Market Design.
If you allow me I will conclude here. Let me once again thank you for your contribution, efforts, and engagement to building the global energy storage facilities from wherever you are around the world. I can assure you that we in Europe will continue to prioritise and promote storage facilities in the years to come.
On that note, I wish you an excellent third (and last) day of this Energy Storage Global Conference, and I very much to attend your next edition.