Potential for decarbonisation by coupling of electricity and gas markets

Potential for decarbonisation by coupling of electricity and gas markets

Today, Dr Christoph Riechmann, Director in Frontier’s Energy practice, presented at the Fluxys Gas Shippers Forum in Brussels. 

In his presentation , Christoph explained the potential of coupling electricity and gas markets to drive forward decarbonisation. He pointed out that in order to comply with 2050 climate targets the EU must achieve highly ambitious CO2 reductions in all sectors of the economy.

The build-up of renewable energy supply, storage and transport are three of the big challenges of decarbonisation:

  • Energy storage constitutes the key challenge.The combination of intermittent renewable energy production from wind and solar and seasonal heat demand will require vast seasonal energy storage. Such bulk storage is feasible mainly in chemical form through gases, but not purely in the form of electricity in batteries. This gas needs to have a low-carbon content, either by using renewable electricity to produce synthetic gases or by extracting CO2 from natural gas.
  • Once such energy is stored in the form of gas, it is most economical  to transport and distribute it as gas.
  • The combination of an electric and gas system helps limit the need to build up renewable generation capacity to more politically acceptable levels - a better alternative than a purely electric system.

Christoph pointed out that the existing gas infrastructure can support decarbonisation in an efficient way if gas supplies are increasingly renewable or low-carbon, with natural gas potentially helping the “transition”. Despite the uncertainties, various scenario studies consistently find a long-term role for gases and  increasing interaction between electricity and gas, as well as between different types of gases.

Christoph concluded that market design and regulation needed to be updated and made consistent and technology-neutral in a range of areas. Several solutions could address regulatory barriers and gaps in these areas, which is explored further here.

Frontier regularly advises clients on sector coupling and regulatory design.

For more information, please contact [email protected] or call +44 (0) 20 7031 7000.