Woohoo Bank

Is Europe Doing Enough To Realize Its Long-Term Energy Goals?

As we transition to renewables, hoping to leave oil and gas in the background, will it be possible to generate enough power when we’re already seeing failures due to poor wind and dry conditions this year? With governments and international organizations pushing green policy, are we really ready to leave oil and gas in the past? 

Recent weather conditions in the U.K. have not been favorable for renewable energy production. The British energy major SSE has announced significant shortfalls in renewable energy production, producing 32 percent less power than anticipated between April and September this year, with total output during this period equating to 11 percent of its whole-year target. This is largely due to very dry and low wind weather conditions throughout these months. 

SSE announced of the situation, “This shortfall was driven by unfavorable weather conditions over the summer, which was one of the least windy across most of the UK and Ireland and one of the driest in SSE’s Hydro catchment areas in the last seventy years.”

This is not good news in a country that is already experiencing fuel shortages and soaring gas prices. With Boris Johnson announcing aims for entirely green electricity generation by 2035 energy companies will have to do better at ensuring poor weather conditions do not throw their whole renewable portfolios off track. 

The U.K. is not the only European country suffering from adverse weather conditions, with German utility company RWE reporting “much lower” wind volumes across Northern and Central Europe as a whole during the first half of 2021. Experts have suggested that it is vital to establish a balanced portfolio, as a renewable energy company, to ensure that energy output is not totally lost due to poor weather conditions, as the energy transition will lead us to rely upon these developments for our day-to-day power. 

RWE stated that the company’s offshore wind earnings from January to June 2021 decreased to $538.5 million from $675.5 million the previous year. Onshore solar projects also experienced losses during this time. 

Denmark’s Orsted reported similar challenges this August, with lower earnings on the same period in the previous year. While Orsted’s earnings were positive due to new wind farms, low wind speeds meant that its already-existing farms generated significantly less power. 

The troubles faced by renewable energy companies this year have led many to question our preparedness for the energy transition away from fossil fuels to rely entirely on renewables. Renewable energy projects, such as wind, solar and hydro-energy, are being established worldwide at an increasing rate, but we are still way off the energy production required to meet the world’s energy needs, perhaps by decades. 

Several scientists and energy representatives from around the world believe that a full transition over the next decade is possible if there is “sufficient political will, international coordination, and concrete action on a massive scale to institute a total “re-design of the global energy system.”” Research suggests that the transformation can occur faster than currently estimated so long as world governments and energy companies can agree upon the necessary steps to develop the renewables sector and pump funding into research and project development. 

But others are not so sure. While some believe a 2035 deadline is realistic – based on cohesive action, others say even 2050 is far from viable. Experts point out the volatility of solar and wind production – which relies on favorable weather conditions for output; the lack of capacity of wind and solar projects for the world’s growing demand levels; the lack of energy storage technology required to bridge this gap; and the investment required not only to develop renewable energy projects but also to adapt existing infrastructure to prepare it for the energy transition. This, they argue, is simply not realistic due in the timeframe without joint action at the international level, which is highly unlikely at the scale needed. 

SSE’s low energy production has driven finance director, Gregor Alexander, to state that the company will soon be updating the market “with an ambitious new investment plan that will optimize the SSE group’s options and opportunities …”, although no more information has been released. And as of yet, SSE has not heeded advice to split the company in order to list the renewable portfolio through an independent company. 

The company also announced it had signed an agreement with Japan’s renewable energy company Pacifico Energy, establishing a joint ownership company focused on Japan’s offshore wind development. We are seeing more and more renewable energy companies teaming together to enhance the research and development of new technologies to increase renewable energy output over the next decade.

One thing is certain, high investment levels and a wide variety of renewable energy production methods must be available to ensure they are sustainable in all weather conditions if the transition is to be  successful. Essentially, the transition cannot leave oil and gas in the past until the world is fully prepared to run on renewables, and storage will be key as wind and solar power do not function at all hours of the day and night.

By Felicity Bradstock for

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