Rystad Energy Norwegian consulting group is warning about that the European Commission’s ambitious plan to speed up the green transition could incur far higher costs than what it has budgeted.
In order to reduce Europe’s dependence on Russian fossil fuels, the EC has proposed increasing renewables’ share of the EU energy market to 45 percent by 2030, up five percentage points from the previous target. The “REPowerEU” plan would create a major growth opportunity for solar and for offshore wind; in particular, the latter is well-suited for the generation of green hydrogen fuel, a mainstay of the proposal.
In addition, introducing a huge surge in demand for renewable-energy infrastructure could result in higher prices for equipment like turbines and solar panels, driving up the capex required for new capacity, Rystad cautioned.
At present, it can take years to achieve renewables permitting in some EU member states; by way of example, Italy’s first offshore wind farm came online this March, 14 years after it was first proposed and six years after it secured a lease. The plan proposes to ease the permitting rules that are the main impediment to offshore wind development in Europe.
However, the price will be steep, and likely far more than what the EC plans to set aside. In addition to a massive rollout of solar PV capacity, Rystad believes the plan will require another 450-490 GW of installed wind capacity by 2030 (onshore and offshore). The investment needed to build out this much wind power comes to about $880 billion, according to Rystad, and the extra solar power would cost another $480 billion.
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