EU to reach 2020 renewables goals on coronavirus, Brexit

Author: Matthew Jones

2020/03/25

LONDON (ICIS)--The combination of Brexit and lower demand associated with the coronavirus pandemic should enable the EU as a whole as well as many member states to reach their 2020 renewables targets, according to ICIS model run.

This is due to the consequences of a prolonged downturn in demand, which will not be normalised for by the EU’s official statistics office Eurostat, meaning that renewables look set to make up a higher share of consumption in 2020 across the EU.

The likelihood of target achievement had already increased from February due to Brexit, since the UK was among the worst performers in the EU for renewable share, but will now not be included in the final numbers.

DEMAND IMPACT

The impact of the coronavirus outbreak on European demand remains unclear as it will depend on the level of restrictions in place in each country and for how long such measures are implemented.

However, earlier this week ICIS analysis highlighted the potential impact of a 10% drop in demand across Europe between March and June.

The results from this scenario for the EU as a whole show a renewable share increase within the electricity sector (RES-E) of 2.4% as the fall in demand is far greater than the fall in renewable output.

While Eurostat normalises for wind and hydro variability in order to reduce the impact of atypical years on the results, no such mechanism exists for demand.

As a result, the lower level of demand will lead to a higher share of renewables in EU consumption in 2020 from the official statistics.

BREXIT

The prospects of the EU reaching the binding target had already increased from February due to the UK’s withdrawal from the EU and the decision not to amend the 20% target.

Since the UK was the fourth worst performer in the EU, 4 percentage points behind its target in 2018, the removal of the UK means that the bloc is now closer to the 20% target than it was before Brexit.

EU 27 reached a share of 18.9% renewables in final energy consumption in 2018, which is 0.9 percentage points higher than the result for the EU 28.

When combined with further expansion in renewable capacity since 2019 and the anticipated lower demand in 2020, this should enable the EU to reach its binding 20% renewable target.

2020 TARGETS

The EU as a whole has a binding target of 20% renewables in final energy consumption to reach by 2020, laid out in the 2009 renewable energy directive, with each member state having its own individual binding target.

The achievement of targets does not have a direct bearing on renewable build-out in the market, which will be slowed down by the impact of coronavirus.

However, this will mean that several member states avoid potential fines administered by the European Court of Justice.

Additional reporting by Varoon Kumar