Executive Summary

This decade will see significant decarbonisation of the EU electricity supply. Brave changes are happening, driven by the expected rapid roll-out of wind and solar power generation in all Member States in response to the Russian war of aggression against Ukraine and Europe's commitment to become a 'net-zero' emissions continent by 2050 (expressed in the 'Fit-for-55' and the forthcoming EU climate target for 2040)

Member States' latest 10-year national energy and climate plans, being submitted to the European Commission (EC) at the time of writing this paper, suggest a remarkable, often triple-digit, planned growth in use of these two renewable energy sources in some countries. Renewable electricity generation must double by 2030. To manage weather-dependent output, the energy system must provide adequate flexibility resources at scale from both the demand and supply side.

Flexibility is the EU power system’s ability to adjust to the fluctuating generation and consumption of energy.

Delivering the energy transition effectively will require systemic, efficient and fair improvement across the whole energy system. This analysis by the European Environment Agency (EEA) and the EU Agency for the Cooperation of Energy Regulators (ACER) sketches out key elements of the flexibility challenge (a doubling of flexibility is needed by 2030) in an increasingly decarbonised EU power system. It identifies key flexibility levers. It calls for Member States to assess and unlock the potential of flexibility resources such as demand response. It sees scope for an important new role for the NECPs, alongside biennial national greenhouse gas emission projections with more complete energy parameters, as useful tools for regional cooperation to better forecast and meet Member States' flexibility needs. It points to the important role of interconnectors in enabling flexibility solutions across borders. It suggests that policy-makers coordinate their approaches assessing and utilising all flexibility levers across borders, where appropriate. Its main findings are summarised in the box below.

Summary and recommendations

1. Enhancing Europe's energy security and tackling climate change are compatible objectives but delivering them requires urgent changes to adapt the energy system. The involvement of EU and national policy-makers, regulators, energy grid operators and users will be key.
2. Accelerating the rollout of renewables is needed yet it also brings challenges. The energy system must adapt at scale to provide adequate flexibility resources (from both the demand and supply side) to adjust to fluctuating renewable electricity supply. Today, much of the flexibility that backs up renewables is sourced from fossil fuels.
3. The flexibility challenge is significant- double today's flexibility is needed by 2030- requiring a broad mix of (clean) flexible resource and supportive policies. The ramp up in flexibility needs to match the ramp up in renewables.

What is the solution?

1. Renewables bring the dual benefit of mitigating climate change and simultaneously enhancing Europe's energy independence.
2. Very promising and climate-friendly flexibility resources exist (e.g. demand response or energy storage) and must be further unlocked.
3. Europe's interconnected power system is also part of the solution, enabling flexibility - and renewables - to be procured across borders.
4. A more coordinated all-hands-on-deck approach to have complementary national assessments of flexibility needs and common policies across borders can bring extended benefits.
5. Europe's energy system has to change in at least two major ways:

• Use coordinated planning and operation of the energy system to manage decarbonisation and security of supply at the same time:
• Regularly assess the flexibility needs of the power system at the EU level and deepen the coordination on the national approaches via Member States' National Energy and Climate Plans (NECPs) and the national greenhouse gas projections in biennial progress reporting. There is scope for NECs and projections to develop on regional cooperation to help Member States better meet their flexibilty needs.
• Share electricity more broadly by expanding cross-border transmission capacities and improving the operation of interconnected systems and markets.
• Optimise electrification across all sectors of the economy such as buildings and transport, and enhance opportunities for energy storage. Direct electrification with renewables is one of the most efficient ways to decarbonise demand.

• Create incentives for consumers to actively adapt their consumption when needed and for storage to be operated dynamically. Further:
• Maximise the potential offered by market signals and cost reflective network charges to enable consumers from all sectors to financially benefit from changing their consumption patterns.
• Dismantle barriers to entry and create supportive investment frameworks to enable small, climate-compatible flexibility resources to participate in all electricity markets on an equal footing with traditional centralised sources of flexibility.
  Improve the provision of information to households and small businesses to help them overcome increasingly complex energy offers, including on energy efficiency, and take suitable and informed decisions.

Source: TH-04-23-970-EN-N_Flexibility_solutions_report_FINAL