6 | Prysmian Group | Energy transition - White paper 2022 0 20 40 60 80 100 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Electricity and heat producers Other energy industries Industry Transport Residential Commercial and public services Agriculture Fishing Final consumpation not elsewhere specified Electricity and heat producers Other energy industries Industry Transport Residential IEA. All rights reserved. Source: WindEurope based on European Commission Impact Assessment, Getting fit for 55 and set for 2050 - Electrifying Europe with wind Energy (2021) CO2 emissions by sector, World 1990-2019 Economics of the energy transition The post pandemic recovery is a good example of such disruptions. Soaring natural gas prices have roiled EU, leading to price spikes in the cost of electricity that are raising utility bills for consumers, putting pressure on energy suppliers and disrupting industries. Russia has limited pipeline exports to Europe because of high domestic demand, output disruptions and high liquified natural gas prices related to Asia’s economic recovery. Russia is also potentially limiting natural gas delivery into Europe to support its case for starting flows via Nord Stream 2. European gas reserves are low and the need to replenish these reserves means higher European LNG and gas imports during the post pandemic recovery, fostering competition between Europe and Asia for LNG supplies and thus a further increase in gas prices. A tightening of the European gas market will lead to growing volatility in energy bills, unless governments commit more clearly to renewable energy, according to the analysis of Bruegel, a European think tank. In fact, economics are becoming favorable tomany renewable technologies, opening the opportunity to reshape the energymixwithout additional social cost, even exploiting benefits frompostpandemic investments. Tomake an example, the global levelized cost of energy (LCOE) for offshore wind farms is following a strong decreasing trend, demonstrating its potential. Some specificmarkets already have a competitive LCOE: inGermany and theNetherlands there are already “zero subsidy” auctions; in France, reduced subsidy auctions; in othermarkets, such as the UK, it is already one of themost competitive technologies. The level of competitiveness is expected to increase in other worldmarkets by 2030, ensuring a lower global LCOE than fossil fuel technologies. The energy transition is already underway The energy transition is currently taking place mainly in the power sector, where renewable energy nowaccounts for 26%of electricity generation worldwide. The cost of new solar andwind projects is undercutting the cost of existing coal-fired power plants, several studies have found. But the transition in transportationwill likely be gradual and occur only in phases. %
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