Why energy efficiency remains key despite ongoing decarbonization

By Fernando Nu?o and Bruno De Wachter

The EU power generation system is well on its way to decarbonization, but that does not take away the need for further energy efficiency improvements. In the first place because power generation will still continue to emit GHG emissions in the years to come, but also to reduce the pressure on renewable generation capacity growth. We calculated what 1 MWh of electricity per year means in terms of carbon emissions, material use and land use.

Electricity is not cheap and still far from GHG-free

Over the past years, the EU has gone through several moments of abundant renewable electricity production combined with limited demand, leading to negative short term marginal electricity prices. These short-lasting events gave birth to two common misconceptions:

• that EU power generation will soon be free of GHG emissions,
• and that renewable electricity has a zero marginal price because it has a zero operational cost.

Both misconceptions lead to the conclusion that energy efficiency improvements for electrical systems are not worth their financial and environmental cost anymore.

To shed light on these two aspects, we have calculated, for 1 MWh of electricity per year in the EU in the period between 2025 and 2045:

1. its GHG emissions,
2. its land use,
3. and its material use.

This 20-year period corresponds with the typical life-time of devices such as medium power electric motors, but any electricity-consuming or using device is concerned (power cables, transformers, heat pumps, electric vehicles...).

GHG emissions of EU power generation

The starting point is the expected evolution of the EU electricity mix between 2025 and 2050 as published in the “2030 Climate Target Plan Impact Assessment” by the European Commission .

Next step is to translate every year's generation mix into an average emission value per MWh of electricity. To do this, we have used the figures of GHG emissions from the life cycle impact (LCI) calculations for various types of electricity generation executed by the United Nations Economic Commission for Europe (UNECE) and published in the document “Carbon Neutrality in the UNECE Region: Integrated Life-Cycle Assessment of Electrcity Sources” (2022).

Combining the two sources above-mentioned we come to the conclusion that 1 MWh of electricity per year between 2025 and 2045 will lead to an average of 146 kg of CO2eq emissions per year.

This figure might be surprising, but stems from the reality that generation from coal fired power plants will still be part of the EU electricity mix until 2040, combined with the fact that there is a need for gas fired power plants to fill gaps between demand and variable renewable production. This last element is probably the main reason why sustained energy efficiency efforts are needed. As Lucas Boehlé from the International Energy Agency (IEA) recently stated:

“The more we are replacing traditional power generation systems by variable renewable energy systems, the more demand side management becomes crucial. This includes efforts to minimize the peaks in electricity demand through energy efficiency improvement.”

IEA's Energy Efficiency 2023 Report: Key findings and a chance to discuss with Lead Authors

Land use of EU power generation

The moments of negative short term marginal electricity prices have created the erroneous idea that renewable electricity has a zero short term marginal price because it has a zero operational cost. In reality, marginal electricity prices do not only have a component covering operational costs, but also one that covers the capacity payment factor. The marginal price is designed to give a signal to the market when it is required to build additional capacity, and it would not do so if only operating costs were taken into account.

This means that energy losses still come at a cost, namely the one it takes to build the additional generation capacity needed to cover the losses. This cost is not only of a financial kind, but also environmental. Building additional generation capacity requires material use and land use, among other types of environmental impact.

Calculating with the same LCI figures and the same EU electricity mix over the years as mentioned above, the production of 1 MWh of electricity per year leads on average to 3453 points of land use in the period between 2025 and 2045, which corresponds to 26.36 m2 of typical cropland (131 points / m2 of non-irrigated cropland (“Carbon Neutrality in the UNECE Region: Integrated Life-Cycle Assessment of Electrcity Sources”, Table 32).

The production of 1 MWh of electricity per year leads, in the period 2025-2045, to an average use of 26 m2 of typical cropland.

Note that the land use points only take the competition for land and certain aspects of biodiversity into account, and not the impact on the landscape and its perception by EU citizens.

The construction of renewable generation plants is often triggering local protest, and the final share of renewable energy capacity needed for the energy transition will be the most difficult to realize – the low hanging fruit will have been picked and more difficult or controversial locations will have to be unlocked. Energy efficiency improvements reduce the need for this capacity.

Material use of EU power generation

The additional generation capacity needed to cover energy losses (or extra-demand) also implies material use. Taking into account the fact that new generation capacity in the 2025-2045 period will almost exclusively be renewable (see graph above), we assumed the power production is entirely covered by onshore wind plants (which is a simplified approach, as solar and wind offshore are also expected to make a significant contribution, though lower than onshore wind).

We derived the associated figures of material use from the Renewable Energy Materials Properties Database (REMPD) of the U.S. Department of Energy (DOE) . We also assumed an annual productivity of 2500 hours full load equivalent and a wind turbine lifespan of 20 years.

Based on these assumptions, we calculated that the consumption of 1 MWh of electricity per year in the period of 2025 and 2045 can be associated with an average of 490 kg of material use (all materials combined).

Let's illustrate how relevant these savings are. The extra material needed in a 110 kW induction motor when moving from IE3 to IE4 efficiency level is about 93 kg, which allows to save 3.8 MWh/year, assuming an operation of 3500 hours full load equivalent per year. This results in a highly positive material balance, as 93 kg of additional material used in the motor lead to 1850 kg of material savings in electricity generation infrastructure.

What does it take to produce one more MWh?

The figures above demonstrate that efforts to harvest additional energy savings still make sense, today as well as in the years to come. The evolution of the electricity price over the next 20 to 40 years is hard to predict, which can make it hard to assess energy efficiency pay-back times in a highly accurate manner. That said, the environmental benefits of each MWh saved are irrefutable.