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European Oil Majors Energy Transition highlights BP, Shell, and Total rapidly scaling renewables, wind and solar assets, hydrogen, electricity, and EV charging while cutting upstream capex, aligning with net-zero goals and utility-style energy services.

Key Points

It is the shift by BP, Shell, Total and peers toward renewables, electricity, hydrogen, and EV charging to meet net-zero goals.

✅ Offshore wind, solar, and hydrogen projects scale across Europe

✅ Capex shifts, fossil output declines, net-zero targets by 2050

✅ EV charging, utilities, and power trading become core services

Under pressure from governments and investors, including rising investor pressure at utilities that reverberates across the sector, industry leaders like BP and Shell are accelerating their production of cleaner energy.

This may turn out to be the year that oil giants, especially in Europe, started looking more like electric companies.

Late last month, Royal Dutch Shell won a deal to build a vast wind farm off the coast of the Netherlands. Earlier in the year, France’s Total, which owns a battery maker, agreed to make several large investments in solar power in Spain and a wind farm off Scotland. Total also bought an electric and natural gas utility in Spain and is joining Shell and BP in expanding its electric vehicle charging business.

At the same time, the companies are ditching plans to drill more wells as they chop back capital budgets. Shell recently said it would delay new fields in the Gulf of Mexico and in the North Sea, while BP has promised not to hunt for oil in any new countries.

Prodded by governments and investors to address climate change concerns about their products, Europe’s oil companies are accelerating their production of cleaner energy — usually electricity, sometimes hydrogen — and promoting natural gas, which they argue can be a cleaner transition fuel from coal and oil to renewables, as carbon emissions drop in power generation.

For some executives, the sudden plunge in demand for oil caused by the pandemic — and the accompanying collapse in earnings — is another warning that unless they change the composition of their businesses, they risk being dinosaurs headed for extinction.

This evolving vision is more striking because it is shared by many longtime veterans of the oil business.

“During the last six years, we had extreme volatility in the oil commodities,” said Claudio Descalzi, 65, the chief executive of Eni, who has been with that Italian company for nearly 40 years. He said he wanted to build a business increasingly based on green energy rather than oil.

“We want to stay away from the volatility and the uncertainty,” he added.

Bernard Looney, a 29-year BP veteran who became chief executive in February, recently told journalists, “What the world wants from energy is changing, and so we need to change, quite frankly, what we offer the world.”

The bet is that electricity will be the prime means of delivering cleaner energy in the future and, therefore, will grow rapidly as clean-energy investment incentives scale globally.

American giants like Exxon Mobil and Chevron have been slower than their European counterparts to commit to climate-related goals that are as far reaching, analysts say, partly because they face less government and investor pressure (although Wall Street investors are increasingly vocal of late).

“We are seeing a much bigger differentiation in corporate strategy” separating American and European oil companies “than at any point in my career,” said Jason Gammel, a veteran oil analyst at Jefferies, an investment bank.

Companies like Shell and BP are trying to position themselves for an era when they will rely much less on extracting natural resources from the earth than on providing energy as a service tailored to the needs of customers — more akin to electric utilities than to oil drillers.

They hope to take advantage of the thousands of engineers on their payrolls to manage the construction of new types of energy plants; their vast networks of retail stations to provide services like charging electric vehicles; and their trading desks, which typically buy and hedge a wide variety of energy futures, to arrange low-carbon energy supplies for cities or large companies.

All of Europe’s large oil companies have now set targets to reduce the carbon emissions that contribute to climate change. Most have set a ”net zero” ambition by 2050, a goal also embraced by governments like the European Union and Britain.

The companies plan to get there by selling more and more renewable energy and by investing in carbon-free electricity across their portfolios, and, in some cases, by offsetting emissions with so-called nature-based solutions like planting forests to soak up carbon.

Electricity is the key to most of these strategies. Hydrogen, a clean-burning gas that can store energy and generate electric power for vehicles, also plays an increasingly large role.

The coming changes are clearest at BP. Mr. Looney said this month that he planned to increase investment in low-emission businesses like renewable energy by tenfold in the next decade to $5 billion a year, while cutting back oil and gas production by 40 percent. By 2030, BP aims to generate renewable electricity comparable to a few dozen large offshore wind farms.

Mr. Looney, though, has said oil and gas production need to be retained to generate cash to finance the company’s future.

Environmentalists and analysts described Mr. Looney’s statement that BP’s oil and gas production would decline in the future as a breakthrough that would put pressure on other companies to follow.

BP’s move “clearly differentiates them from peers,” said Andrew Grant, an analyst at Carbon Tracker, a London nonprofit. He noted that most other oil companies had so far been unwilling to confront “the prospect of producing less fossil fuels.”

While there is skepticism in both the environmental and the investment communities about whether century-old companies like BP and Shell can learn new tricks, they do bring scale and know-how to the task.

“To make a switch from a global economy that depends on fossil fuels for 80 percent of its energy to something else is a very, very big job,” said Daniel Yergin, the energy historian who has a forthcoming book, “The New Map,” on the global energy transition now occurring in energy. But he noted, “These companies are really good at big, complex engineering management that will be required for a transition of that scale.”

Financial analysts say the dreadnoughts are already changing course.

“They are doing it because management believes it is the right thing to do and also because shareholders are severely pressuring them,” said Michele Della Vigna, head of natural resources research at Goldman Sachs.

Already, he said, investments by the large oil companies in low-carbon energy have risen to as much as 15 percent of capital spending, on average, for 2020 and 2021 and around 50 percent if natural gas is included.

Oswald Clint, an analyst at Bernstein, forecast that the large oil companies would expand their renewable-energy businesses like wind, solar and hydrogen by around 25 percent or more each year over the next decade.

Shares in oil companies, once stock market stalwarts, have been marked down by investors in part because of the risk that climate change concerns will erode demand for their products. European electric companies are perceived as having done more than the oil industry to embrace the new energy era.

“It is very tricky for an investor to have confidence that they can pull this off,” Mr. Clint said, referring to the oil industry’s aspirations to change.

But, he said, he expects funds to flow back into oil stocks as the new businesses gather momentum.

At times, supplying electricity has been less profitable than drilling for oil and gas. Executives, though, figure that wind farms and solar parks are likely to produce more predictable revenue, partly because customers want to buy products labeled green.

Mr. Descalzi of Eni said converted refineries in Venice and Sicily that the company uses to make lower-carbon fuel from plant matter have produced better financial results in this difficult year than its traditional businesses.

Oil companies insist that they must continue with some oil and gas investments, not least because those earnings can finance future energy sources. “Not to make any mistake,” Patrick Pouyanné, chief executive of Total, said to analysts recently: Low-cost oil projects will be a part of the future.

During the pandemic, BP, Total and Shell have all scrutinized their portfolios, partly to determine if climate change pressures and lingering effects from the pandemic mean that petroleum reserves on their books — developed for perhaps billions of dollars, when oil was at the center of their business — might never be produced or earn less than previously expected. These exercises have led to tens of billions of dollars of write-offs for the second quarter, and there are likely to be more as companies recalibrate their plans.

“We haven’t seen the last of these,” said Luke Parker, vice president for corporate analysis at Wood Mackenzie, a market research firm. “There will be more to come as the realities of the energy transition bite.”

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U.S. Energy Aid to Ukraine delivers emergency electricity grid equipment, generators, transformers, and circuit breakers, supports ENTSO-E integration, strengthens energy security, and advances decarbonization to restore power and heat amid Russian attacks.

Key Points

U.S. funding and equipment stabilize Ukraine's power grid, strengthen energy security, and advance ENTSO-E integration.

✅ $53M for transformers, breakers, surge arresters, disconnectors

✅ $55M for generators and emergency heat to municipalities

✅ ENTSO-E integration, cybersecurity, nuclear safety support

In the midst of Russia’s continued brutal attacks against Ukraine’s energy infrastructure, Secretary of State Blinken announced today during a meeting of the G7+ on the margins of the NATO Ministerial in Bucharest that the United States government is providing over $53 million to support acquisition of critical electricity grid equipment. This equipment will be rapidly delivered to Ukraine on an emergency basis to help Ukrainians persevere through the winter, as the country prepares for winter amid energy challenges. This supply package will include distribution transformers, circuit breakers, surge arresters, disconnectors, vehicles and other key equipment.

This new assistance is in addition to $55 million in emergency energy sector support for generators and other equipment to help restore emergency power and heat to local municipalities impacted by Russia’s attacks on Ukraine’s power system, while both sides accuse each other of energy ceasefire violations that complicate repairs. We will continue to identify additional support with allies and partners, and we are also helping to devise long-term solutions for grid restoration and repair, along with our assistance for Ukraine’s effort to advance the energy transition and build an energy system decoupled from Russian energy.

Since Russia’s further invasion on February 24, working together with Congress, the Administration has provided nearly $32 billion in assistance to Ukraine, including $145 million to help repair, maintain, and strengthen Ukraine’s power sector in the face of continued attacks. We also have provided assistance in areas such as EU integration and regional electricity trade, including electricity imports to stabilize supply, natural gas sector support to maximize resource development, support for nuclear safety and security, and humanitarian relief efforts to help Ukrainians to overcome the impacts of energy shortages.

Since 2014, the United States has provided over $160 million in technical support to strengthen Ukraine’s energy security, including to strengthen EU interconnectivity, increase energy supply diversification, and promote investments in energy efficiency, renewable energy, and clean energy technologies and innovation.  Much of this support has helped prepare Ukraine for its eventual interconnection with Europe’s ENTSO-E electricity grid, aligning with plans to synchronize with ENTSO-E across the integrated power system, including the island mode test in February 2022 that not only demonstrated Ukraine’s progress in meeting the EU’s technical requirements, but also proved to be critical considering Russia’s subsequent military activity aimed at disrupting power supplies and distribution in Ukraine.

Department of Energy (DOE)

• With the increased attacks on Ukraine’s electricity grid and energy infrastructure in October, DOE worked with the Ukrainian Ministry of Energy and DOE national laboratories to collate, vet, and help prioritize lists of emergency electricity equipment for grid repair and stabilization amid wider global energy instability affecting supply chains.
• Engaged at the CEO level U.S. private sector and public utilities and equipment manufacturers to identify $35 million of available electricity grid equipment in the United States compatible with the Ukrainian system for emergency delivery. Identified $17.5 million to support purchase and transportation of this equipment.
• With support from Congress, initiated work on full integration of Ukraine with ENTSO-E to support resumption of Ukrainian energy exports to other European countries in the region, including funding for energy infrastructure analysis, collection of satellite data and analysis for system mapping, and work on cyber security, drawing on the U.S. rural energy security program to inform best practices.
• Initiated work on a new dynamic model of interdependent gas and power systems of Europe and Ukraine to advance identification and mitigation of critical vulnerabilities.
• Delivered emergency diesel fuel and other critical materials needed for safe operation of Ukrainian nuclear power plants, as well as initiated the purchase of three truck-mounted emergency diesel backup generators to be delivered to improve plant safety in the event of the loss of offsite power.

U.S. Department of State

• Building on eight years of technical engagement, the State Department continued to provide technical support to Naftogaz and UkrGasVydobuvannya to advance corporate governance reform, increase domestic gas production, provide strategic planning, and assess critical sub-surface and above-ground technical issues that impact the company’s core business functions.
• The State Department is developing new programs focused on emissions abatement, decarbonization, and diversification, acknowledging the national security benefits of reducing reliance on fossil fuels to support Ukraine’s ambitious clean energy and climate goals and address the impacts of reduced supplies of natural gas from Russia.
• The State Department led a decades-long U.S. government engagement to develop and expand natural gas reverse flow (west-to-east) routes to enhance European and Ukrainian energy security. Ukraine is now able to import natural gas from Europe, eliminating the need for Ukraine to purchase natural gas from Gazprom.

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India Village Electrification hailed by the IEA in World Energy Outlook 2018 showcases rapid energy access progress, universal village power, clean cooking advances via LPG, and Modi-led initiatives, inspiring Indonesia, Bangladesh, and Sub-Saharan Africa.

Key Points

A national push to power every Indian village, praised by the IEA for boosting energy access and clean cooking.

✅ Electrified 597,464 villages ahead of schedule in April 2018.

✅ IEA hails India in World Energy Outlook 2018 as star performer.

✅ LPG connections surge via Ujjwala, aiding clean cooking access.

The global energy watchdog International Energy Agency (IEA) has called India's electrification of every village the greatest success story of 2018. In its latest report, World Energy Outlook 2018, the IEA has called India a "star performer" in terms of achieving the big milestone of the providing power to each village. "In particular, one of the greatest success stories in access to energy in 2018 was India completing the electrification of all of its villages," said the IEA. It added that countries like Indonesia and Bangladesh have also achieved the commendable electrification rate of 95% (up from 50% in 2000), and 80% (up from 20% in 2000), respectively, even as Europe's electrification push continues as part of broader transitions.

This 643-page report by the IEA says over 120 million people worldwide gained access to electricity in 2017 and charts growth in the electric car market as part of broader energy trends. For the first time ever, the total number of people without access fell below 1 billion, it said.  The mega plan of providing electricity to 597,464 villages in India was announced by Prime Minister Narendra Modi during his Independence Day speech in 2015. On April 28, 2018, PM Modi confirmed that India had achieved its goal ahead of schedule. "This is one of the greatest achievements in the history of energy," said the IEA.

Praising the Narendra Modi government for making efforts towards lighting up every village in India, the agency said: "Since 2000 around half a billion people have gained access to electricity in India, with political effort over the last five years significantly accelerating progress."

India's achievement of providing universal household electricity access will improve the lives of over 230 million people, said the IEA, even as analyses like a Swedfund report debate some poverty outcomes in electrified areas. For a start, electric lighting makes the use of candles, kerosene and other polluting fuels for lighting redundant, not only saving money (and providing more light) but also seriously improving health, it said.

Though the global energy agency has called India "a success story", and a "bright spot for energy access", it says huge challenges remain in other regions of the world where over 670 million people still live without electricity access. "90% of these people are concentrated in sub-Saharan Africa, with countries such as Nigeria facing severe shortages," said the report.

Seven decades after independence and nearly three decades after India's economic liberalisation, the Modi government achieved the historic milestone of giving power to every single village of India, 12 days ahead of the deadline set by PM Modi. Leisang in Manipur became the last village to be connected to the grid, while a Delhi energy storage project explores ways to balance supply and demand.

The agency also praised India for tackling a related problem: access to clean cooking facilities. "While an estimated 780 million people in India rely on biomass for cooking, progress is emerging, as India is one of the few countries in the world targeting this "blind spot" of energy policy," it said.

Around 36 million LPG connections have been made since Prime Minister Modi and Minister for Petroleum and Natural Gas, Dharmendra Pradhan, launched the Pradhan Mantri Ujjwala Yojana scheme in May 2016 to provide free connections to families living below the poverty line. In India, around 50 million free LPG stoves and initial refills have been provided to poor households via this scheme since 2015. The government has set a target of providing LPG connections to 80 million households by 2020.

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BC Hydro Electricity Imports shape CleanBC claims as Powerex trades cross-border electricity, blending hydro with coal and gas supplies, affecting emissions, grid carbon intensity, and how electric vehicles and households assess "clean" power.

Key Points

Powerex buys power for BC Hydro, mixing hydro with coal and gas, shifting emissions and affecting CleanBC targets.

✅ Powerex trades optimize price, not carbon intensity

✅ Imports can include coal- and gas-fired generation

✅ Emissions affect EV and CleanBC decarbonization claims

British Columbians naturally assume they’re using clean power when they fire up holiday lights, juice up a cell phone or plug in a shiny new electric car. 

That’s the message conveyed in advertisements for the CleanBC initiative launched by the NDP government, amid indications that residents are split on going nuclear according to a survey, which has spent $3.17 million on a CleanBC “information campaign,” including almost $570,000 for focus group testing and telephone town halls, according to the B.C. finance ministry.

“We’ll reduce air pollution by shifting to clean B.C. energy,” say the CleanBC ads, which feature scenic photos of hydro reservoirs. “CleanBC: Our Nature. Our Power. Our Future.” 

Yet despite all the bumph, British Columbians have no way of knowing if the electricity they use comes from a coal-fired plant in Alberta or Wyoming, a nuclear plant in Washington, a gas-fired plant in California or a hydro dam in B.C. 

Here’s why. 

BC Hydro’s wholly-owned corporate subsidiary, Powerex Corp., exports B.C. power when prices are high and imports power from other jurisdictions when prices are low. 

In 2018, for instance, B.C. imported more electricity than it exported — not because B.C. has a power shortage (it has a growing surplus due to the recent spate of mill closures and the commissioning of two new generating stations in B.C.) but because Powerex reaps bigger profits when BC Hydro slows down generators to import cheaper power, especially at night.

“B.C. buys its power from outside B.C., which we would argue is not clean,” says Martin Mullany, interim executive director for Clean Energy BC. 

“A good chunk of the electricity we use is imported,” Mullany says. “In reality we are trading for brown power” — meaning power generated from conventional ‘dirty’ sources such as coal and gas. 

Wyoming, which generates almost 90 per cent of its power from coal, was among the 12 U.S. states that exported power to B.C. last year. (Notably, B.C. did not export any electricity to Wyoming in 2018.)

Utah, where coal-fired power plants produce 70 per cent of the state’s energy amid debate over the costs of scrapping coal-fired electricity, and Montana, which derives about 55 per cent of its power from coal, also exported power to B.C. last year. 

So did Nebraska, which gets 63 per cent of its power from coal, 15 per cent from nuclear plants, 14 per cent from wind and three per cent from natural gas.   

Coal is responsible for about 23 per cent of the power generated in Arizona, another exporter to B.C., while gas produces about 44 per cent of the electricity in that state.  

In 2017, the latest year for which statistics are available, electricity imports to B.C. totalled just over 1.2 million tonnes of carbon dioxide emissions, according to the B.C. environment ministry — roughly the equivalent of putting 255,000 new cars on the road, using the U.S. Environmental Protection Agency’s calculation of 4.71 tonnes of annual carbon emissions for a standard passenger vehicle. 

These figures far outstrip the estimated local and upstream emissions from the contested Woodfibre LNG plant in Squamish that is expected to release annual emissions equivalent to 170,000 new cars on the road.

Import emissions cast a new light on B.C.’s latest “milestone” announcement that 30,000 electric cars are now among 3.7 million registered vehicles in the province.

BC Electric Vehicles Announcement Horgan Heyman Mungall Weaver
In November of 2018 the province announced a new target to have all new light-duty cars and trucks sold to be zero-emission vehicles by the year 2040. Photo: Province of B.C. / Flickr

“Making sure more of the vehicles driven in the province are powered by BC Hydro’s clean electricity is one of the most important steps to reduce [carbon] pollution,” said the November 28 release from the energy ministry, noting that electrification has prompted a first call for power in 15 years from BC Hydro.

Mullany points out that Powerex’s priority is to make money for the province and not to reduce emissions.

“It’s not there for the cleanest outcome,” he said. “At some time we have to step up to say it’s either the money or the clean power, which is more important to us?”

Electricity bought and sold by little-known, unregulated Powerex
These transactions are money-makers for Powerex, an opaque entity that is exempt from B.C.’s freedom of information laws. 

Little detailed information is available to the public about the dealings of Powerex, which is overseen by a board of directors comprised of BC Hydro board members and BC Hydro CEO and president Chris O’Reilly. 

According to BC Hydro’s annual service plan, Powerex’s net income ranged from $59 million to $436 million from 2014 to 2018. 

“We will never know the true picture. It’s a black box.” 

Powerex’s CEO Tom Bechard — the highest paid public servant in the province — took home $939,000 in pay and benefits last year, earning $430,000 of his executive compensation through a bonus and holdback based on his individual and company performance.  

“The problem is that all of the trade goes on at Powerex and Powerex is an unregulated entity,” Mullany says. 

“We will never know the true picture. It’s a black box.” 

In 2018, Powerex exported 8.7 million megawatt hours of electricity to the U.S. for a total value of almost $570 million, according to data from the Canada Energy Regulator. That same year, Powerex imported 9.6 million megawatt hours of electricity from the U.S. for almost $360 million. 

Powerex sold B.C.’s publicly subsidized power for an average of $87 per megawatt hour in 2018, according to the Canada Energy Regulator. It imported electricity for an average of $58 per megawatt hour that year. 

In an emailed statement in response to questions from The Narwhal, BC Hydro said “there can be a need to import some power to meet our electricity needs” due to dam reservoir fluctuations during the year and from year to year.

‘Impossible’ to determine if electricity is from coal or wind power
Emissions associated with electricity imports are on average “significantly lower than the emissions of a natural gas generating plant because we mostly import electricity from hydro generation and, increasingly, power produced from wind and solar,” BC Hydro claimed in its statement. 

But U.S. energy economist Robert McCullough says there’s no way to distinguish gas and coal-fired U.S. power exports to B.C. from wind or hydro power, noting that “electrons lack labels.” 

Similarly, when B.C. imports power from Alberta, where generators are shifting to gas and 48.5 per cent of electricity production is coal-fired and 38 per cent comes from natural gas, there’s no way to tell if the electricity is from coal, wind or gas, McCullough says.

“It really is impossible to make that determination.” 

Wyoming Gilette coal pits NASA
The Gillette coal pits in Wyoming, one of the largest coal-producers in the U.S. Photo: NASA Earth Observatory

Neither the Canada Energy Regulator nor Statistics Canada could provide annual data on electricity imports and exports between B.C. and Alberta. 

But you can watch imports and exports in real time on this handy Alberta website, which also lists Alberta’s power sources. 

In 2018, California, Washington and Oregon supplied considerably more power to B.C. than other states, according to data from Canada Energy Regulator. 

Washington, where about one-quarter of generated power comes from fossil fuels, led the pack, with more than $339 million in electricity exports to B.C. 

California, which still gets more than half of its power from gas-fired plants even though it leads the U.S. in renewable energy with substantial investments in wind, solar and geothermal, was in second place, selling about $18.4 million worth of power to B.C. 

And Oregon, which produces about 43 per cent of its power from natural gas and six per cent from coal, exported about $6.2 million worth of electricity to B.C. last year. 

By comparison, Nebraska’s power exports to B.C. totalled about $1.6 million, Montana’s added up to $1.3 million,  Nevada’s were about $706,000 and Wyoming’s were about $346,000.

Clean electrons or dirty electrons?
Dan Woynillowicz, deputy director of Clean Energy Canada, which co-chaired the B.C. government’s Climate Solutions and Clean Growth Advisory Council, says B.C. typically exports power to other jurisdictions during peak demand. 

Gas-fired plants and hydro power can generate electricity quickly, while coal-fired power plants take longer to ramp up and wind power is variable, Woynillowicz notes. 

“When you need power fast and there aren’t many sources that can supply it you’re willing to pay more for it.”

Woynillowicz says “the odds are high” that B.C. power exports are displacing dirty power.

Elsewhere in Canada, analysts warn that Ontario's electricity could get dirtier as policies change, raising similar concerns.

“As a consumer you never know whether you’re getting a clean electron or a dirty electron. You’re just getting an electron.” 

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Global Energy Investment Decline risks future oil and electricity supply, says the IEA, as spending on upstream, coal plants, and grids falls while renewables, storage, and flexible generation lag in the energy transition.

Key Points

Multi-year cuts to oil, power, and grid spending that increase risks of future supply shortages and market tightness.

✅ IEA warns underinvestment risks oil supply squeeze

✅ China and India slow coal plant additions; renewables rise

✅ Batteries aid flexibility but cannot replace seasonal storage

An almost 20 per cent fall in global energy investment over the past three years could lead to oil and electricity shortages, as surging electricity demand persists, and there are concerns about whether current business models will encourage sufficient levels of spending in the future, according a new report.

The International Energy Agency’s second annual IEA benchmark analysis of energy investment found that while the world spent $US1.7 trillion ($2.2 trillion) on fossil-fuel exploration, new power plants and upgrades to electricity grids last year, with electricity investment surpassing oil and gas even as global energy investment was down 12 per cent from a year earlier and 17 per cent lower than 2014.

While the IEA said continued oversupply of oil and electricity globally would prevent any imminent shock, falling investment “points to a risk of market tightness and undercapacity at some point down the line’’.

The low crude oil price drove a 44 per cent drop in oil and gas investment between 2014 and 2016. It fell 26 per cent last year. It was due to falls in upstream activity and a slowdown in the sanctioning of conventional oilfields to the lowest level in more than 70 years.

“Given the depletion of existing fields, the pace of investment in conventional fields will need to rise to avoid a supply squeeze, even on optimistic assumptions about technology and the impact of climate policies on oil demand,’’ the IEA warned in its report released yesterday evening. “The energy transition has barely begun in several key sectors, such as transport and industry, which will continue to rely heavily on oil, gas and coal for the foreseeable future.’’

The fall in global energy spending also reflected declining investment in power generation, particularly from coal plants.

While 21 per cent of global ­energy investment was made by China in 2016, the world’s fastest growing economy had a 25 per cent decline in the commissioning of new coal-fired power plants, due largely to air pollution issues and investment in renewables.

Investment in new coal-fired plants also fell in India.

“India and China have slammed the brakes on coal-fired generation. That is the big change we have seen globally,’’ said ­Bruce Mountain a director at CME Australia.

“What it confirms is the ­pressures and the changes we are seeing in Australia, the restructuring of our energy supply, is just part of a global trend. We are facing the pressures more sharply in Australia because our power prices are very high. But that same shift in energy source in Australia are being mirrored internationally.’’ The IEA — a Paris-based adviser to the OECD on energy policy — also highlighted Australia’s reduced power reserves in its report and called for regulatory change to encourage greater use of renewables.

“Australia has one of the highest proportions of households with PV systems on their roof of any country in the world, and its ­electricity use in its National ­Electricity Market is spread out over a huge and weakly connected network,’’ the report said.

“It appears that a series of accompanying investments and regulatory changes are needed, including a plan to avoid supply threats, to use Australia’s abundant wind and solar potential: changing system operation methods and reliability procedures as well as investment into network capacity, flexible generation and storage.’’ The report found that in Australia there had been an increase in grid-scale installations mostly associated with large-scale solar PV plants.

Last month the Turnbull ­government revealed it was prepared to back the construction of new coal-fired power stations to prevent further shortfalls in electricity supplies, while the PM ruled out taxpayer-funded plants and declared it was open to using “clean coal” technology to replace existing generators.

He also pledged “immediate” ­action to boost the supply of gas by forcing exporters to divert ­production into the domestic ­market.

Since then technology billionaire Elon Musk has promised to solve South Australia’s energy ­issues by building the world’s largest lithium-ion battery in the state.

But the IEA report said batteries were unlikely to become a “one size fits all” single solution to ­electricity security and flexibility provision.

“While batteries are well-suited to frequency control and shifting hourly load, they cannot provide seasonal storage or substitute the full range of technical services that conventional plants provide to stabilise the system,’’ the report said.

“In the absence of a major technological breakthrough, it is most likely that batteries will complement rather than substitute ­conventional means of providing system flexibility. While conventional plants continue to provide essential system services, their business model is increasingly being called into question in ­unbundled systems.’’

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EU Solar Impact on Electricity Prices highlights how rising solar PV penetration drives negative pricing, shifts peak hours, pressures wholesale markets, and challenges grid balancing, interconnection, and flexibility amid changing demand and renewables growth.

Key Points

Explains how rising solar PV cuts wholesale prices, shifts negative-price hours, and strains grid flexibility.

✅ Negative pricing events surge with higher solar penetration.

✅ Afternoon price dips replace night-time wind-led lows.

✅ Grid balancing, interconnectors, and flexibility become critical.

The latest EU electricity market report has confirmed the affect deeper penetration of solar is having on wholesale electricity prices more broadly.

The Quarterly Report on European Electricity Markets for the final three months of last year noted the number of periods of negative electricity pricing doubled from 2019, to almost 1,600 such events, as global renewables set new records in deployment across markets.

Having experienced just three negative price events in 2019, the Netherlands recorded almost 100 last year “amid a dramatic increase in solar PV capacity,” in the nation, according to the report.

Whilst stressing the exceptional nature of the Covid-19 pandemic on power consumption patterns, the quarterly update also noted a shift in the hours during which negative electric pricing occurred in renewables poster child Germany. Previously such events were most common at night, during periods of high wind speed and low demand, but 2020 saw a switch to afternoon negative pricing. “Thus,” stated the report, “solar PV became the main driver behind prices falling into negative territory in the German market in 2020, as Germany's solar boost accelerated, and also put afternoon prices under pressure generally.”

The report also highlighted two instances of scarce electricity–in mid September and on December 9–as evidence of the problems associated with accommodating a rising proportion of intermittent clean energy capacity into the grid, and called for more joined-up cross-border power networks, amid pushback from Russian oil and gas across the continent.

Rising solar generation–along with higher gas output, year on year–also helped the Netherlands generate a net surplus of electricity last year, after being a net importer “for many years.” The EU report also noted a beneficial effect of rising solar generation capacity on Hungary‘s national electricity account, and cited a solar “boom” in that country and Poland, mirroring rapid solar PV growth in China in recent years.

With Covid-19 falls in demand helping renewables generate more of Europe's electricity (39%) than fossil fuels (36%) for the first time, as renewables surpassed fossil fuels across Europe, the market report observed the 5% of the bloc's power produced from solar closed in on the 6% accounted for by hard coal. In the final three months of the year, European solar output rose 12%, year on year, to 18 TWh and “the increase was almost single-handedly driven by Spain,” the study added.

With coal and lignite-fired power plunging 22% last year across the bloc, it is estimated the European power sector reduced its carbon footprint 14% as part of Europe's green surge although the quarterly report warned cold weather, lower wind speeds and rising gas prices in the opening months of this year are likely to see carbon emissions rebound.

There was good news on the transport front, though, with the report stating the scale of the European “electrically-charged vehicle” fleet doubled in 2020, to 2 million, with almost half a million of the new registrations arriving in the final months of the year. That meant cars with plug sockets accounted for a remarkable 17% of new purchases in Q4, twice the proportion seen in China and a slice of the pie six times bigger than such products claimed in the U.S.

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