IEEE Power & Energy Magazine - January/February 2021 - 25

january/february 2021

1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018

2,900
2,800
2,700
2,600
2,500
2,400
2,300
2,200
2,100
2,000

Year

2018

2017

2016

2015

2014

2013

2012

2011

20
19
18
17
16
15
14
13
12
11
10

2010

figure 1. Net electricity generation, EU-28, 1990-2018
(data from ec.europa.eu/eurostat).

2009

The main objective of capacity expansion planning has
changed dramatically. Originally, the objective was to supply
demand growth while guaranteeing certain reliability levels.
Since several technologies could achieve this aim, the main
consideration was cost-effectiveness. Again, CCGTs were
in the best position. Currently, objectives are more ambitious since decarbonizing is a key priority. The challenge is
not just that needed technologies happen to be more expensive and complex than the original ones. At this stage, there
are no technologies available to go beyond approximately
80% decarbonization. Technological innovation is needed
with appropriate market incentives. The promotion of wind
and solar has been at least somewhat effective as costs have
been reduced to very reasonable levels. Additional development is now needed for energy storage or carbon capture
and sequestration, and these technologies appear to be even
less mature than wind and solar PVs were a decade ago.
We can expect cost reductions on 4-h lithium-ion batteries,
but to go beyond 80% decarbonization we need affordable
large-capacity batteries or some new technology that has
yet to be envisioned. Again, it is not realistic to expect that
short-term market prices will provide sufficient incentive
for these technological developments.
When the liberalization of the European electrical systems was developed during the 1990s and the first half of
the 2000s, it was an incentive for electric companies, which,
perceiving the existence of new competitors, launched themselves with determination to undertake new investments. In
the Spanish case, between 2002 and 2008, about 22 GW of
gas-combined cycle plants were brought online, which represented 32% of the current total installed capacity.
However, as Figures 1 and 2 show, things did not turn out
as expected. A good part of the new investments in generation was made at the start of the first decade of this century
when demand growth was very significant. In the middle of

TWh

Expansion Planning, Long-Term Supply Guarantee,
and Higher-Order Objectives

the decade, this growth began to dissipate. Subsequently, the
severe economic crisis that affected the economy of the EU
resulted in a dramatic correction of the expected increase in
demand that, in fact, not only stopped growing as expected
but significantly decreased. From 1995 to 2005, electricity
consumption in the EU increased more than 20%, which,
projected, would have led to consumption in 2015 of about
4,000 TWh. Between 2005 and 2011, it decreased by about
3%, fewer than 1,000 TWh out of the 4,000 TWh that had
been expected by the most optimistic forecasts. This factor
in itself was more than enough to disrupt the sector, increasing future risk aversion when facing new investments.
In addition to the aforementioned decrease in demand,
technology advancements and regulatory encouragement
have boosted the penetration of renewable sources (see
Figure 2). This situation has affected the profitability of
merchant plants, including those installed after the start of
the market. Load factors and prices have been lower than
expected and thus income.
These factors led to the utilization factor of the new
investments reaching significantly lower levels than investors could expect in the lowest of their original forecasts. For

(%)

gas transmission network, but siting was not critical. As a
result, transmission planning developed by independent system operators or transmission system operators did not necessarily have to be a key conditioning factor for competitive
investors. But renewables change the whole thing. Take, as
examples, the onshore wind resources in the U.S. Midwest,
the offshore wind resources in the North Sea, and the availability of solar photovoltaics (PVs) in northern Africa. These
locations have outstanding renewable potential, but they are
far from the main load centers. All of these resources need
a previous decision from transmission planners, who have
to decide which locations make more economic sense, and
therefore critically condition the competition for access.
Also, the necessary new transmission links often involve
different state administrations, complicating the siting process and leading to unexpected delays that are outside the
control of generation investors.

Year

figure 2. Renewable generation quota in the EU-28,
2005-2018 (data from ec.europa.eu/eurostat).
ieee power & energy magazine

http://ec.europa.eu/eurostat http://ec.europa.eu/eurostat

IEEE Power & Energy Magazine - January/February 2021

Table of Contents for the Digital Edition of IEEE Power & Energy Magazine - January/February 2021