The energy consumption reduction, which is a non compulsory target in the European legislation, could also be difficult to meet.

Progress against EU 20-20-20 objectives

Owing to the economic recession and national legislation, the EU is close to achieving its Kyoto target reduction in Green House Gases emissions as a bloc. In 2009, total European CO2 emissions fell by 7%.

Renewable energy pace too slow

Renewable energy generation continued to grow in 2009 boosted by increases in wind and solar power of 15% and 53% respectively. However, the pace of change is currently not quick enough to reach the EU’s target of 20% renewably sourced energy in the energy mix by 2020, Capgemini says.

The Commission assumes that 500 TWh of the 1.2 PWh growth in the renewable output required to meet the target will come from wind power. This is a cause for concern, the analyst says, as the most favourable onshore wind sites have already been taken, necessitating the development of expensive and complex offshore wind farms.

Finance is difficult

On the financial side, the crisis has decreased the required project finance flow, austerity plans have pushed many countries to reduce their subsidies to renewable energy such as solar or wind development and new regulations are rendering wind farm construction very complex.

In addition, as these renewable energies are not yet competitive, their development has to be supported by customers.

As a consequence, regulators and governments should decide to increase electricity prices and these decisions are always difficult to take in soft recovery times.

With China now the world’s first solar panel exporter (exports valued at US$15 billion) and India, the leading wind turbine exporter, the development of these renewable energies in Europe is leading to increased imports instead of developing local industry with jobs attached to it, Capgemini says.

Reducing energy consumption

Europe’s energy consumption goal – reducing primary energy consumption from 1750 million tonnes of oil equivalent (Mtoe) in 2005 to 1520 Mtoe in 2020 – looks challenging.

Security of supply and the need for smart grids

While overall electricity and gas security of supply increased during the observatory period (2009 and winter 2009/2010), tense situations were observed in electricity during the very cold winter days.

Grid availability is a key factor in electricity security of supply. The new trends related to a greener energy mix and more active customer behaviours are transforming the design and management of the electricity grid.

Smart grids will have new equipments and more sensors and will be digitally managed using standardised communication protocols.

However widespread smart grid deployment will need a regulatory push and public funding. Growing adoption of smart metering and smart grid solutions will help to optimise power generation and customer demand and secure a power supply for homes, buildings and industries across Europe.

Colette Lewiner, Global Leader of Energy, Utilities & Chemicals, Capgemini, comments: “The growing share of decentralised and unforeseeable renewable sources in the global energy mix and issues relating to security of supply, continue to make effective grid management a real challenge for Utilities.

“It is Capgemini’s opinion that over the next years, we will see increasing adoption of smart grid technologies in Europe as Utilities will have to control and manage the dramatic increase in data flow, storage and information exchanges associated with a more complex and demanding energy landscape.”