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From left to right: Endesa CEO José Bogas; Teresa Ribera, Fourth Vice- President of the Government of Spain and Minister for Ecological Transition and Demographic Challenge and Fernando Ruiz, chairman of Deloitte, during the report launch.
- The energy decarbonisation by 2040 of the Balearic and the Canary Islands requires an investment of €30bn over the next 20 years, which will generate significant savings and reduce the energy required.
- The decarbonised system proposed for the Canary Islands would see a 40% reduction in the cost of electricity generation compared to today, and in the Balearic Islands the reduction would be 60%.
- Household energy expenditure will decrease 30- 40% by 2030 compared to today and 60-72% by 2040.
- Decarbonising non-peninsular territories by 2040, a decade earlier than on the peninsula, would provide experience in the deployment of new technologies.
- The study proposes recommendations for the decarbonisation of non-peninsular territories by 2040.
Non-peninsular territories (Canary Islands, Balearic Islands and the Autonomous Cities of Ceuta and Melilla) could lead the ecological transition and implement a fully decarbonised energy system by 2040, a decade ahead of the emission reduction targets set by the European Union and Spain for 2050. This is one of the main conclusions of the study "Non- Peninsular Territories 100% Decarbonised by 2040: the vanguard of the energy transition in Spain", prepared by Monitor Deloitte in collaboration with Endesa.
This study analyses the characteristics of the non-peninsular territories and provides a set of solutions to decarbonise these regions. It also highlights the important benefits that these advances can bring to these territories in terms of investment, job creation, economy and energy efficiency, and for the rest of Spain by becoming a perfect test ground.
For Alberto Amores, partner in charge of the Energy and Natural Resources practice at Monitor Deloitte, "decarbonising non-peninsular territories by 2040, a decade earlier than on the peninsula, is viable, and financially beneficial, and would allow for the acquisition of experience that could be exploited in the deployment of new technologies in the rest of Spain. The energy transition in these territories must be a priority for all the Administrations and agents involved."
“Decarbonising non-peninsular territories by 2040 would allow for the acquisition of experience that could be exploited in the deployment of new technologies in the rest of Spain.”
Alberto Amores, partner in charge of the Energy and Natural Resources practice at Monitor Deloitte
Decarbonisation by 2040 in the Canary Islands, Balearic Islands, Ceuta and Melilla
The study analyses the peculiarities of the non-peninsular territories with a view to achieving a completely decarbonised energy system and proposes a set of actions in 3 areas: transport, homes and services, and electricity generation.
- The transport sector is responsible for 40-50% of total greenhouse gas (GHG) emissions in non-peninsular territories. Private passenger transport by road accounts for up to 80- 85% of final energy consumption, making its decarbonisation a higher priority than on the peninsula. The study proposes a set of measures for its decarbonisation, including fleet electrification before 2040, the accelerated renewal of fleet vehicles (to a much greater extent than on the peninsula) and the modal change towards public transport and non-motorised transport systems.
The electric vehicle is already a competitive solution on the islands. In the Canary Islands, the overall cost of an electric vehicle (purchase, fuel, maintenance, etc.) is 25-30% lower than the conventional option and, in the Balearic Islands, 10% lower. Furthermore, current EV autonomy is sufficient for these territories, but deploying the necessary recharging infrastructure is essential.
- The residential sector generates only 1-3% of direct GHG emissions in non-peninsular territories, since the most significant consumption of a home - heating and hot water - has less impact due to the type of climate. Decarbonisation of this sector involves deploying heat pumps for heating and DHW (domestic hot water).
Likewise, self-consumption has greater advantages for the system in non-peninsular territories than in the peninsula, so its penetration should be promoted.
- The services sector is responsible for 2-4% of direct GHG emissions in the non-peninsular territories. Replacing equipment based on natural gas/petroleum products and less efficient electrical equipment with heat pumps should be the main solution.
On the other hand, although electricity does not emit at end use, currently the electric generation is responsible for 40% of the emissions in these systems. The document analyses each territory and proposes measures for its total decarbonisation by 2040.
Cueva Blanca wind farm in Agaete (Gran Canaria)
The Canary Islands, a decarbonised electrical system
Currently, electricity generation accounts for 39% of emissions in the Canary Islands. A fully decarbonised power system by 2040 would require 10-11 GW of renewable generation, 20-25 GWh of storage capacity and seasonal backup to “move” surplus production to times of the year when needed.
To achieve this mix, renewable generation must be combined with storage, so that excess renewable energy may be used later in periods of lower production.
Renewable development should be based mainly on solar generation, as it fits better than wind power with storage, due to its greater stability and predictability. Therefore, the study proposes a 25% wind, 75% solar mix of renewable energies, which requires less storage to guarantee security of supply and therefore requires less investment.
Likewise, demand management should also be promoted by 20-30%, with a shift towards hours of higher renewable solar production.
Finally, it is essential to minimise land occupation. The study thus proposes installing less renewable capacity than would be economically optimal, boosting the use of self-consumption (up to 2-3 GW) and exploring the option of offshore generation technologies to compensate. The proposed system would occupy 1.9% of the Canary Islands' territory, or 15% of the uncultivated agricultural area.
This decarbonised system proposed in the study would require an investment of €12-19bn by 2040 and would have a generation cost of €70-90/MWh, which represents a 40% reduction compared to today.
In the short to medium term, new renewable capacity needs to be installed to reach 250-275 MW of renewables in the next 5 years, which means multiplying the current rate by 5, a rate that should progressively accelerate. In addition, 2.5 GWh of batteries would have to be installed, and demand management mechanisms introduced.
Finally, actions should be promoted in the thermal plants to guarantee security of supply, facilitate the integration of renewables and minimise accumulated GHG emissions.
Solar panels in La Graciosa (Canary Islands)
Decarbonisation in the Balearic Islands
Achieving a completely decarbonised electricity system in the Balearic Islands by 2040 would require 4.5-5 GW of installed renewable capacity, 13-14 GWh of storage capacity and an increase in the net interconnection capacity with the peninsula to 650MW.
Properly designing this system requires taking into account the peculiarities of the territory in order to adopt a series of measures.
In the Balearics, as in the case of the Canary Islands, solar generation in the energy mix has a better fit with storage and the use of self-consumption (up to 1-2GW) would allow only 1% of the entire territory to be occupied or 17% of vacant and unproductive land.
Likewise, the development of demand management would significantly reduce the storage capacity required.
Furthermore, the fact that the interconnection with the peninsula could be boosted towards the end of this decade would reduce seasonal storage needs.
All this, with an emergency backup capacity in the Islands to guarantee the security of supply in the event of possible failures in the interconnections and in cases of emergency.
This system would require investing €6-7bn by 2040, and would have an average generation cost of €50-55/MWh, 55% less than at present.
Transitioning from a system based primarily on thermal power plants and various interconnections to one that is 100% renewable requires over the next 5-10 years:
- Developing renewable generation - between 125-135 MW in the next 5 years, and 210-230 MW/yr by 2025-2030 which means multiplying the current rate by 15 -, storage (2GW) and demand management.
- Additionally, actions would have to be carried out in the thermal generation plants similar to those indicated for the Canary Islands, to facilitate the integration of renewables and minimize accumulated GHG emissions.
Endesa electric car travelling around Mallorca (Balearic Islands)
Autonomous Cities of Ceuta and Melilla
Achieving decarbonised systems in Ceuta and Melilla by 2040, with actions such as those proposed in the study, would involve an investment of approximately €280-300m.
In Ceuta, if the planned interconnection with the peninsula materializes, the demand for this system could be met mainly with renewable energy from the peninsula, with reliable generation capacity only necessary in the event of incidents or delays in planning.
In Melilla, on the other hand, decarbonisation must be based on the development of generation based on renewable fuels and the promotion of self-consumption, it being equally necessary to move forward the adaptation of the current facilities to natural gas.
Investment and savings to be generated
The development of the actions proposed in the study requires an additional investment by 2020-2040 of between €18-22bn in the Canary Islands, which represents an average of €10,000 per inhabitant over the entire period; and €10-12bn in the Balearic Islands, which represents an average of €9,000 per inhabitant.
These investments carry significant benefits:
- The energy model would be completely decarbonised, and between 80-85% of the actions would mean cost savings compared to current solutions, and the technologies are available.
- The current energy dependency of 90-95% would go to 0- 10% in the Canary Islands and 30-40% in the Balearic Islands (a higher amount due to the interconnection).
- Savings of €35bn in energy imports.
- The average cost of electricity generation would decrease by 30-40% by 2030 and 40-60% by 2040, compared to the current cost.
- Final energy consumption would be 35% less than at present comparado con la actualidad, debido a la electrificación de la demanda y a las medidas de eficiencia energética.
- The increase in energy efficiency and the reduction in the cost of electricity will have a direct impact on the energy expenditure of families, which will decrease 30-40% by 2030 compared to today and 60-72% by 2040.
- The development of renewables could generate 30-60,000 jobs in the Canary Islands and 15-30,000 in the Balearic Islands (direct and indirect) cumulatively in 2020-2040.
- The territories can become an ideal test bed for the development of new necessary technologies for the storage of energy or hydrogen.
Benefits from decarbonisation
Job creation
90,000
jobs could be created in the Canary and Balearic Islands between 2020-2040
Family spending
-72%
energy expenditure would decrease by up to 72% in 2040
Recommended energy policies
The Monitor Deloitte study establishes a set of recommendations regarding energy policies to decarbonise non-peninsular territories by 2040. These recommendations are structured in 5 major blocks:
- Establishing a General Planning Framework.
- Decarbonising final demand.
- Renewables, storage and security of supply.
- Non-peninsular territories as a test bed.
- Generation of economic activity and employment.
The energy transition in the islands, Ceuta and Melilla
According to the report "Non-peninsular territories 100% decarbonised by 2040", the Canary Islands, the Balearic Islands, Ceuta and Melilla could lead the ecological transition and implement a decarbonised energy system by 2040.