Europe's electricity markets are in flux. Renewables have upended wholesale markets, but decarbonization has been slow. 

Can the region meet its long-term carbon reduction goals, even as nuclear declines?

“The pathways [that] energy markets across Europe take over the next few decades toward 2050 decarbonization targets are not set in stone,” said Richard Slark, director of the firm Pöyry Management Consulting. 

Europe still has a number of options. But the pathways are getting slimmer.

Pöyry is currently working on a study of European energy market scenarios amid long-term concerns for the regional grid. The research, slated for publication next year, is being carried out on behalf of a diverse group of stakeholders ranging from energy companies to policy bodies. 

“We’re in a complete state of flux because we are trying as a continent to move toward this decarbonization objective and grappling with new technology that is providing a disruptive influence. That creates a challenge and new opportunities," said Slark.

Laszlo Varro, the International Energy Agency’s chief economist, last month highlighted the scale of the challenge by pointing out that recent record levels of wind and solar deployment would not replace generation lost from aging nuclear plants and a stagnating gas market.

“If I dig into the current decommissioning schedules of nuclear reactors in Europe, by the mid-2020s Europe is going to lose nuclear production at roughly twice the rate of the recent deployment of wind and solar production,” he said, according to a report in Recharge.

Wind is set to become the leading source of electricity in Europe soon after 2030, according to the International Energy Agency’s World Energy Outlook 2017 report. But carbon goals will be harder to achieve as nuclear gets kicked off the grid, since renewables have much lower capacity factors than the nukes they are often replacing.

At the same time, Europe needs to electrify its transport and heating industries, which means even further renewable generation capacity is required.

Complicating the situation, Europe is also facing “a major wave of decommissioning of gas capacity," said IEA's Varro at a conference last month.

How to solve the problem is still unclear, said Slark. Pöyry is researching how different energy pathways might affect electricity markets. “It’s a study we’ve been doing on a multi-client basis,” he said.

“Stakeholders have bought into that process and are guiding the structure of what those scenarios might look like.”

Nuclear advocates have called for Europe to review plans to retire reactors.

Dr. Jonathan Cobb, senior communication manager for the World Nuclear Association, said: “Varro paints a pessimistic picture on the prospects for nuclear, wind, solar and reliable low-carbon electricity supply. We need action to improve the prospects for all those options.”

But some observers feel that traditional notions of baseload may become obsolete in a more flexible, digital grid.

“When, in Europe, you’ve got more than 250 gigawatts of wind and solar installed, it’s unfair to say renewables cannot fulfill the void,” said Aris Karcanias, co-lead of the clean energy practice at FTI Consulting.

“Renewables are no longer just variable or alternative forms of energy: When you tie them in a hybrid with wind, solar and storage, you fundamentally make them a programmable, dispatchable source of energy, which is reliable," said Karcanias.

Karcanias believes nuclear doesn't fit into this world. “One of the greatest issues with nuclear is you’re dealing with very large volumes of inflexible energy,” he said.

Covering low-solar, low-wind periods might be possible through better grid integration, allowing markets to draw on wind, solar, hydro or other energy sources elsewhere, he claimed.

Said Slark: “It is certainly very difficult to eradicate all carbon sources from the power sector. But if you take that as a requirement, there are ways of doing so. It might mean using hydrogen; it might mean using biofuels to provide stability.”

Europe needs to make up its mind fast on what route to take. “The clock is very much ticking,” Slark said.