The energy transition process in Central and Eastern Europe has been significantly impacted by the energy sector price crisis of 2022-2023, which was driven by developments in the gas market and the Ukraine war. This has led to a re-evaluation of the role of natural gas in the power sector. Despite the development of alternative gas routes, which have seen a shift in gas transit from Russian pipelines to LNG in most EU member states, some landlocked MSs still import Russian gas through the southern gas corridor. Many MSs have continued to install and plan further development of their gas-based power production through the construction of new, sizeable, combined cycle gas turbine (CCGT) capacities. Among the countries with gas-focused plans are both West Balkan and EU countries, including Germany, Hungary, Poland, Romania, and North Macedonia. The drivers of this expansion differ significantly.
These developments raise serious questions about the future development of the power sectors of the CEE states:
- Are the planned gas power plants needed from a flexibility perspective?
- How can zero greenhouse gas (GHG) emissions in the power sector by 2040 be reached with these new capacities?
- Is it economically justified to build these power plants as hydrogen/CCS-ready?
- What would be the impact if the gas plants switch to hydrogen/CCS?
- How can renewable energy source (RES) generation capacities (wind/PV, complemented with storage options, including battery energy storage systems (BESS) and pumped hydro) substitute these capacities?
- What is the minimum gas capacity required in the system?
While gas-fired plants represent a crucial source of flexibility provision, given their readily adjustable production profile, it is necessary to ascertain whether all planned capacities are truly required for that purpose. If they are unable to recover the investment cost from the flexibility markets, they will be forced to operate in the wholesale markets for significantly longer periods, resulting in substantial CO₂ emissions during their lifetime, which could extend beyond 2040. This pathway presents a significant risk of jeopardising the net-zero target of the power sector or creating stranded assets.
The results of the analysis of Question 4 – the impact of switching to hydrogen is presented in the following document.
