Block ip Trap

Pandemic Power Play: How EU is proving a test case for a renewable energy dominated grid during COVID-19

11 Sep 2020

By Andy Tang

Soon after The Great Lockdown began in Europe, energy demand and load on the grid decreased, drastically shifting utility dynamics. This period shows the possibilities of what a system would look like if the dominant energy source was renewables, and it solves the argument about whether they can provide enough electricity to power the system.

When global energy demand dropped, fossil fuel-based power generation plummeted, causing oil markets to temporarily crash, and coal-based power generation across Europe and the United Kingdom to drastically decrease. An open data initiative that has been tracking energy usage and mix since early March 2020, has revealed the rapidly changing energy dynamics in real-time.

What powered the grid? A high concentration of renewables, combined with flexible power (storage), dominated the grid; idling inflexible natural gas plants filled-in the gaps. Even as global demand decreased, total renewable generation remained at pre-crisis levels; a combined result of low electricity prices, long-term contracts, and renewables-friendly policy measures. A happy consequence of an unfortunate situation, renewables became a larger part of electrical systems across the globe.

All of this has resulted in unprecedented cuts to fossil fuel generation. The UK went entirely without coal for a record-breaking time period, over 56 days and counting at the time of this writing — the first the country has gone without it since 1888. At one point, the UK even asked to lower nuclear output in order to balance its grid. The UK’s complete shutdown of coal reveals that the grid can meet demand without it. Instead, coal use has become an economical decision.

Decreasing energy demand made existing renewable sources the cheapest to operate, which incentivized markets to prioritize solar and wind, leading to the fossil fuel reductions. A recent report shows that, as revenue suffers, utilities try to get more electricity from wind and solar farms (which are highly automated and cost little to operate) and less from fossil fueled power plants.

Prior to COVID-19, Germany was running on 51 percent renewable generation. During lockdown it reached as high as 75 percent of operational capacity. The country generated a staggering 30 GW of solar on some days, with 40 GW of wind on the same day. Certain days forced the export of large amounts of solar power in order to balance the grid - reaching 14 GW at its highest. Spain experienced the same problem.

Flexible generation’s critical role

Increased use of renewables in the EU couldn’t have happened without flexible generation. Storage has outperformed all other generation assets, up 20 percent over last year. But it’s not enough. Grid operators still had to rely on inflexible natural gas generation to fill gaps in renewable supply. These plants needed to remain idling at all times in order to be ready for a dip in solar or wind. The main cause of renewable curtailment is the high cost of ramping fossil fuel plants up and down, and is likely why Germany was unable to absorb the country’s high amount of clean energy generation.

This sets the scene for the next decade of the energy transition. Energy storage providers can harness excess renewable generation during peak hours for later use. Th creates a natural pricing arbitrage because of storage’s variability, which creates incentives for flexible power operators; storage providers benefit from their ability to charge when prices are low and discharge when prices are high.

Increasing flexible generation improves renewable energy integration and decreases fossil fuel consumption. Across European markets, variable renewable energy generation is expected to become the largest share of capacity as early as 2023. In an effort to balance this growth, flexible generative assets will be essential. It’s predicted that storage across all segments will grow from 3 gigawatts (GW) in 2020, to 26 GW in 2030, and 89 GW by 2040. The impact of increased flexibility will reduce the coal fleet from 60 to 40 percent of nameplate capacity.

Flexible energy storage with the capability to provide various parts of the energy value stack will thrive in markets with high renewable energy penetration, demonstrating their strong economics and capacity benefits to the grid.

Cross-border collaboration

This period also revealed that stronger connections between countries for cross-border collaboration is needed so that all of the renewable capacity can be utilized. Allowing power to flow freely between countries will help everyone navigate the energy transition. 

Data found that when Germany had to curtail renewables at home, instead of shutting the system down, the country exported 14 gigawatts (GW) of extra renewable power generation to Norway, which has a more flexible system. Norway was able to shutdown other assets (mainly the country’s hydro plants), add Germany’s renewable power to its flexible storage assets, and then distribute it across the country. Similarly, Spain had to push out 5-6 GW of renewable power.

Germany paid the price twice for inflexibility: first by losing the cheapest energy, and then by having to pay Norway €80 MWh to take it. Those with inflexible systems will increasingly pay more for their power, while countries with flexible systems benefit because they’re able to shut down their own production and gain energy with negative pricing (i.e. get paid to take it). It’s estimated that those with inflexible power systems will increasingly need to pay others to take their excess renewable power as high levels of renewable energy generation become frequent, which will drive energy prices down overall.

Using stronger connections across countries will enable energy to flow freely within the EU, prevent curtailment, and help all members run on larger amounts of renewable power - not just those with the generation capacity. Along with being able to store excess renewables, distributed battery storage can offer relief on congested grids; freeing up more capacity on transmission lines helps prevents wear and tear, allowing existing transmission capacity to better serve future grids.

Putting the economy to work

In the midst of this pandemic, renewables and energy storage are likely to play a role in recovery plans. The European Union released a proposed €750 billion ($825 billion) Coronavirus pandemic recovery package that aims to boost clean technology and energy value chains. This would allow more deployment of energy storage and other distributed energy technologies to provide economic and COVID-19 relief benefits. Research shows that renewable energy can directly and indirectly generate roughly three times as many jobs as comparable fossil fuel investments.

Decreased energy demand during the COVID-19 pandemic has afforded us an unexpected gratis opportunity to test renewable systems and discover how to technologically transition to a renewable-dominated grid. Let’s use this opportunity to build the infrastructure that’s needed to complete the transition to 100 percent renewable.

 

Andy Tang is Vice President - Energy Storage and Optimization for Wärtsilä, a global energy storage optimizer, delivering integrated energy solutions that build a resilient, intelligent and flexible energy infrastructure.

Wärtsilä | http://www.wartsila.com

 


Author: Andy Tang
Volume: 2020 September/October