Managing Volatility – Integrating Renewables into the Energy System a report by Fritz Vahrenholt1 and Holger Gassner2 1. Chief Executive Officer; 2. Head of Markets and Political Affairs, RWE Innogy GmbH
The share of renewable energies in the world’s energy mix is increasing. There are several reasons why the path towards a higher share of renewables is necessary. Besides the most often mentioned argument of climate change, increasing energy demand and declining cheap fossil fuel resources force the world to explore new energy sources and implement new solutions.
Due to these new solutions often being more expensive in their infancy, as the technology evolves, politicians worldwide are promoting support schemes for renewable energies. Europe, especially Germany, is leading the way in implementing ambitious targets in energy policy, to deploy renewable capacities in a very short time period. The target is to have at least 34 % of electricity generation from renewables by 2020 in the EU.1 even more ambitious.
Germany’s target of 50 % renewables by 2030 is
In Germany, the success of renewable energy developments up to now has mainly been based upon priority access to the grid and attractive financial support. As the share of renewable energy developments was very small, neither the technical nor the price effects were noticeable in the existing system.
However, the technical and economical challenges of implementing or even complementing renewable energies into the existing energy mix and market designs are increasingly the focus of political debate.
Fritz Vahrenholt is Chief Executive Officer (CEO) of RWE Innogy. He also holds the following Board of Directors seats: member of the supervisory boards of Aurubis AG, RADAG and Putz & Partner AG and member of the Senate of Fraunhofer-Gesellschaft. He has also served as a board member of Shell Germany, as Chairman of the supervisory board of HEW (until its merger with Vattenfall) and as a member of the supervisory board for ThyssenKrupp Technologies
AG. After his time as an environmental minister in the state of Hamburg, Professor Vahrenholt held numerous industry positions, including Founding CEO of Germany’s third-biggest wind turbine manufacturer, REpower (until its merger with Suzlon). He holds a degree in Chemistry and started his career as a researcher, before joining the Hesse Department of the Environment.
Holger Gassner is Head of Markets and Political Affairs/Corporate Responsibility of RWE Innogy, a position he has held since 2008. In 2003, he started to work for the division for energy policy and environmental affairs and was responsible for the co-ordination of these topics for the entire RWE AG. He has served with the RWE group since 1996, initially as project manager for power plant engineering in the generation sector and later as executive assistant
to the board. He studied Mechanical Engineering in Bochum and also Economy in Chicago and Barcelona.
E:
holger.gassner@
rwe.com
As Germany is one of the countries with the highest share of renewables in Europe, we will focus on the challenges witnessed in Germany. However, some of these challenges could also be seen as typical of those faced by other countries focusing on increased renewable energy generation, e.g. Spain and, in the long run, Europe in general.
Initially, the industry focus around renewable technology deployment was on cost reduction and volume. Little or no attention was paid to the future development of grid infrastructure and the rebound effects on the existing energy mix. In the most recent years, mainly wind – up to now mostly onshore – was added to the electricity system, which is, next to hydropower, the most mature and low-cost renewable technology available. Also, the share of photovoltaic (PV) is rapidly increasing, due to attractive support schemes and, in parallel, decreasing module prices on world markets. By the end of 2011, the electricity produced from wind energy in Germany alone was 46.4 terawatt-hours (TWh).2
Estimates
for 2030 suggest electricity produced from onshore wind will equate to 77.4 TWh, approximately 30 % of the total renewable electricity generation target; offshore wind accounting for 25 % and PV, with 41.4 TWh, equating to another 16 %.3
Both wind and PV technologies are weather-dependent and therefore can be intermittent by their nature. This has an impact on the entire electricity system, which, up until now, has been based on continually available and dispatchable electricity production. What effects does this high share of volatile production have?
Intermittency of Renewable Energy Sources The stormy weather of the last weeks of 2011 brought a record for wind energy in Germany. December 2011 was the first month after a long period of light winds in which the turbines rotated most of the time. That month, wind turbines in Germany produced nearly 8 TWh of electricity. That is about one-sixth of their total production of 44.3 TWh in 2011. To balance supply and demand across the electricity network and allow so much wind energy into the system, conventional capacities, which had ensured electricity production during the low-wind month before, had to be constrained off. The challenges are how to deal with steep load ramps and how to bridge periods with high generation from renewables and periods with low generation from renewables. The challenges increase with the amount of renewables in the system. Having more renewable generation means that, over time, conventionally produced electricity will decrease. As conventional power plants must earn their money by selling power to the wholesale markets, the reduced production hours threaten their economics. This is valid for existing and also for new-build power plants, if wholesale electricity prices do not increase significantly.
However, independently of the share of renewables, there will be times, even in the future, where generation capacity must bridge periods with less wind or sun.
10 © TOUCH BRIEFINGS 2012
Industry Outlook
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