Renewable energy sources and, more specifically, the way in which these are integrated into existing energy markets are an ever-growing concern. Jacob Klimstra, head of Jacob Klimstra Consultancy, discusses the impact that subsidising renewable energy sources, particularly in Germany, has on the European energy market.
Germany is a prime example of a country that is disrupting its own energy markets as well as those around it, as a direct result of the renewable energy subsidies it has introduced. Naturally, it is difficult to argue against the importance of stimulating renewable energy use. Yet the impact of feed-in tariffs and other subsidy schemes on the wider energy market needs to be reconsidered.
The intermittent nature of renewable energy sources means large-scale back-up is required to guarantee an uninterrupted power supply. Take the large difference in output of solar panels between summer and winter as an example. Using e.g. pumped hydro or batteries to cover nightly use during the summer months is a possibility, but no cost effective means currently exists to store electric energy from summer to winter. Therefore, fuel-based back-up is needed and that means using local or central fuel-based generation. The same applies for extended periods of time with hardly any wind power output.
As long as on average less than 20 per cent of electricity is originated from intermittent renewables, there is no serious threat to the stability of the grid. As soon as the contribution from renewables reaches 30 per cent, grid problems will arise.
The main issue is that back-up plants are currently not properly compensated financially for their service. The costs for back-up power are generally not taken into account when considering the costs of integrating renewable sources. For their economic survival, local and central fuel-based power generators should be compensated for acting as back-up for renewables. These power plants should also be rewarded for performing functions such as a fast response to changes in required output caused by e.g. higher forecasting errors and rapid changes in output from renewables. . It is essential that these financial considerations be incorporated when considering the costs of renewables.
What the power sector needs right now is a strategy that includes a robust reward mechanism to ensure we have an adequate system capable of securing a stable and reliable supply of electricity in the long term
The best strategy for allowing a substantial fraction of intermittent renewable electricity sources in the system is to integrate electricity and heat requirements, since separating them will never result in an optimised system. Heat and chill can easily be stored, while the excess electricity from renewables can be used to generate heat in an efficient way.
Renewable energy regulation policy and finance is one of the tracks at this year’s Renewable Energy World conference, see the conference programme at a glance here. You can also register as a delegate for the conference through our website.