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German energy balancing

By Dave Elliott

Germany is in the lead globally with its ambitious renewable energy programme, already supplying over 32% of its electricity and aiming for 80% by 2050.  At present, Germany’s 1.5 million photovoltaic solar installations have a generation capacity of over 40GW, four times the remaining 10.8 GW base-load nuclear fleet that is being decommissioned in stages between the end of 2017 and 2022. PV can be well matched to day-time peak demand in Germany, which is why it has challenged gas peaking plant in this market.  However, due to its low load factor (10-15%, compared to 70-80% or more for nuclear), solar PV generation only delivers around 940 equivalent full-load hours of electricity per year, so in 2015 its high capacity only met around 7.5% of German electricity demand, compared to 14% for nuclear generation. That’s why some think it is not the best option to expand for the future – it’s expensive for relatively low levels of actual output.

What are the counter arguments?  In an interesting Energy Post article, Jeffrey Michel points out that ‘solar power has a particular advantage over centralised nuclear generation, in that it needs no long-distance transmission to serve local markets. This is an important consideration in the southern states of Bavaria and Baden-Württemberg, where five of the country’s remaining eight nuclear reactors are being retired’.

Nevertheless, solar is variable, so while, as Michel says, ‘on summer weekdays, solar irradiation covers up to 35% of German grid requirements, and nearly 50% on weekends’, at other times it can supply much less, or nothing (e.g. at night). Unless there is some storage. That’s actually happening, with, as he notes, 41% of new PV installations including battery backup in 2015. However, even if that continues to expand, as seems likely despite recent support cut-backs, it may only make a relatively small dent in the overall grid balancing problem, given that PV’s actual overall input is relatively low compared with that from wind. It’s also the case that small domestic battery systems are expensive and although they are getting cheaper, larger scale grid-linked storage of large renewable inputs is usually a more cost-effective way to balance variations on the system due to the larger scale use of wind power.

Certainly, given the higher load factors (30-40%), wind energy’s grid inputs from its 40GW or so of on-shore capacity are much larger than those from solar’s 40 GW, and they are also more reliable around the year. Offshore wind is even better.  However, there is a problem. Whereas solar is widely available around the country, all the offshore wind capacity and most of the onshore wind capacity is in the north of Germany. So there is a need for long-distance grid transmission. That’s expensive and invasive, but it does help balance local variations in supply and demand. That is helpful, for the potentially large wind shortfalls and surpluses especially, though grid transfers around the country will not help when wind and PV combined deliver more (or less) than is needed in total nationally. Storage would help, as can exporting the surplus, but there are limits (there may not be demand elsewhere) and certainly at present there is still often a surplus that, if all else fails, is sold locally at low prices, used for low-grade low-value heating, or just dumped. The grid operators thus have to intervene to avoid over-production/wasteful curtailment as best they can, but it still happens, and if output is curtailed, under the current market set up, producers are compensated for loss of earnings, the cost of these balancing payments being passed on to consumers. Given that it delivers the largest output and mostly in the North, it is wind that is affected most, but the Energy Post article notes that the combined impact of ‘loss of sale’ compensation for wind and solar curtailment is quite large: ‘balancing payments of €485 m were made by grid operators to renewable energy producers between 2009 and the end of September 2015, with rising amounts anticipated for the future’.

These relatively high charges are one reason, along with the overall cost, why the rate of deployment of wind and PV has been slowed in the new revised Engiewende programme by reducing support levels and setting annual extra capacity limits. This may be shortsighted. As already noted, PV solar is quite well matched to local daytime use and storage might cope to some extent with the over capacity/surplus problem: it could allow for more PV capacity while reducing oversupply impacts on the grid. Even given the cuts in support, PV projects with storage will still go ahead. The Energy Post article notes that the Renewable Energy Storage Subsidy Programme of the KfW Development Bank arranges low-interest federal loans and payback assistance covering up to 25% of the required investment outlays.

It’s harder for wind to avoid the surplus problem, given its larger input and its regional resource distribution. Large-scale grid-linked storage can help. So, up to a point, can more big HVDC grid links, although that will take time to deploy. Energy Post notes that, after many local objections and delays, the 1,816 km SuedLink corridor HVDC link from the North Sea to Bavaria ‘may now be completed only in 2025, three years after the last nuclear reactor has been retired. Overall costs could rise to €10 billion due to requirements for underground cables along part of the route’. It has been a struggle, but at least the plans for completing these vitally necessary links are now underway.

The debate over the relative merits of wind and PV is not just happening in Germany. As the Energy Post article notes, in the United States, a number of recent studies have identified key customer benefits for net-metered rooftop solar systems, with storage adding further benefits. The Brookings Institution listed them as:

  • avoiding the purchase of energy from other, polluting sources;
  • avoiding the need to build additional power plant capacity to meet peak energy needs;
  • providing energy for decades at fixed prices; and
  • reducing wear and tear on the electric grid.

However, apart from its greater reliance on grid links, wind power offers similar benefits, as well as more delivered energy/kW installed. Clearly PV output can mostly be used locally and that reduces transmission requirements up to a point, but most consumers will have to import power when input from their PV systems is not available, or more is needed than they can economically store themselves, e.g. when there is little sun for a long period. That will have to come from the grid and from sources like wind, if available, or, if not, from larger storage facilities, including pumped storage hydro reservoirs, topped up at other times by surplus wind or maybe solar output.  So wind and the grid, suitably upgraded, remain vital for overall system balancing.  And in fact the system seems to be working well.

For an update on the Energiewende revisions see: www.agora-energiewende.de/fileadmin/Projekte/2016/EEG-FAQ/Agora_FAQ-EEG_EN_WEB.pdf

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