A brave new world of grid integrated renewables

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Current trends make a mockery of doubts peddled by network incumbents that fossil fuel power is the best way to assure security of electricity supply.

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IEEFA

Important regional electricity markets and whole countries are blowing past old record levels of wind and solar power by taking a variety of simple, practical steps to improve grid flexibility.

Current trends make a mockery of doubts peddled by system incumbents who keep promoting new subsidies (like capacity payments) for old-school gas and nuclear power as the best way to assure electricity supply security.

As we outlined in a report published this week—“Power Industry Transition, Here and Now”—there is nothing hypothetical about the global rise of renewable energy grid integration.

The report’s nine case studies show how markets from Texas to Tamil Nadu, India, to California to Denmark are making use of tools and policies that grid experts and academics have long argued are needed to achieve a larger presence of variable renewables.

Our research shows how the market share for wind and/or solar made up from 14 to 53 per cent of generation in various markets, up to 10 times the global average of 5 per cent as estimated by the International Energy Agency.

These case studies prove that renewables can be (and are being) safely integrated into the grid, can assure ongoing security of supply, and can promote system flexibility—all through an assortment of mechanisms that vary by specific national circumstances.

Uruguay, for example, has become the world’s fastest growing wind market, by integration with its strong domestic hydropower resources—a highly flexible power source that the country can tune up and down according to the availability of wind power. Uruguay last year got 33 per cent of its electricity from wind, up from 1 percent in 2013.

Other countries have achieved similar flexibility. Denmark stands out as the world’s No. 1 market by share of wind and solar power, achieving 53 percent of net generation from wind and solar last year. Denmark has done this by successfully balancing the variability of wind generation with cross-border, sub-sea cables whose capacity is equivalent to more than half the country’s domestic generation.

In this way, Denmark exploits the diversity of generation of its bigger neighbors, especially by tapping into hydropower from Scandinavia and renewables and thermal generation in Germany. Such interconnection allows Denmark to import and export power according to the status of its domestic wind generation, a mechanism that allows it to balance its grid.

Meanwhile in South Australia, the world’s No. 2 market by share of wind and power (48 percent), grid operators are ramping up tech-driven flexibility through demand response and battery storage.

South Australia is a global leader in major grid-scale and residential battery deployments, with at least five of such installations completed or announced at the time of writing. Tesla’s 100MW lithium-ion battery (the world’s biggest) was completed in late 2017 alongside a 315MW wind farm to help balance the grid.

An additional 30MW of battery capacity is being built on the Yorke Peninsula of South Australia next to the Wattle Point Wind Farm. Planning is underway for three more major grid-scale, residential projects.

South Australia has also contracted for nearly 1 gigawatt of demand response this year, which allows users to be paid to reduce consumption in the event of demand surges.

Other ways of increasing electricity system flexibility include new grid controls that force renewables themselves to respond to changes in electricity supply and demand (in Germany) and market reforms (Texas) to pay generators more for responding to near-term peaks and troughs in demand and supply.

Our case studies show that flexibility is key to the expansion of wind and solar power. Having focused this research on options already proven at scale, we know that such initiatives are achievable.

Only one of our nine case studies (Spain) was of a market that has capacity payments, where power plants—often conventional coal, gas, nuclear and hydropower—are subsidized simply to be available as back-up. Spain’s electricity system has excess capacity, and therefore no need for such subsidies.

We see no evidence that capacity markets are needed in the global transition to renewables, notwithstanding keen lobbying by fossil fuel utilities such as Germany’s RWE (and many others) to sustain the status quo.

The cost-effective solutions we outline in our report offer a proven and more sensible way forward.

Gerard Wynn is a London-based IEEFA energy finance consultant.

Source: IEEFA. Reproduced with permission.

 

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12 Comments
  1. Jon 1 year ago

    Interesting, most of those examples are tied to other networks which helps a fair bit.
    At the risk of being a cracked record I think Snowy 2.0 is a big enabler in getting the whole of the NEM to a higher renewable level, along with other pumped hydro and chemical batteries scattered through the network.

    • Simon Jowett 1 year ago

      …as another recent article suggests we need more DSR Demand Side Response technology added to the mix – particularly with the advent of EV’s

      • Jon 1 year ago

        Good point, I missed that.

    • JonathanMaddox 12 months ago

      In the long term, Snowy 2.0 could prove a very valuable asset, but there’s simply no call for it as long as there is still so much coal and gas in our generation mix: they will readily ramp down their output (gas with more speed and less fuss, of course, and greater cost savings from its more expensive fuel) when demand is low or wind and solar generation high.

      I’d like for Snowy 2.0 to be coming online when our fleet of coal-fired power stations is down below half the present number.

      If not, well then, I presume some other storage technology will have stepped into the breach which Snowy 2.0 hopes to fill.

      • Peter 12 months ago

        Lead-time is an important issue

        • Mike Westerman 12 months ago

          Indeed – short lead time projects that are earlier to market will take the best pickings at the top of the price curve. At first these will be batteries but they quickly will exhaust the available demand at their LRMC so investment will dry up. But smaller, cost conscious PHES will take a very big bite out of the curve provided the storage duration matches the peak demand curve they are supplying into. This is the weakness of Snowy 2 – it really is competing with other technologies able to respond to rare but longer duration events.

        • JonathanMaddox 12 months ago

          Of course lead time is important. It’s a good thing they’re doing all the preliminaries for Snowy 2.0 now, then: by the time it’s actually needed, it will also be “shovel ready”.

          For decarbonisation of the electricity supply without nuclear energy, very large storage facilities are going to be needed. Snowy 2.0 is not going to be big enough, but I’ll be very surprised if it is not part of the picture.

    • Mike Dill 12 months ago

      I think Snowy might help if they put in a lot of high power transmission for the project, like running a HVDC line to Melborne and another one to Sidney . As soon as the transmission is there, other energy sources will be able to connect and mostly make Snowy a ‘white elephant’.

      • Jon 12 months ago

        As you said as soon as there is transmission capacity there will be more renewable non synchronous generation (which is great) Snowy 2.0 and other pumped hydro are enablers to prevent these generators having to spill as often and fill the gaps when demand is greater than supply that is being generated at the time.

        I find it odd that people think Tassie being “the battery of the nation” is a good plan when it’s a long way from the grids highest consumption points and think Snowy 2.0 is a poor plan.
        I understand the distaste of the political symbol it is being seen as but I think it is a sound project and will enable a good/rapid transition transition away from Coal/Gas.
        Yes; 4 years is very much part of rapid transittion, Liddell is the next closure and it’s still several years away, any other pumped hydro is going to take near that long to get approvals etc in place.
        I don’t see it as a Snowy 2.0 OR other projects, I think we need Snowy 2.0 AND other projects.

        • Mike Westerman 12 months ago

          Tas as the battery of the nation is a long way off as well…

      • Mike Westerman 12 months ago

        As generators, the Snowy has no right or obligation to augment the network, tho’ clearly 5GW more capacity is needed south and 3GW east, plus 2-3GW to the western plains to import wind and solar to the scheme. A lot of money invested in maintaining a centralist model while the system is devolving rapidly into a distributed system: going from a few 10s of generators to >3million. The regulators and Feds are frozen like rabbits in the headlights while this juggernaut rolls on.

        There are priorities which don’t consist of pollies making on the fly decisions for political advantage. There are projects that don’t compromise the most valuable environmental assets in Australia and weigh on the taxpayer.

  2. Hettie 12 months ago

    Unless reports of sensible markets operating successfully elsewhere can be back dated to say, 1902, there is little hope of our Gov’t giving them any credence.

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