Any country can reach high shares of wind, solar power cost-effectively, study shows
Transformation of power systems is necessary to
guarantee flexibility over long term, but this will be more difficult in
some markets than in others
26 February 2014
Wind power and solar photovoltaics
(PV) are crucial to meeting future energy needs while decarbonising the
power sector. Deployment of both technologies has expanded rapidly in
recent years – one of the few bright spots in an otherwise-bleak picture
of clean energy progress – and IEA scenarios indicate that this trend
will continue for decades. However, the inherent variability of wind
power and solar PV is raising concerns: Can power systems remain
reliable and cost-effective while supporting high shares of variable
renewable energy (VRE)? And if so, how?
A landmark study released today by the
International Energy Agency addresses these concerns and confirms that
integrating high shares – i.e., 30 percent of annual electricity
production or more – of wind and solar PV in power systems can come at
little additional cost in the long term. However, costs depend on how
flexible the system currently is and what strategy is adopted to develop
system flexibility over the long term. Managing this transition will be
more difficult for some countries or power systems than others, the
study says.
“Integrating high shares of variable
renewables is really about transforming our power systems,” IEA
Executive Director Maria van der Hoeven said as she launched The Power of Transformation - Wind, Sun and the Economics of Flexible Power Systems,
the latest in a series of IEA reports shedding light on the challenges
and opportunities of integrating VRE into power systems globally.
“This new IEA analysis calls for a
change of perspective,” she explained. “In the classical approach,
variable renewables are added to an existing system without considering
all available options for adapting it as a whole. This approach misses
the point. Integration is not simply about adding wind and solar on top
of ‘business as usual’. We need to transform the system as a whole to do
this cost-effectively.”
Currently, wind and solar PV account for
just about 3 percent of world electricity generation, but a few
countries already feature very high shares: In Italy, Germany, Ireland,
Spain, Portugal, and Denmark, wind and solar PV accounted respectively
from around 10 to more than 30 percent of electricity generation in 2012
on an annual basis.
The report says that for any country,
integrating the first 5-10 percent of VRE generation poses no technical
or economic challenges at all, provided that three conditions are met:
uncontrolled local “hot spots” of VRE deployment must be avoided, VRE
must contribute to stabilising the grid when needed, and VRE forecasts
must be used effectively. These lower levels of integration are possible
within existing systems because the same flexible resources that power
systems already use to cope with variability of demand can be put to
work to help integrate variability from wind and solar. Such resources
can be found in the form of flexible power plants, grid infrastructure,
storage and demand-side response.
Going beyond the first few percent to
reach shares of more than 30 percent will require a transformation of
the system, however. This transformation has three main requirements:
deploying variable renewables in a system-friendly way using
state-of-the art technology, improving the day-to-day operation of power
systems and markets, and finally investing in additional flexible
resources.
The challenges of such transformation
depend on whether a power system is “stable,” meaning no significant
investments are needed to meet demand in the short term, or “dynamic”
which requires significant investments short-term, to meet growing power
demand or replace old assets.
The publication helps to clarify the
very different perception of wind and solar around the globe. In stable
systems, such as those in Europe, the existing asset base will help to
provide sufficient flexibility to increase VRE generation further.
However, in the absence of demand growth, increasing VRE generation in
stable systems inevitably comes at the detriment of incumbent generators
and puts the system as a whole under economic stress. This outcome is
based on fundamental economics; market effects are thus not only a
consequence of variability. The transformation challenge in stable
systems is twofold: scaling up the new, flexible system while scaling
down the inflexible part of the old.
Governments with stable systems face
tough policy questions about how to handle the distributional effects,
in particular if other power plants need to be retired before the end of
their lifetimes and, if so, who will pay for stranded assets. Meeting
these challenges will only be possible through a collaborative effort by
policy makers and the industry. In any case, “these surmountable
challenges should not let us lose sight of the benefits renewables can
bring for energy security and fighting dangerous climate change. If OECD
countries want to maintain their position as front runners in this
industry, they will need to tackle these questions head-on,” Ms. Van der
Hoeven said.
By contrast, in “dynamic” power systems
such as in India, China, Brazil and other emerging economies, wind power
and solar PV can be cost-effective solutions to meet incremental
demand. VRE grid integration can – and must – be a priority from the
onset. With proper investments, a flexible system can be built from the
very start, in parallel with the deployment of variable renewables.
“Emerging economies really have an opportunity here. They can leap-frog
to a 21st-century power system – and they should reap the benefits,” the IEA Executive Director concluded.