Economic tipping points mean renewable energy will account for over half of electricity generation by the mid-2020s in the UK and Germany. This comes as the cost of generating energy from wind and solar is expected to more than halve from today’s levels by 2040.
BONN, GERMANY - Economic tipping points mean renewable energy will account for over half of electricity generation by the mid-2020s in the UK and Germany. This comes as the cost of generating energy from wind and solar is expected to more than halve from today's levels by 2040.
These findings are part of an economic study released today by Bloomberg New Energy Finance (BNEF) and commissioned by Eaton in partnership with the Renewable Energy Association (REA).
The study - ‘Beyond the tipping point: flexibility gaps in future high-renewable energy systems in the UK, Germany and the Nordics' - highlights that future energy systems in the UK and Germany with very high levels of variable renewable generation must be complemented by flexible resources, including energy storage.
Key findings of the study include:
• At certain times, and with increasing frequency, wind and solar energy alone could meet - and even exceed - total power demand in both markets;
• With more renewable supply comes more curtailment, but not to significant levels: in 2030, less than 1% of UK and 3% of German wind and solar generation is curtailed or ‘wasted' due to oversupply. By 2040, this rises to 3% and 16% respectively;
• Increased wind and solar generation results in more variable demand for other energy sources to plug power supply gaps. In this environment, flexible power technologies such as energy storage and gas generators will have an advantage. In addition, certain types of demand response such as flexible electric vehicle charging and variable industrial loads can respond quickly to conditions on the grid, or shift or consume surplus renewable energy;
• As early as 2030, there will be whole weeks where wind and solar power generation exceed total demand at some point every day. This creates a very challenging environment for ‘baseload' technologies that benefit from running at a constant stable output, such as nuclear, coal and lignite;
• However, even in the 2040 scenarios, there will be some weeks and months where generation other than wind and solar must be called upon to meet the majority of demand. Such long ‘gaps' cannot be filled with demand response and current energy storage technologies. A fleet of flexible resources will need to be maintained to meet these gaps, including gas generation, interconnectors and dispatchable renewable technologies such as bioenergy. In future, long-term storage solutions such as hydrogen may come into play too.
"This study highlights a seismic shift in how power systems will operate in future. As wind and solar become the cheapest options for power generation, the race is on to develop and deploy the flexible resources that will complement them," said Albert Cheung, head of global analysis at Bloomberg New Energy Finance.
"Eaton commissioned this economic study to understand the size of the challenge before exploring possible policy and technology responses, which will be the focus of the second part of the study to be released in early 2018," said Louis Shaffer, distributed energy segment manager, Europe, Middle East and Africa Region at Eaton.
"These solutions could include continued promotion of smart metering, reforms to increase market openness and transparency for all grid ancillary services and long-term grid service contracts and pricing schemes. We will also analyse the benefits of various policy options for the future of the energy market that include battery storage," added Shaffer.
"The study shows that wind and solar power are now the cheapest form of new build generation in many cases, and costs will continue to fall dramatically. Massive increases in future renewable power generation mean that industry and government must start planning now to ensure low-carbon, cost-effective ways of balancing demand and supply," said Dr Nina Skorupska, chief executive of the Renewable Energy Association.
"We believe that there is a role for fuelled renewable technologies such as bioenergy and energy from waste to provide the complementary baseload generation that will be required, to avoid the need for carbon intensive generation at all. This study shows that battery storage is well placed to serve short term supply and demand issues and highlights the dramatic cost reductions in renewable power over the past few years," added Skorupska.
An executive summary of the study is available for download at www.eaton.com/tippingpoints.
About Bloomberg New Energy Finance
Bloomberg New Energy Finance (BNEF) is an industry research firm focused on helping energy professionals generate opportunities. With a team of experts spread across six continents, BNEF provides independent analysis and insight, enabling decision-makers to navigate change in an evolving energy economy.
Leveraging the most sophisticated new energy data sets in the world, BNEF synthesizes proprietary data into astute narratives that frame the financial, economic and policy implications of emerging energy technologies.
Bloomberg New Energy Finance is powered by Bloomberg's global network of 19,000 employees in 192 locations, reporting 5,000 news stories a day. Visit https://about.bnef.com/ or request more information.
Eaton is a power management company with 2016 sales of $19.7 billion. We provide energy-efficient solutions that help our customers effectively manage electrical, hydraulic and mechanical power more efficiently, safely and sustainably. Eaton is dedicated to improving the quality of life and the environment through the use of power management technologies and services. Eaton has approximately 96,000 employees and sells products to customers in more than 175 countries. For more information, visit www.eaton.com.
About the Renewable Energy Association
The Renewable Energy Association represents renewable energy producers and supporting companies and promotes the use of all forms of renewable energy in the UK across power, heat, transport and recycling, it also is the leading trade body for energy storage and electric vehicle infrastructure. It is the largest renewable energy and clean technology trade association in the UK, with over 600 members, ranging from major multinationals to sole traders. For more information, visit: www.r-e-a.net.