A landmark study* released on 26 February by the International Energy Agency confirms that integrating high shares - that is, 30 % of annual electricity production or more - of wind and solar PV in the power system of any country can come at little additional cost in the long term if the route taken is carefully chosen.
Transformation of power systems is necessary to guarantee flexibility over long term, but this will be more difficult in some markets than in others, and there are a good many concerns to deal with, mainly those raised by VRE - variable renewable energy. Wind power and solar photovoltaics 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 scenarios analysed by the International Energy Agency indicate that this trend will continue for decades. However, the inherent variability of wind power and solar PV is raising questions: can power systems remain reliable and cost-effective while supporting high shares of VRE? And if so, how?
Transforming the power system
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 at the launch of the report, 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 said. "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 % 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 % of electricity generation in 2012 on an annual basis.
The report finds that for any country, integrating the first 5-10 % 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 - flexible power plants, grid infrastructure, storage and demand-side response - can be put to work to help integrate variability from wind and solar.
Going beyond the first few percent to reach shares of more than 30 % 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.
Perceptions of wind and solar around the world
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. 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.
*'The Power of Transformation - Wind, Sun and the Economics of Flexible Power Systems' is on sale at the IEA bookshop.
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