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Conventional energy production vs. use of renewable energies

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2023-01-01 publication

Right direction, wrong speed

Power from the wind and sun is supposed to be helping Germany out of the energy crisis. But the pace of expansion for green electricity has slowed dramatically. Accelerating it again will mean clearing away obstacles that have been growing for years.

By EVA AUGSTEN

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Where does electricity come from? Who cares as long as it comes out of the plug socket? For many decades, this was many people’s view. And in Germany, electricity did indeed almost always come out of the socket: on average, the power supply was interrupted for just 12.7 minutes in 2021. There were no prizes, let alone elections, to be won in raising topics such as energy autonomy or grid security. Even the broad climate movement made little impact against cheap fossil fuels and antipathy toward wind turbines. 

Then Putin sent his tanks into Ukraine and turned off the gas supplies little by little. Suddenly energy supplies are top of the political agenda. Is renewable electricity coming to the rescue? Can we forgo Russian gas, nuclear power, oil and coal? Or do we have to jettison all our noble climate targets to keep the lights on?

There is some good news: even though the energy transition has been stalling for years, the ground has been laid for considerably more energy independence in terms of electricity supplies. Almost half of Germany’s power supply comes from renewable sources, and the coalition agreement between the country’s governing parties has set a target of 80 percent by the year 2030. Using the wind and sun as the basis for our future electricity supply is no longer a political utopia but the foundation on which energy suppliers and grid operators base their plans. The challenge brought by the energy crisis therefore does not require a change of direction but a rapid effort to breathe new life into the seized-up machinery of the energy transition. The circumstances for this are not ideal: “Supply chains have been broken. There is a shortage of microchips everywhere. The skilled worker shortage has reached a new dimension. These are no longer just challenges but real problems,” says Dr. Thomas Benz, Managing Director of the Society for Energy Technology in VDE (VDE ETG). Despite everything, he is convinced that the transition can and must succeed – provided policymakers now put the right rules in place. “Technically, we are prepared and largely have the solutions in the drawer ready to go. Now we just have to act.”

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Time to step on the gas, or to step away from gas?

Expert teams regularly run computer models to look at what the electricity system of the future could look like. In most of these models, gas power stations act as a bridge technology – a flexible supply of energy to compensate for the fluctuations in power generation from wind and solar. This is the case, for example, in the Climate-neutral power system 2035 scenario published by the Agora Energiewende think tank in June 2022. The scenario was conceived the previous year at a time when energy prices were rising sharply but a war with Russia was not yet in sight. But, since then, the future viability of using gas as a bridging technology has become uncertain, while a sound alternative is still lacking. A policy brief from the energy transition project Ariadne expects the gas supply in Germany to shrink by around 30 percent from pre-crisis levels in the coming years. This figure already factors in substantially increased imports of liquid natural gas (LNG) via floating terminals and European ports.

The 18 authors behind the Ariadne paper expect it to be possible to reduce gas-fired electricity generation by up to 80 percent by 2025. This relies on mobilizing older coal- and oil-fired power stations currently on standby or held in reserve, which could in part be reconnected to the normal electricity market in the coming years. Some coal-fired power stations would also have to remain in operation longer than planned.

No independence from gas without an alternative

Like coronavirus lockdowns, however, this emergency response is not a long-term option. It is incompatible with protecting the climate and does little to reduce dependency. As the Agora paper “Volle Leistung aus der Energiekrise” (Full power out of the energy crisis) points out, this means there is a need for long-term solutions too. The think tank proposes an expansion of renewable energy, greater electrification and improved efficiency. The fact that all these measures involve a time lag means it is all the more urgent to address them quickly – as with vaccine development during the pandemic.

VDE ETG position paper “Zeit zum Handeln” (Time to act)

With their position paper “Zeit zum Handeln” (Time to act) published in 2021, the experts from the “Electrical Energy Generation and Storage” department of VDE ETG summarized their main messages on the electricity sector and how they see its future. The paper concluded that Germany, in principle, has the potential to fully supply its needs with renewables. However, the experts anticipate that renewable energy sources will be traded internationally in future and in some cases imported by Germany for economic reasons. At the same time, sector coupling will become ever more important in substituting renewables for fossil fuels across all industries. In a transitional phase, gas will still be needed as a fully predictable source of electricity generation. VDE ETG’s position is being elaborated in a series of background papers on technical aspects, most recently in November 2022 with a paper on the operation and stability of the system as a whole and the expansion of renewable electricity generation.

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The construction of hydrogen infrastructure is one such measure with a delayed impact. Everyone is looking for the magic bullet when it comes to replacing fossil fuels. “Completely exiting gas-fired electricity generation is only realistic when we have a replacement in the form of hydrogen,” says Dr. Benz from the VDE ETG. The Agora paper therefore calls for a rapid conversion of the gas power stations still needed today. “Hydrogen has an advantage over fossil fuels in that it can be produced in many more countries. In Europe, there are grand plans in Scotland, Scandinavia and eastern Europe and on the Iberian Peninsula. Beyond Europe, Canada and countries in North Africa are a possibility. That means that energy partnerships can be diversified and new partnerships created on an equal footing,” says Andrea Appel, Project Manager for Hydrogen at VDE. 

Environmentally friendly produced hydrogen, however, is just as hard to come by as COVID vaccines in spring 2021. Electrolysis capacity powered by green electricity is only now being established. Most modeling shows this changing by around the year 2030, when electrolyzers with a total capacity of ten gigawatts in Germany alone are expected to be manufacturing green hydrogen. The European Union usually suspects a potential distortion of competition behind any state support for industrial projects. Yet it waved through more than 60 hydrogen projects heavily subsidized by the Federal Ministry of Economics in summer 2021. They are considered Important Projects of Common European Interest (IPCEI). Another 40 such projects followed in summer 2022. On top of this, Dii Desert Energy, an initiative that evolved from the Desertec project, is promising the capability to deliver Europe more than ten million tonnes of green hydrogen a year by 2030. This represents around half the demand expected at that stage by the REPowerEU plan. The other half is to be generated in Europe itself. The choke point remains expanding renewable energy on a large enough scale.

Given rising energy prices and the political tailwind, expanding wind and solar power is a no-brainer. Industry associations and other experts are indeed seeing new momentum. “Renewable energy has become a solution to two problems at once – the climate and the shortage of fossil fuels,” says Wolfram Axthelm, Managing Director of the German Renewable Energy Federation (BEE). 

Order books at installation companies are full, currently mainly limited by the supply of components and skilled workers. Many private individuals and companies find that it pays to generate solar power for their own needs, and some German federal states even require them to do so. New installations have increased noticeably year on year. Almost five gigawatts’ worth of photovoltaic installations joined the grid between January and September 2022 – around a fifth more than in the same period of the previous year. But that is nowhere near enough. To achieve a climate-neutral power system by 2035, the annual capacity addition must roughly treble by the middle of the decade, according to the Agora scenario.

The expansion of wind and solar is stalling

Extra capacity on this scale will require large wind and solar farms. The German government wants to significantly increase the pace of expansion through higher targets in the Renewable Energies Act (EEG). But this approach has not yet had much success. In June 2022, for example, open-air solar facilities with a power output of 1,125 megawatts were supposed to receive approval for EEG funding. But interest in the call for tenders was so meager that the Federal Network Agency, after discounting flawed bids, could only award contracts for 700 megawatts. The wind energy tender in October for 1,320 megawatts was also undersubscribed, with projects amounting to just 772 megawatts. One problem is that project developers find themselves knee deep in a morass of “ifs” and “buts” in the form of the copious clauses and regulations that have accumulated over the years. According to the German Wind Energy Association, planning and approval for a new wind farm takes on average four to five years. Now, however, there is a new difficulty: prices and interest rates have risen sharply in the wind and solar industry, but the maximum price for tenders is fixed. Revenues that seemed comfortable just a year ago are already making projects look uneconomical today.

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Reality has outpaced the regulations when it comes to building and operating power grids, too. For years, the potential capacity of existing wind farms in Schleswig-Holstein, Mecklenburg-West Pomerania and Brandenburg has substantially outstripped the energy grid’s ability to carry electricity out of these sparsely populated regions. Despite this, grid expansion is sluggish. The Südlink route from Thuringia to Bavaria has been a bone of contention for over a decade. As things stand, three years after legislation to accelerate the expansion of the power grid, the route has progressed to just the second of six approval stages. And the approval of the Uckermark Line, which will bring electricity to Berlin from the northeast, took a full 17 years, according to its operator 50Hertz. Much of this time was spent re-examining the same issues, notes the company. A first section has now finally opened. 

In the energy crisis, this slow tempo is now proving doubly painful, with costly fossil-fuel power stations having to step in for the lack of wind power able to flow through the grid. What is more, technologies, energy markets and political requirements are shifting so fast that grid planning is often outdated before the first pylon is set up. The Agora scenario for a climate-neutral power system anticipates that new and upgraded power lines will have to cover up to 50 percent more ground than previously thought. But there are many factors that could affect this figure – for example, if people continue to oppose wind farms in their areas, if local electrolyzers are used to convert wind power to hydrogen and avoid grid bottlenecks or if hydrogen from the desert largely replaces natural gas. Project “Uptake” – a joint initiative involving the Fraunhofer IEE, the Öko-Institut (Institute for Applied Ecology), RWTH Aachen University and the grid operator 50Hertz – aims to address precisely these uncertainties. The project partners advise keeping a close eye on developments and factoring a degree of fallibility into any plans. Grid planning, they argue, must make provisions for various likely scenarios. “In the past, it was normal to build in some redundancy. Today, grid operators who want their power lines to keep some capacity in reserve have to justify every additional euro of spending to the Federal Network Agency,” says Dr. Benz. The proposal from the Uptake project, similar to that in the Agora paper, would therefore be a change of paradigm.

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A balance with many variables

Alongside the geographical imbalance, other stress factors for the power grid have also worsened in recent months and years. On the one hand, electricity demand is rising – as would largely be expected in the energy transition: heat pumps are selling faster than they can be installed. Subsidies for electric cars, charging points and wall boxes have led to a flood of orders in recent years. With its aging nuclear power stations, France needs to import electricity from Germany in winter to meet this demand. On the other hand, the supply of electricity and guaranteed generation has declined: Germany’s nuclear plants will be retired in the spring. Coal and hydroelectric power plants are operating to limited capacity because of low river levels. And nobody has built peak load power stations in Germany for years given the uncertainty about whether they would ever pay off. 

“In this situation, it’s just as well that the German electricity system has lots of different belts and braces,” says Dr. Benz. Temporary hydroelectric imports from Austria, grid, capacity and contingency reserves, and plans for controlled load shedding can absorb critical situations. Even if these “belts and braces” have rarely been under as much pressure as they are today, the most recent stress test by the grid operators shows that, together, they will hold. 

Moreover, there have never been as many technical options as there are today for quickly and effectively reducing the load in the most critical hours of the year. Distribution grid operators may in future play a considerably greater role by communicating with local generators and consumers. Perhaps the best-known possibility is that of managing electric cars, heat pumps and other flexible units in a more systematic way than is the case today. Depending on the situation, these consumers could react to the supply of electricity or the amount of load in the power grid. In the case of heat pumps, this is already reality, although in a simplified form. Customers can pay lower electricity prices in return for allowing grid operators to temporarily switch off heat pumps in response to demand on the electricity market. But the potential in relation to electric cars and other flexible household consumers remains completely unexploited. The German Energy Industry Act has long included provisions that allow grid operators to limit charging. In the case of electric cars, however, the economics ministry under the previous government did not produce the regulation that was supposed to detail how this would work. The approval and roll-out of smart meters has also been faltering for many years, although they are vital as a secure interface for controlling consumption. Some electric cars could even feed power back into the grid. A field test by The Mobility House and Audi has shown that this could earn owners €1,500 a year per vehicle without any compromise on availability. Legally, however, mobile batteries are classed as consumers rather than energy storage. This means that even when power is flowing back into the grid, operators would still have to pay levies and surcharges, turning what should be additional income into additional costs. A potential resource to improve flexibility is therefore going unexploited.

The days of fixed plans are over

Faster approvals, more renewable power, electrolyzers and hydrogen imports managed to protect the grid, smart heat pumps and wall boxes, and resilient, smart power grids are key ingredients for a stable power system in future. And there are many other aspects to add to the mix: To ensure there is sufficient electricity when wind and solar are unable to generate power, the building of standby power stations has to be made worthwhile even if they are only needed for a few hours a year. Secure interfaces are needed so that local producers and consumers can communicate. A European value chain is required so that dependence on fossil fuel imports does not morph into dependence on solar technology imports. Considerably more skilled workers are needed across the board to install these new technologies. 

Policymakers must now work quickly with industry to tackle this backlog of tasks. The technical possibilities have been researched and the arguments for various approaches repeated ad nauseam. Stakeholders seem to have finally grasped the complexity of the issue. Now it is time to take decisions and accept that there can be no perfect outcome with so many variables in constant flux.


EVA AUGSTEN is a freelance journalist in Hamburg, Germany, who specializes in renewable energy.

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