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Lessons from California and Germany

By Kolby Hoagland | December 27, 2013

Society’s problems arise from actions taken either on misinformation or the misperception of accurate information. The current snags impeding the healthy growth of the renewable energy sector in places like California and Germany demonstrate that the rise of a complex and highly diverse industry, like the renewable power industry, demands prudent forethought, pragmatic solutions, and a forward-looking roadmap that allows for market evolution. This week’s DataPoints Blog briefly looks at the long-term problem of intermittency and how the development of future power markets demands pragmatic solutions.

From the initial development of wind and solar energy system, we have understood that the intermittency of these energy sources is a problem for electricity grids that require consistent sources of power; long has it been understood, but conveniently forgotten as wind and solar have come to dominate the renewable portfolios. In California and Germany, wind and solar are celebrated for providing a remarkable quantity of clean, renewable electricity. Germany fulfilled half of it midday demand for electricity with renewables in May in 2012. The accomplishment and record setting amount of renewable kWh from wind and solar is commendable, but the current reliance on these intermittent energy sources comes at a considerable cost. In a recent article from the Economist, “How to lose half a trillion euros,” substantial economic loss and reliability concerns from the move to the wind and solar low-carbon systems disquiet the excitement of simply reaching renewable generation targets. In California, the misalignment of power generation from renewables and overall demand on the grid causes price spikes in the late afternoon and early. As the sun goes down, thermal power plants are required to ramp up generation to meet the loss of generation from photovoltaic panels. Known as the “duck chart effect” and demonstrated in the graph below, greater penetration of solar over the coming years could lead to over generation on the grid and low electricity rates in the middle of the day and then a price spike in the late afternoon and early evening. Not only does this pose a problem to consumers who would ultimately bear the burden of the higher costs when the sun goes down, producers must have a reliable and relatively consistent price for the electricity that they produce. The limits that a thermal power plant can be ramped and dispatched makes greater solar and wind penetration difficult to handle.

Duck Graph

As policy makers, independent energy developers, and utilities answer society’s demand for more renewable power, hindsight rues the lack of foresight on the issue of wind and solar’s intermittency. The lack of energy storage and smart grid technologies pose limits of further growth. California recently mandated energy storage targets, but the scale and economics of energy storages still proves economically unfavorable. Smart grid technologies, such as appliances communicating to mitigate demand spikes, are also proving slow to materialize. On the other hand, biomass power, particularly biogas which is easily dispatchable, is a reliable option to solve market issues caused by the inadequacies of wind and solar. Biogas is an underused bioenergy source that could solve many of the issues that wind and solar generation pose. Policy makers and energy developers lack a long-term plan that incentivizes sustained growth of renewables on a grid that isn’t proving to be as malleable as once hoped. Pragmatic, flexible, long-term plans that look at biomass equal to wind and solar must be pursued to solve current issues that Germany and California are encountering.

4 Responses

  1. Paul Spencer

    2013-12-30

    1

    Author is a bit behind the curve - at least in BPA country. After a relatively brief (approximately 2 years) period of legal and technical turmoil, operating systems here are stabilized, and markets are tamed. Policy - as anyone published should know - have winners and losers. Good policy, though, promotes long-term benefits to society. On the other hand 'Catch 22' prevents markets from taking action on their own. That's where government comes into play - to force the steps that bring progress. As to the "half a trillion" quote, consider the source. The Economist and the WSJ will always take the side of the conventional market 'wisdom'. How about if we look at the avoided costs of air and water pollution due to the fossil-fuels industries, realized in healthcare costs, environmental damage, plus the clean-ups? Then we could get controversial and add in the costs of resource wars and anthropogenic climate-change effects. Fortunately, the technical experts are coming up with solutions for the purported problems - apparently somewhat ahead of the pace of journalistic understanding in this case.

  2. Kolby Hoagland

    2013-12-30

    2

    Paul- Thank you for your comment! I have the same hope for policy makers. Hopefully the recent intransigence of the US congress is behind them. Yet, the odds of proactive policy being enacted are still drastically low. I also agree that the technical experts are moving forward with solutions, but those solutions have externalities that lead to instability in the original market and need for further innovation and commercial scaling. Professionally, I argue that the bioenergy industry offers a number of solutions that are under-pursued by markets and policy makers. I chose the Economist story bc the issue of intermittency has slowly risen (Yes, a little late) to mainstream coverage. I'd like to argue much of the economist's story, yet I have to applaud that its simply a part of their narrative. Renewables penetrating greater portions of the grid and causing the whole system (externalities and all) to become more complex is an issue not widely understood; its complexity requires greater attention and analysis than the Economist or the WSJ ever would apply to the story. Ultimately markets will account for avoided emissions, or the repercussions they incur. Policy maker will hopefully keep up, and the media will continue to offer insight in as unbias of a manner as they see fit.

  3. Peter Brown

    2013-12-31

    3

    Kolby, the energy market does not like intermittent (?) activities from sources of funding, government, banks and individuals. Give us a nice flat field and even if it is a minefield we will rush in and develop the hell out of it. When the funding in Biodiesel got complicated, things started getting very intermittent. The same applies to wind and solar, ethanol and other sources where someone in the chain could play games with rules. What the market needs to realize is that energy has to be available on a hummingly happy basis with one for or another picking up the slack. Our infrastructure is too fragmented as long as petroleum companies insist on skewing the works in their favor. For example, if you install a PV panel to charge your car then you need to add an accumulator because you are charging when the sun don't shine and not paying your Exxon/BP/Shell bill is not possible.

  4. john

    2013-12-31

    4

    Generally, Vendors and Contractors are promoting double dipping and scamming for installing projects.

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