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.