06 A reservoir serving a hydropower facility near the town of Mingachevir in northwestern Azerbaijan. Flexible plants such as hydro and bio-power facilities can respond rapidly to system fluctuations, supporting increasingly higher shares of variable solar and wind power. © NASA
06 FEATURE: SYSTEM TRANSFORMATION By Rainer Hinrichs-Rahlwes (German Renewable Energies Federation – BEE; European Renewable Energy Council – EREC) Renewable energy is growing rapidly and is likely to become the backbone of a secure and sustainable energy supply in an increasing number of developed and developing countries. Variable renewables such as wind and solar are growing particularly quickly in the electricity sector. Hydropower, geothermal, and bioenergy are being integrated into existing energy systems and markets in a growing number of countries, as fossil fuel and nuclear capacity is replaced with renewable-based technologies, and as supply chains are adapted. By contrast, integrating large shares of variable wind and solar requires that the energy mix and infrastructure become increasingly flexible and, where feasible, interconnected. 1 A number of countries are aiming beyond mere integration of renewable energy by enacting policies and measures to transform their energy systems to accommodate rising shares of variable renewables. For countries and regions planning to achieve very high shares i of wind and solar energy, system transformation is the most efficient and least costly way to do so. “System transformation” is defined as the process of adapting the energy system by replacing traditional baseload power from coal-fired and nuclear power plants with a flexibility-driven system that enables significant increases in shares of variable renewables. It entails shifting from a system that is relatively rigid and centralised to one that is more nimble and decentralised. Producers, consumers, grid operators, and other actors will play greater roles in optimising supply and demand, in part through the use of information technologies (sometimes called “smart grids”), and also through increased interconnection of all energy sectors—power, heating and cooling, and transport. The earliest and biggest challenges have to be met within the electricity sector, where relatively inflexible, conventional power plants and grid systems must, over time, be integrated with intelligent, flexibility-driven systems to support rising shares of a mix of variable and dispatchable renewable energy. Excess electricity can be used increasingly for transportation, heating, and cooling. Therefore, although transformation will require a change in the energy system as a whole, transformation of the electricity system is both feasible and most urgent. ■■Shifting Paradigms: From Integrating Renewables to System Transformation For many years, it was believed that renewable energy technologies (other than large hydro) could only supplement the established electricity system, and that there was an inherent limit on the share of variable renewable sources that it could accommodate. ii Experience in Denmark, Germany, Spain, and elsewhere, however, has demonstrated that the implementation of suitable policies can enable the successful integration of higher shares of variable renewables than was thought possible only a few years ago, while also providing unforeseen benefits. 2 Most of the alleged constraints to achieving higher shares of renewables either have resulted from a lack of political will to enact the required enabling legislation and actions, or they have been disproven as technical solutions to overcome the various challenges have emerged. Hence, variable renewables are becoming a major part (meaning around 15–20% or more) of the electricity supply in an increasing number of countries. 3 It is now evident that a mix of variable and dispatchable renewables can provide a stable and reliable electricity supply. 4 As installed capacities of renewables increase, a portfolio of different renewable technologies can often cover the major part of the power demand and, where inter-connected to other grids, can provide a surplus to export. They can provide electricity around the clock and throughout the year at reasonable costs, if the grid system and the regulatory framework are flexible and operated smartly. Further, it has been shown that renewables can reduce electricity prices considerably and thus alleviate energy costs for consumers. 5 iii Rising shares of variable renewable energy sources have triggered discussions about potential risks for system stability, the need for back-up capacities, and limitations of existing market designs that may no longer be able to provide adequate signals for needed future investment in power plants and infrastructure. 6 These discussions began in countries and regions where wind power shares of the total electricity mix exceeded 15% (e.g., Denmark, northern Germany, northern Spain, South Australia). The debate is expanding to other regions and technologies with, for example, high shares of solar PV emerging in Spain, Italy, and increasingly throughout Germany. Although the present debate focuses on these OECD countries, it will soon become relevant for other countries (including major emerging economies) as their shares of wind and solar electricity generation increase. 06 i There is no specific percentage that applies. In a very inflexible system, the need for transformation may start at a level of 10%, whereas in other, more flexible, systems—including those with high existing shares of large hydropower—it may start well beyond 20 or 30%. ii This apprehension and doubt was less evident and less widely accepted in countries with high shares of hydropower, a resource that is quickly dispatchable and can serve as balancing power. iii This is a consequence of the merit order effect. Due to very low marginal costs of wind and solar power generation, all other power plants are pushed out of the merit order so that their full-load hours and resulting capacity factor decrease constantly. In addition, prices per kWh tend to be very low in times of high wind and solar yields. Renewables <strong>2013</strong> Global Status Report 89
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RenewableS 2013 GLOBAL STATUS REPOR
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FOREWORD Access to modern energy en
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TABLES TABLE 1 Estimated Direct and
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REN21 Flagship Products and Activit
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EXECUTIVE SUMMARY Renewable energy
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In response to rapidly changing mar
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TOP FIVE COUNTRIES ANNUAL INVESTMEN
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01 GLOBAL MARKET AND INDUSTRY OVERV
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