(The author is a Reuters columnist. The opinions expressed are
By Gerard Wynn
LONDON, Sept 16 The lack of clear rules and
targets for the integration of renewable power in the European
Union risks slower adoption at higher cost.
The 2009 EU Renewable Energy Directive is responsible for
driving rapid growth in the sector by setting each member state
a mandatory target for producing non-fossil-fuel energy. (Chart
In the case of electricity, the directive also required
priority grid access and integration of renewable power;
however, these rules were neither quantified nor mandatory.
Additionally, in some cases they may backfire.
For example, when wind and solar are in surplus,
guaranteeing them priority grid access may be unhelpful if it
means undermining the economics of coal, gas and nuclear to the
point that those conventional energy sources are no longer
Options for grid balancing include: building more
transmission capacity and electricity storage; improving
day-ahead wind and solar forecasting; involving renewables in
grid balancing; more demand response; and subsidies to build
new/ operate existing fast-response gas-fired power.
At present, the evidence is that member states need at least
further specific guidance to integrate renewables more
Chart 1: (page 31) goo.gl/ar4iq
Chart 2: (page 7) goo.gl/gHy54G
Chart 3: (page 10) goo.gl/gHy54G
Chart 4: (page 175) goo.gl/OHcPv
A recent publication by Germany's Fraunhofer Institute
illustrated the impact of rising solar and wind energy on power
markets, in an analysis of German market data from January to
Variable renewable power accounts for nearly 20 percent of
power generation in Germany, putting it in fifth place among the
EU's 28 member states, where Denmark leads with more than 40
Impacts of more renewables include lower wholesale power
prices and more volatile generation.
Power prices fall because renewables receive a subsidy per
unit of generation and have zero fuel costs, and so can bid low
prices for electricity in wholesale markets.
In addition, grid operators pay conventional power plants to
shut down generation when wind and solar are in surplus,
potentially leading to negative prices.
German base and peak day-ahead power prices are now at their
lowest since 2004, in constant 2010 euros, the Fraunhofer
Institute report showed. (Chart 2)
The impact is hardest on gas and hard coal, as the most
expensive marginal power producers, followed by nuclear and
lignite: generators are allowed access to the grid on the basis
of lowest marginal cost.
At German day-ahead prices below 25 euros per megawatt-hour,
in January to July, gas-fired power had a utilisation ratio of
5-25 percent, followed by hard coal (5-40 percent), lignite
(40-90 percent) and nuclear (55-100 percent), the report showed.
Utilisation ratio was defined as the proportion of available
assets used in power generation.
Such ratios have made it more difficult for conventional
generation to recover fixed capital costs, leading to the
discussion of mechanisms to subsidise back-up gas-fired power.
Germany could integrate renewables better through a range of
options, including building more transmission capacity, making
more of its hydropower available for pumped storage, or
increasing the scale of its demand response market.
Under the latter, the 2012 "Ordinance on Interruptible Load
Agreements" requires grid operators to issue a call for tenders
each month for up to 3,000 MW of interruptible loads that can be
called upon to balance the grid.
The Renewable Energy Directive makes it unclear how
countries should integrate wind and solar, potentially storing
up more problems as other countries boost capacity to meet their
Its Article 16 describes how member states should ensure
"Member States shall take the appropriate steps to develop
transmission and distribution grid infrastructure, intelligent
networks, storage facilities and the electricity system, in
order to allow the secure operation of the electricity system as
it accommodates the further development of electricity
production from renewable energy sources, including
interconnection between Member States and between Member States
and third countries," it said.
These are vague guidelines rather than targets.
The directive also seeks to guarantee priority access, but
adds a condition that the ruling should not compromise "secure
operation", leaving judgement to member states.
And it says wind and solar power curtailment should be
minimised, without setting or proposing guidelines.
It is unsurprising that EU countries have prioritised
meeting mandatory targets for deploying wind and solar, over
meeting non-mandatory, unspecific targets for the grid
infrastructure and market rules needed to integrate them.
In its progress report on renewable energy, published in
March, the executive European Commission said infrastructure
investments were urgently needed.
"The current failure to modernise the grid as the energy mix
is changing is causing problems for the development of the
internal market, technical problems related to loop flows, grid
stability and growing power curtailment, and investment
bottlenecks resulting from delayed connection of new power
"Adaptation of the electricity grid and system operation,
including by improving storage capacity, better system controls
and forecasting will improve the efficiency with which current
infrastructure is used."
On a more specific note, a report by the consultancy Ecofys
for the Commission specified 13 measures for grid integration
and found that all member states had adopted some of these.
But underlining the variability in adoption, it found that
only 10 out of 27 studied EU countries gave renewable power grid
priority and/ or compensation for curtailment, and in just four
countries were grid operators required to optimise renewable
power grid integration. (Chart 4)
(Reporting by Gerard Wynn; Editing by Dale Hudson)