Friday, September 28, 2012

Loop Flows, Surging Consumer Costs and Capacity Payments Signal End of Honeymoon Period for Renewables

A number of recent articles deal with the market/supply challenges (put mildly) of the increased presence of uncontrollably intermittent renewable generation in energy mixes.  The articles appear to be precipitated by leaks from a pending EU Commission report


FAZ/EWI Energy Conference: Oettinger on Harmonsation of Renewable Support, EEG Surcharge, Loop Flows, Capacity Markets « German Energy Blog:
"The EU Commission is becoming increasingly displeased with Germany’s energy policy and its lack of European coordination, the newspaper Frankfurter Allgemeine Zeitung (FAZ) writes. Climate protection and energy efficiency could be better promoted on a larger scale than by individual national measures, EU Energy Commissionar G√ľnther Oettinger said at an energy conference organised by FAZ and the Institute of Energy Economics at the University of Cologne (EWI)."
The article notes Oettinger concurs with a recent Deutsche Bank assessment of the renewables surcharge Germany's residents pay:
...the EEG surcharge could otherwise not only rise from 3.592 ct/kWh in 2012 to approximately 5 ct/kWh in 2013 as widely predicted, but to 6 or 7 ct/kWh and including VAT something like 9 ct/kWh, endangering public support for renewable energy


The end of the honeymoon period for renewables: European Energy Review
"Electricity markets across Europe are experiencing a once-in-a-generation transformation, which is largely driven by the exponential growth of intermittent generation from renewable energy sources - solar PV and wind in particular. Although the rise of such renewables is both necessary and inevitable in the transition to a low-carbon economy, it is becoming increasingly difficult and costly to integrate them into the current power system. Inevitably renewable generators will be asked to play a bigger role in managing the impact their production has on electricity systems. In addition, they will have to deal with reduced financial support and legal prerogatives as policymakers will try to end their insulation from energy markets. The honeymoon period for renewables is ending, and their existence in electricity markets is bound to get a lot more challenging."
Continue Reading at the European Energy Review

A third related article, Capacity markets little understood, is at the Renewables International website.  It indicates long-term advocates of renewable energy are blissfully unaware of the structural economic challenges now presenting themselves in not only markets with a large renewable share, but markets connected to those markets.
...a seemingly innocuous question posed by Harrison showed that Fell and Maegaard, for all of their groundbreaking work, have not yet thought enough about an issue that is increasingly moving into the foreground: "What about capacity markets?"...
Fell and Maegaard answered the question by pointing out what can be done with excess green power – which is not at all what Harrison asked. Fell is the co-author of Germany's Renewable Energy Act, without which Germany would not be where it is today in terms of renewables...



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