POWER SUPPLY
CHALLENGES

Solutions for Integrating Renewables


JACOB KLIMSTRA





FOREWORD

HANS TEN BERGE
Secretary General, Eurelectric

Europe's electricity markets are changing. Historically, electricity markets were based on generation capacity with comparatively low fixed costs and high variable (fossil) fuel costs. But the ratio of variable and fixed costs is shifting, as renewable generation based on solar and wind with little to no variable cost increasingly enters the market.

Despite technological advances and efficiency gains, even the most modern, state-of-the-art fossil fuel capacity is finding it increasingly difficult to compete in a market where subsidised capacity is able to generate at zero variable cost. Yet firm capacity will be needed to back up variable generation. In this context, many argue the current market environment is no longer fit for purpose.

The penetration of low-carbon, intermittent, generation capacity is a positive step towards less carbon-intensive electricity systems. However, the change in generation portfolios does pose a number of challenges for the markets.
How do we ensure that sufficient capacity is available when the wind doesn't blow and the sun doesn't shine? Currently subsidy schemes remove variable renewable capacity from market price signals. This cannot and should not be a long - term option – for any type of electricity generation.

This is no academic debate. Rather, the European electricity industry is already feeling the effects of the recent changes on
_________________________________

 ABOUT THIS BOOK



Video: The author of the book, Dr Jacob Klimstra interviewed
in April 2014 in Finland.

This book is a deep dive into the fundamentals of optimizing power systems with large shares of wind and solar energy. It was first launched in Power-Gen Europe in Cologne, 3-5 June 2014.

the ground. Companies have to mothball recently built gas plants, for instance, or put investment projects on hold. The unfavourable market conditions are also discouraging external investors from putting their money into the electricity sector. Meanwhile, policy support costs, for instance for renewables or energy efficiency, are increasing the price that end customers pay for their electricity.

In short: the challenges are big and the solutions are as yet unclear. A fresh look at market design and at a 'smarter' energy system in general is needed. This book contributes to that discussion, with a particular focus on the effects for generators. In describing and analysing the current environment and the way that some of the challenges can be addressed, it addresses key concerns of the European – and global – electricity industry today.



NOTE TO THE READER
JACOB KLIMSTRA

 Many readers of this book have to make important decisions about electrical energy supply in different regions. Electricity is crucial for creating wealth and comfort in a modern society. With ever-growing demand for electrical energy, its generation has a huge impact on global fuel consumption and the related emissions. This demand is expected to double over the next twenty years or so.

During the past hundred years, scientists and engineers have acquired a thorough knowledge of the power supply system. Modern power plants achieve high fuel efficiencies, and their emissions have been drastically reduced. Excellent transmission and distribution systems ensure a high degree of reliability in the power supply to consumers. However, measures need to be taken to make the electricity supply more sustainable. Ultimately, the depletion of fossil fuels will occur and the issue of global warming from greenhouse gases cannot be neglected. Therefore, the power sector has to adjust accordingly and find a new path. Decisions made now will have a long-term impact and optimum solutions have to be chosen.

The purpose of this book is to explain the challenges arising from the advent of a large volume of intermittent renewable energy sources.

The purpose of this book is to explain the challenges arising from the advent of a large volume of intermittent renewable energy sources. In addition, innovative solutions are offered for keeping the power supply system reliable and affordable. The book also discusses the effects of renewable energy on the cost of electricity per kilowatt-hour. Low costs are very important since energy is so intertwined with the economy – any increase in the price of electricity has a significant impact on the cost of products and services.

Power systems are not based on feelings and opinions, but on scientific and technical facts. Therefore, some mathematics and physics are presented in this book. Nevertheless, readers without a technical background should also be able to understand the issues displayed.

Writing this book took much more effort than initially expected. Large levels of intermittent power sources in a system have an impact on the requirements for contingency reserves, on balancing electricity production and demand, on supplying reactive power and on costs. This required searching for actual data on the output of solar panels and wind turbines, in combination with actual power demand patterns. Fortunately, most European and USA-based transmission system operators make the necessary information available on the internet, although often heavy number crunching was required to transform this data into a workable format. Also, the International Energy Agency always provides useful information. Yet, this book does not pretend to cover every aspect of the issues at stake. Hopefully it helps the reader to gain more insight into the matter and serve towards achieving the best solutions.

I am indebted to Wärtsilä for offering the possibility to write this book. The continuous support from a number of co-workers during its preparation is highly appreciated. In alphabetical order, I would particularly like to mention Christian Hultholm, Jaime López, Jiipee Mattila, Jussi Laitinen, Kärt Aavik, Kenneth Engblom, Kimi Arima, Mats Östman, Niklas Wägar and Svante Bethlehem. I am especially grateful to my wife Anna Martha who allowed me to dedicate so much time to writing of this book.



Banner_mobile_the_book

FOREWORD
HANS TEN BERGE
Secretary General, Eurelectric

Europe's electricity markets are changing. Historically, electricity markets were based on generation capacity with comparatively low fixed costs and high variable (fossil) fuel costs. But the ratio of variable and fixed costs is shifting, as renewable generation based on solar and wind with little to no variable cost increasingly enters the market.

_______________________________________
 ABOUT THIS BOOK


Video: The author of the book, Dr Jacob Klimstra interviewed
in April 2014 in Finland.

This book is a deep dive into the fundamentals of optimizing power systems with large shares of wind and solar energy. It was first launched in Power-Gen Europe in Cologne, 3-5 June 2014.


Despite technological advances and efficiency gains, even the most modern, state-of-the-art fossil fuel capacity is finding it increasingly difficult to compete in a market where subsidised capacity is able to generate at zero variable cost. Yet firm capacity will be needed to back up variable generation. In this context, many argue the current market environment is no longer fit for purpose.

The penetration of low-carbon, intermittent, generation capacity is a positive step towards less carbon-intensive electricity systems. However, the change in generation portfolios does pose a number of challenges for the markets.
How do we ensure that sufficient capacity is available when the wind doesn't blow and the sun doesn't shine? Currently subsidy schemes remove variable renewable capacity from market price signals. This cannot and should not be a long - term option – for any type of electricity generation.

This is no academic debate. Rather, the European electricity industry is already feeling the effects of the recent changes on
the ground. Companies have to mothball recently built gas plants, for instance, or put investment projects on hold. The unfavourable market conditions are also discouraging external investors from putting their money into the electricity sector. Meanwhile, policy support costs, for instance for renewables or energy efficiency, are increasing the price that end customers pay for their electricity.

In short: the challenges are big and the solutions are as yet unclear. A fresh look at market design and at a 'smarter' energy system in general is needed. This book contributes to that discussion, with a particular focus on the effects for generators. In describing and analysing the current environment and the way that some of the challenges can be addressed, it addresses key concerns of the European – and global – electricity industry today.



NOTE TO THE READER
JACOB KLIMSTRA

 Many readers of this book have to make important decisions about electrical energy supply in different regions. Electricity is crucial for creating wealth and comfort in a modern society. With ever-growing demand for electrical energy, its generation has a huge impact on global fuel consumption and the related emissions. This demand is expected to double over the next twenty years or so.

During the past hundred years, scientists and engineers have acquired a thorough knowledge of the power supply system. Modern power plants achieve high fuel efficiencies, and their emissions have been drastically reduced. Excellent transmission and distribution systems ensure a high degree of reliability in the power supply to consumers. However, measures need to be taken to make the electricity supply more sustainable. Ultimately, the depletion of fossil fuels will occur and the issue of global warming from greenhouse gases cannot be neglected. Therefore, the power sector has to adjust accordingly and find a new path. Decisions made now will have a long-term impact and optimum solutions have to be chosen.

The purpose of this book is to explain the challenges arising from the advent of a large volume of intermittent renewable energy sources.

The purpose of this book is to explain the challenges arising from the advent of a large volume of intermittent renewable energy sources. In addition, innovative solutions are offered for keeping the power supply system reliable and affordable. The book also discusses the effects of renewable energy on the cost of electricity per kilowatt-hour. Low costs are very important since energy is so intertwined with the economy – any increase in the price of electricity has a significant impact on the cost of products and services.

Power systems are not based on feelings and opinions, but on scientific and technical facts. Therefore, some mathematics and physics are presented in this book. Nevertheless, readers without a technical background should also be able to understand the issues displayed.

Writing this book took much more effort than initially expected. Large levels of intermittent power sources in a system have an impact on the requirements for contingency reserves, on balancing electricity production and demand, on supplying reactive power and on costs. This required searching for actual data on the output of solar panels and wind turbines, in combination with actual power demand patterns. Fortunately, most European and USA-based transmission system operators make the necessary information available on the internet, although often heavy number crunching was required to transform this data into a workable format. Also, the International Energy Agency always provides useful information. Yet, this book does not pretend to cover every aspect of the issues at stake. Hopefully it helps the reader to gain more insight into the matter and serve towards achieving the best solutions.

I am indebted to Wärtsilä for offering the possibility to write this book. The continuous support from a number of co-workers during its preparation is highly appreciated. In alphabetical order, I would particularly like to mention Christian Hultholm, Jaime López, Jiipee Mattila, Jussi Laitinen, Kärt Aavik, Kenneth Engblom, Kimi Arima, Mats Östman, Niklas Wägar and Svante Bethlehem. I am especially grateful to my wife Anna Martha who allowed me to dedicate so much time to writing of this book.